Contract Work vs Direct Hire: Which Is Best for You?

There are various forms of staff recruitment methods. Some organizations use a direct hire system, while some use contract systems. The two systems of employment are effective depending on the needs of the company. How do you know which of the two is best for your organization? In this article, we discuss the differences in the process of contract work vs direct hire.

Contract vs Direct Hire

In the case of a direct-hire, a staffing agency looks for qualified full-time professional staff for a business or organization. The staffing agency takes care of the hiring process and proposes the employee to the company. If the staff is accepted, the person can begin working for the company as permanent staff.

Most times, direct hires are placed in full-time positions. However, there are some instances whereby direct hires take over a part-time position. As soon as the staffing agency completes its role, the employee becomes part of the company’s payroll and a permanent staff member.

Contract hire also has a similar recruitment process to a direct hire. However, there are differences. In the case of contract hire, the candidate involved will be on the staffing agency’s payroll when the contract is signed. The candidate will work for the client but will be under the staffing agency’s payroll system, not the organization’s.

The contract hire process is very convenient as it allows companies more flexibility by allowing them to hire the candidate after the contract duration directly. Contract lengths can have various durations. It could be for a short period or indefinite. With this method, organizations have the option to retain a candidate to become a permanent staff if they wish.

Advantages of Contract and Direct Hire Recruiting

Contract Recruiting

1.    Assessment Opportunity

The contract hire system allows organizations to test the ability of a candidate without having to put them on their payroll. It allows for the abilities of the contracted candidate to be assessed by the organization before they decide whether they want to retain or not. Hence, the client can see if the candidate is worth it before committing to full-time direct hire.

2.    Less Complex Interview Process

In the case of contract hire, the interview process does not take much time or effort. Staffing agencies generally reduce the time it takes for companies to find permanent recruits. For contract hires, the time it takes is even less. Hence, organizations can get the needed staff quickly with only a short interview process.

Direct Recruiting

1.    Instills Loyalty

Direct hire recruiting instills a sense of belonging to employees. Being permanent staff directly under the client’s payroll helps them feel a sense of loyalty to the business. This can help improve the work environment and productivity. New direct recruits will see themselves as part of the company and will play their part more efficiently.

2.    Attracts More Experts

Individuals with high talent and skills want to feel valued. Direct hire recruiting provides better job security for such talents. Hence, they will be more attracted to direct positions than contract ones. Also, most organizations offer better benefits to their direct hires than their contract workers.


When a company or organization is looking to recruit staff, they have to consider the benefits and setbacks in contract work vs. direct hire. A direct hire will be directly under the company’s payroll and will be provided full-time benefits. A contract hire will work for the company but will be under the staffing agency’s payroll for the contract duration. However, the organization can decide to recruit the contract staff if they desire.

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