Consultants vs. Contractors: Which is best for your organization?

For many organizations, knowing whether to choose a consultant or contractor, and understanding the difference, can be a puzzling task. There are many similarities between the two, however there are vast differences that enable organizations to achieve different end results.

The key is to understand how the roles differ, advantages and limitations of each, in order to make an informed decision. This will help an organization to better reach its business objectives. They need to ask themselves whether they would benefit from the high-impact expertise of a consultant or a long-term solution with a contractor? 

So, what’s the difference? 

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Generally speaking, consultants and contractors are self-employed, independent business people, who have a special field of expertise or skill. However, the actual difference between the two largely depends on the supplier. 

Consultants are usually more expensive, but this is because they are sought after for high impact short-term help that can be delivered in a matter of days or weeks. They provide clients with clearly defined deliverables in advance and tend to follow this through to completion, offering advice along the way. 

Whereas contractors vary in skill and cost, but they are suited to more long-term needs and are ideal for larger projects with deadlines over several months, or even years. Contractors are quite flexible in how they work, with some working under the direction of the customer and others operating almost in a managed service model. 

What are the similarities? 

Both can be supplied on a remote or on-site basis -- vital in these times. More often than not, a contractor and a consultant will have the same level of technical knowledge, meaning one can add just as much value to a client as the other, but it is also important to note that specialties vary from person to person. 

The benefits and limitations 

When looking to hire a contractor or consultant, there are many factors to take into consideration. This includes the considerable benefits and limitations, which have been outlined below: 

Consultants 

Advantages: 

  • Expertise: Consultants will provide in-depth expertise for an organization. They also help in bringing a different perspective to the table, as their skill set will be aligned with the current need of the organization and business objectives. 
  • Daily Operations: If an organization uses existing staff during a project then it can leave the daily operations understaffed and neglected. By sourcing a consultant organizations are able to free up existing company resources and their day-to-day functions can continue to be well supported by staff.        
  • Fixed Costing: When hiring a consultant, organizations will know upfront the exact costs that they are going to incur. There are no overheads involved and the organizations can also extend the contract based on their requirements and the results achieved during the initial term. 

Limitations: 

  • Uncertainty: Consultants do not come with guarantees, so there is always a possibility that organizations might not achieve the results they had planned when they had hired them, irrespective of the cost. 
  • High Cost: When a project is running on a low budget, a consultant should be hired only if an organization is sure they will help towards achieving the final objectives, due to the high cost of hiring them. 

Contractors 

Advantages: 

  • Skillset: Organizations can build a level of flexibility and relevant skillsets into their teams. This is especially true for those organizations that have IT projects that they need to deliver upon, but do not necessarily have the in-house skills and resources to do so. 
  • Affordability: By using contractors, organizations can expand and contract their workforce as needed, without taking on unnecessary expenses. Hiring can seem an expensive exercise, particularly if those skills are only required for an interim period or a one-off project; this is where using a contractor can prove extremely beneficial. Hence, it typically ends up costing employers less to hire a contractor than an employee. 
  • Flexibility: Selecting contractors provides organizations with increased flexibility in staffing projects, which can be especially advantageous for companies with fluctuating workloads. An organization can hire a contractor for a specific task or project, without any long-term commitments. This allows organizations to more effectively budget the costs for future projects of a similar nature.  

Limitations: 

  • Inhouse skillset: Although beneficial for completing projects, by relying on contractors, organizations do not acquire or develop skills in-house which could be utilised for future projects. 
  • Management: Unlike employees, whom organizations can closely supervise and manage, independent contractors enjoy a certain autonomy to decide how best to do the job for which they were hired. 

Which is best suited for your organization? 

Largely, the contractor/consultant debate is a question of time, budget, and defining objectives. Knowing how long a project/initiative will take, the type and level of skill required, and how the person will fit in with the rest of the team will help determine whether an organization needs a contractor or a consultant. 

Here’s a list of some aspects that should be considered before making a decision: 

  • How long will the work take to complete? 
  • What does the budget look like? 
  • Does your organization know what it needs? 
  • Will the organization require expert guidance? 
  • How much short and or long-term support will the organization require? 

Go to a specialist provider in the technology niche you need  

Organizations should seek out a specialist provider to help address their needs. Although business requirements and budgets can vary, specialist providers can help organizations to choose the option that is best for them. By providing the option for clients to choose from a consultant or a contractor, specialist providers are able to address the needs of more teams.

Photo Credit: Shutterstock

Giles Knights is General Manager, ClearHub, part of Clearvision

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