With the increasing pace of business, having a ready supply, or “bench”, of independent talent has shifted from a luxury to an essential strategy. Companies often struggle to keep projects on track due to skill shortages or gaps in expertise. According to Gartner, 45% of delays stem from the inability to find skilled talent quickly and maintain productivity within existing teams. The problem lies not in a lack of talent, but in the broken processes for attracting and onboarding the right people.
When organisations face difficulties in finding talent, they often resort to internal hires or short-term fixes, which may not fully address their needs. If talent can’t be mobilised quickly, companies prioritise cost-efficiency over optimal deployment, creating a vicious cycle where motivation wanes and projects face further delays.
On average, it takes three to six months to find the right talent, and even then, employees are only productive 31% of the time.
While hiring talent is a crucial decision, the question of hiring a permanent employee or engaging an independent professional deserves serious consideration. There are many factors for companies to consider when hiring independent professionals, beyond just a cost-benefit analysis:
The true cost of a permanent hire: Beyond the salary
Let’s break down the true cost of a permanent employee. While a salary of Dh15,000 per month (Dh180,000 annually) seems straightforward, the real cost is much higher. Performance-based bonuses, typically around 10%, add another Dh18,000, and recruitment fees, ranging from 15-25% of the annual salary, add Dh27,000 to Dh45,000. This brings the total to approximately Dh225,000 per year.
Additionally, with paid leave entitlements of 20-22 days and around a week’s allowance for sick days or emergencies (about 1.25 months), the actual working period is reduced to 10.75 months. Dividing the total cost by this figure gives a true monthly cost of Dh20,930 — around 40% higher than the advertised Dh15,000 salary. This highlights the importance of budgeting at least 20% more than the base salary for permanent hires.
The costs and advantages of independent contractors
How we measure the cost of engaging an independent professional’s services is quite different from the cost equation when hiring permanent employees. Firstly, independent professionals are typically sole proprietors who hire out their specialized skills for an hourly rate or project fee. The recruitment fees for agencies in this instance range from 10% – 30% of the talent’s pay rate.
However, it’s not just about costs; hiring independent professionals offers a range of other advantages that are transforming business operations globally such as relieving companies from the burden of unemployment insurance and other employee-related expenses.
Addressing both capability and capacity gaps, companies can quickly access specialized expertise, particularly in high-growth regions like MENA, where talent can make or break long-term project success.
Addressing both capability and capacity gaps, companies can quickly access specialized expertise, particularly in high-growth regions like MENA, where talent can make or break long-term project success.
The on-demand talent model allows for increased scalability, enabling businesses to efficiently manage project budgets and shift resources without the constraints of retrenchments or notice periods. These professionals form a reliable pool of skilled talent that can be accessed as needed, reducing the time and costs associated with recruitment and onboarding —critical during periods of fluctuating workloads or high growth.
Additionally, their entrepreneurial mindset fosters a culture of agility, bringing fresh perspectives and accelerating results while avoiding common pitfalls. With McKinsey predicting that 75% of Fortune 500 companies may not survive by 2027, the ability to maintain project momentum and stay competitive through independent talent is more crucial than ever.
An often overlooked consideration is the skill and expertise possessed by independent professionals, honed through years of experience. Companies are essentially hiring an expert for a specific task, so their fees are higher as they reflect that expertise. Independent professionals typically require minimal training and onboarding and have an execution mindset. Their independence relies on the quality of their work, so expect to pay a minimum of 30% more than the monthly salary figure.
This degree of quality and specialization means independent professionals offer more flexibility and a higher return on investment. Their niche skills and expertise drive projects more efficiently and effectively, making them a smart investment despite the perceived premium cost.
Value vs cost: Making the right choice
The ideal solution for each business depends on their specific requirements. If someone is required to fill a culture-heavy role such as a leadership position, or a department head, then a permanent employee might be the right choice. However, if a specialist is required for a specific project, or more flexibility in scaling a team, independent professionals could be a more cost-effective and efficient option.
Hiring decisions are strategic investments. Understanding the true cost of a permanent hire helps in appreciating the value of independent talent. It’s not that the cost of a permanent employee is miscalculated; it’s the approach to the budget that needs to evolve.
Companies need to embrace a skill-based hiring culture, promoting flex capacity rather than just permanent employees, where possible. Weighing cost versus value ensures that companies not only manage expenses but also maximise returns, which drives sustainable growth and success.
Hiring decisions are strategic investments. Understanding the true cost of a permanent hire helps in appreciating the value of independent talent. It’s not that the cost of a permanent employee is miscalculated; it’s the approach to the budget that needs to evolve.
Companies need to embrace a skill-based hiring culture, promoting flex capacity rather than just permanent employees, where possible. Weighing cost versus value ensures that companies not only manage expenses but also maximise returns, which drives sustainable growth and success.