Contract to hire?
May 10, 2011 7:16 AM   Subscribe

I'm a software developer and it seems that everyone is hiring contract to hire. Recruiters keep feeding me the line that this is standard practice and to determine if I'm a good "technical fit," but I'm wary. Are contract to hires ever a good place to be in?

I'm pretty frustrated in my current job, I've felt that my career has stalled and there's little chance of internal promotion. I have 5+ years of programming experience, and what I think is a strong resume. The usual suspects turn up very few programming jobs in my area, so I've gone to recruiters. I've gone to 3 now and they've all balked at direct placement. Actually they all had a few, one or two, direct placement opportunities that were looking for someone with a crazy specific skill set.

I know you're suppose to negotiate contract to hire as if it is permanent, and make sure you get benefits and such. I just don't want to be on permanent contract, I want to be able to have a career. Should I continue to ignore contract to hire?

The recruiters have been pitching contract to hire as a mere formality to make sure I'm a fit. If that's the case, I'm okay with it, but I've also heard of people on permanent contract to hire. What's your experience?

I guess this could be a mixed bag, where some companies really do hire at the end of the contract period and some just keep stringing it along, is there anyway to differentiate this in the interview? When I asked the recruiters for some numbers, like how many end up on board full time at the end of the contract, no one has been able to provide me with this. To me this is a red flag, but it may be standard practice.
posted by anonymous to Work & Money (9 answers total)
Unfortunately, that is usually the case with recruiters. While they do have some full-time permanent positions from time-to-time, most are the contract-to-hire type. I recently was in the job market and I found I had to go out and find job postings of the actual companies to get on their radar. Anytime I talked with a recruiter it was usually 3 to 6 months of contract or contract to hire work. I ended up finding a full-time position after interviewing with a number of different companies. IT is still one of the strongest job markets out there, depending on where you are.

I think part of the problem is generally the way IT/software engineering works. A company will have a short-term need to get a project completed and they may not know what the staffing profile will look like after that. So instead of paying the thousands of dollars to bring on an employee, they will pay a slightly higher short-term rate to bring on a contractor. If they feel you were a good employee and that they feel that they will have enough work to support your salary and benefits, they will convert the contract to full-time employment.
posted by dyno04 at 7:41 AM on May 10, 2011

If you do it, make sure your hourly rate is compensorate with the risk that they may not hire you at the end of your contract, as well as sufficient to cover self-coverage for medical insurance. So, say that you were worth $85K ($40/hr) as a software engineer... I'd push for somewhere closer to $100/hr before I was willing to take the risk.

Yeah, its a good risk for someone who is unemployed, its probably an unacceptable for someone with pre-existing stability.
posted by Nanukthedog at 7:44 AM on May 10, 2011 [1 favorite]

Back in the 90s, the shoe was on the other foot and developers were using contracts to job shop. Now that the job market has imploded, companies are using contracts to employee shop. I haven't seen many of these turn into permanent hires but this may just be a local phenomenon. Given the right terms, these jobs could be okay for those who don't need the stability, benefits, etc. but everyone else there's probably too much risk to make them worthwhile.
posted by tommasz at 7:50 AM on May 10, 2011 [1 favorite]

I can only speak to what I saw (small startup case). I was working for a company that was small enough that miss-hires were worrisome to upper management. A couple of senior people were brought in as contract-to-hire people. By month 3 it was pretty obvious if they were working out or not, and if they were, they were brought on full time.

I would take Nanukthedog's money advice, and then interview like it was a full time position. Are you excited about the project and the team and everything else about the situation? If so, go for it.

That said, everything I hear says that it's getting hard to hire software engineers again, so this does surprise me a little.
posted by Phredward at 7:51 AM on May 10, 2011 [1 favorite]

Be up front with the company, and tell them you're interested in a permanent position. Ask for a review at 90 days to evaluate the hire decision.

It's also worth considering how the recruiter's contracts are created. Some of them make more money in a contract-to-hire relationship. There's not a lot you can do about this, but if their interest is not in getting you hired, they'll offer you positions where you won't get hired. If the buy-out of your contract is very expensive for the hiring company, that may delay (or set the timing of) a hiring decision.
posted by Mad_Carew at 8:05 AM on May 10, 2011

Something to check on (on a job-by-job basis): do they mean what you and I know "contract" means? Because it has long been my experience that the phrase gets used to mean "W2 with 90 day probation" which I think of as "a job".

If the recruiter is actually a staffing company, sometimes you'll be W2 through them instead of the employer, and then you'll be hired at the employer.

It is very very very rare that the employer will string you along beyond the initial period. It's really not economical for the employer in the long run; they're just outsourcing the probation period to someone else and after that it's cheaper to have you in-house.

It is a job, you should interview for it as a permanent position, and after you take a job and get through the first three months or whatever you should see something happen to transition you over to permanent, and aside from maybe signing some new papers and re-setting up your direct deposit it should be fairly transparent to you.
posted by Lyn Never at 8:06 AM on May 10, 2011

Also, I've been hired twice from contract-to-hire, so I don't usually worry too much about it when it's an option. But you need to ask for more money as a contractor, because the company may want to save a little money on conversion. Give them the option by asking for more to cover that...
posted by Mad_Carew at 8:08 AM on May 10, 2011

I deal with a lot of contractors at my job. If I come across someone who does exceptional work, I broadcast those skills to colleagues that have open positions that fit with the contractor's skill set. People do get hired this way.
posted by kamikazegopher at 8:24 AM on May 10, 2011

I think it's totally going to vary from company to company, but there are definitely companies out there who have no intention of jerking contract to hire developers around. The last 5 full-time developers my department brought in were contract to hire. For us, if you do good work, and aren't an ass to work with, the "to-hire" part is pretty much a shoe-in.
posted by SpiffyRob at 8:33 AM on May 10, 2011

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