Why tech's hiring pendulum is swinging toward contractors

Being an independent contractor in tech is great! You can earn $100,000 or more a year in roles that truly match your expertise, while enjoying far more autonomy than full-time employees.?

Then again, the independent contractor’s life might be soul-crushing. You’ll miss out on the health benefits and career development that full-time employees enjoy. Even the color of your workplace badge might mark you as someone “different.”

Ever since the days of computer punch cards, contractors’ roles have been a controversial, alluring topic in tech. Attitudes among workers and corporate leaders can vary hugely — and they keep evolving. So do hiring trends.

The latest overview comes from LinkedIn’s Economic Graph team, which finds that tech companies over the past two years have greatly ramped up their reliance on? non-employee, independent specialists. Think of 2022 as the Year of the Contractor.

We can see this transformation via the blue line in the graph above. It tracks the percent of paid job listings on LinkedIn that called for tech-sector contractors. Back in January 2021, such contracting roles were just 5.7% of paid tech listings on LinkedIn. Since then, that share has more than tripled.?

As of October 2022, the most recent month available, 19.9% of paid tech listings on LinkedIn were aimed at contractors. In-demand roles range from data scientists to IT specialists who can provide site support.?

For the broad economy, demand for contract workers has stayed far calmer. In January 2021, 4.3% of job listings across all industries were for contract workers. As the orange line in the chart shows, that figure inched up to 5.9% as of October 2022.

In tech, “we’re seeing mass layoffs, and work still needs to be done,” observes Gabriella Eakin, an experienced tech-sector recruiter who’s about to start a new role as a senior account executive with Integris. Turning to contractors can be a way to address those demands without ramping up the official employee headcount.

In some situations, the all-in cost of hiring contractors can be less than the cost of full-time employees. If contractors work offsite, they don’t need expensive desk space at company offices. Other savings arise because contractors generally don’t get health benefits, stock incentives or other perks.

In high-demand fields, though, elite contractors may out-earn their employee counterparts by a substantial margin. As Eakin points out, top contractors “are experts in their field,” who can be productive from day one. Bringing them onboard can generate results faster than the training and onboarding associated with new full-time employees. Contractors know this, and negotiate their pay accordingly.?

Why else is the tech sector so eager to hire contractors? Some of this boom may trace back to an unwitting shift in many companies’ work tempos. Senior executives have amped up their desire for big new strategic pushes – partly as a consequence of having lots of solo “think time” during the isolating days of Covid and the associated rise of work from home.

Meanwhile, employees and front-line managers have settled into their own steady routines at home. They are perhaps less eager to pivot rapidly from project to project.?

Bringing contractors into the equation helps both executives and permanent employees get what they want. As Eakin points out, a contractor-heavy workforce provides companies with “the flexibility to quickly scale up or down teams as business needs rapidly change.”

Methodology

Economic Graph researchers analyzed the percentage of Linkedin’s paid job posts in the United States from January 2021 through October 2022 that were for contract roles. The study examined both the technology industry and all industries. More than 1 million job posts each month were analyzed.?

LinkedIn data scientist Caroline Liongosari contributed to this article.?