The Chaos of Contracting
Is Contracting Helping or Hurting the Industry?
If you’ve worked in Silicon Valley much, chances are you’ve worked right alongside a contractor. Heck, maybe you’ve been one. I have. Somewhere along the way, tech corporations have shifted vastly away from permanent employees and towards contractors. Google, Apple, Facebook, Amazon, Uber, and many others, all have large workforces of contractors.
The New York Times, the LA Times, CNBC, and no doubt other publications, have run stories about the epidemic of contracting. In short, companies get to maintain an officially low headcount and don’t have to pay for benefits, which ostensibly helps their bottom line, which helps their stock price. It should come as no surprise that the overriding concern is about money. It has nothing to do with people, quality, culture, loyalty, or tenure. The all mighty dollar speaks loudest.
As the practice gains popularity and momentum in the industry, where does it stop? By some reports, Google is over fifty percent contractors. What if it was sixty percent? Seventy-five? What would one hundred percent even mean?
Years ago, as a permanent employee, I was stunned when the HR director told us that the average employee in the industry stayed at a company for two years. That seemed very short to me, but apparently it is true. She proceeded to shock me into a state of horror by saying that after two years, the company didn’t even really want me around. To this day that still does not make any sense to me. However, it begs the question: who started this madness? Was it the corporations betting that people wold not stay, or people betting that the grass was greener somewhere else? It must be some combination of the two.
I have both supervised contractors and been one myself. As a supervisor, I had very specific short-term tasks for my contractors. Every day, though, I could see them frustrated, wanting to do more, to be let in to the corners of the codebase and the secrets of the product, so that they could contribute and really be part of something. Alas, it was very short term, and not to be.
More recently I have been a long-term contractor, but that same yearning is there that I saw years ago from the other side of the equation. There is a basic human need to be included and accepted that doesn’t fit into contracting. While there is not an “us-versus-them” mentality in contracting, there is certainly an “us-and-them” quality to everything. Contractors are separate, but not equal. There are physical and virtual access restrictions, exclusions from meetings, memos, and anything that might be related to the company outside of your immediate project. There are social implications as well.
Furthermore, as a contractor, I was employed by a contracting agency who placed me onsite. So the company paid a premium, on top of my salary, to the agency. Apparently this was still cheaper than just employing me and offering me benefits. Truly, healthcare is out of control in this country, and no doubt plays a part in this chaos, but that’s mostly a different story.
What I don’t think companies realize is that there are hidden costs to using contractors. For starters, every time a contractor is needed, someone has to go through resumes, do phone screens, and then your key people, the ones you really want to keep and have offered permanent employment to, are now busy doing technical interviews, and after that, busy bringing new contractors up to speed. That seems to me a very inefficient use of your golden talent, especially when it is common and recurring, as is often the case. Does your top talent really want to be doing interviews as a career path?
Then the company culture suffers. Us and them. It’s hard to blend the two when one set has to be specifically excluded from certain things. Eventually this could lead to dissatisfaction among your permanent talent, resulting in them leaving after two years. Just a guess on the timing there.
Furthermore, if contractors have to be excluded in various ways, why are they trusted to work on critical parts of a product? If you’re going to trust them so, why not just hire them and make it official? If your top talent is busy doing interviews, and thus not learning new skills, you’re more likely to hire contractors with those new skills, and then get rid the talent you thought you wanted to keep. Feels like a viscous cycle.
There also seems to be a lot of fear on the part of the corporation. If you are a contractor, they can get rid of you at any time for any reason. Easy. They seem terrified of hiring the wrong person. What I don’t get is that most every place I have been at has been “at will” employment, which basically means the company can get rid of you at any time for any reason. Wait a second, that sounds familiar. Oh yeah, it’s the same as a being a contractor. So what is the fear really about?
When an employee stays at a company, they carry history, they carry loyalty, and they carry specific expertise in a given system that no one else has. I would say that contracting puts this more and more at risk. Do the bean counters care about any of this? Clearly not. The short term view of the dollar wins.
I’m sure the contracting practice is good for the financial health of corporations for now. I’m also sure it’s not such a good practice for the humans, neither the employees nor the contractors themselves.
