When Is Contract-To-Hire Worth It?

Technology has improved profitability and productivity, but it’s also responsible for increasing cyberattack numbers. The need for cybersecurity professionals has grown significantly in just a few years, with nearly 500,000 unfilled openings in the United States alone. Is contract-to-hire the solution for IT staffing needs?

HOW DOES CONTRACT-TO-HIRE WORK?

The contract-to-hire staffing model involves short-term hiring agreements with the option for permanent employment. It’s like hiring job candidates for a trial period before deciding whether to keep them as long-term employees.

Contract-to-hire agreements are usually managed by a recruitment agency. The staffing firm takes care of interviews, payroll, and performance evaluations.

The length of contract-to-hire arrangements usually ranges from three to six months, but sometimes lasts a year or more. And unlike temp work, this type of contract offers a smooth pathway to permanent placement.

IS CONTRACT-TO-HIRE WORTH IT IN 2025?

Whether your firm is investing in bespoke AI tools or website development, talented professionals are a must. There’s still a significant need for workers in cybersecurity, network maintenance, software development, and technology expansion.

Still, the possibility of reduced consumer spending and rising inflation means businesses have to juggle costs carefully. Just in the first half of 2025, there were more than 150,000 layoffs in the tech sector, including workers at Microsoft, Intel, Hewlett-Packard, Amazon, and Meta.

In today’s job market, employers have increased leverage. A contract-to-hire approach can help you put together a “dream team” while keeping overall costs low.

WHAT ARE THE PROS AND CONS OF CONTRACT-TO-HIRE?

When you partner with an experienced talent agency that has a good reputation, the contract-to-hire model is an excellent way to source high-quality workers. This arrangement overcomes many IT recruitment challenges, such as skill gaps and specialized needs.

1. Significant Hiring Flexibility and Speed (+)

With contract-to-hire, it doesn’t take as long to find and recruit workers. The decision isn’t permanent, so there’s less pressure during onboarding. This means development teams can spin up output quickly and adapt to changing circumstances on the fly.

The flexibility of contract-to-hire is a major advantage for companies at the cutting edge. There are fewer hurdles when launching new products or expanding services because you’re not locked into long-term employment agreements for dozens or hundreds of people.

2. Verifiable Worker Quality (+)

About 75% of employees lie on job applications. Even certified professionals can exaggerate their level of expertise, qualifications, or real-world work experience. Someone who seemed like the perfect candidate can end up costing you money.

Contract-to-hire avoids this issue by letting you evaluate the worker's real performance over time. Even better, you can observe the person’s genuine capabilities, growth potential, and untapped talents.

3. Better Fit With Your Organizational Culture (+)

Even dedicated workers aren’t always the right fit for an organization’s objectives, culture, or environment. For example, some professionals want the freedom of flexible hours, but your company may need a more rigid structure for global integration. In a way, contract-to-hire is like a “try before you buy” plan for hiring, giving both you and the job candidate a chance to see how well your priorities mesh in real conditions.

4. Open-Ended Backfilling for Employee Emergencies (+)

Navigating workplace injuries, vacations, maternity leaves, and similar disruptions is challenging in IT. Contract-to-hire is effective for backfilling, providing the speed necessary to cover urgent tasks, avoiding complications when workers return to their positions, and letting you easily hire a replacement if the original employee ends up not coming back.

5. Easier Project Scalability (+)

To maximize efficiency, you also need the freedom to shift directions quickly. Contract-to-hire is more flexible in this way, letting you add workers to projects as needed or change development goalposts without violating job role specs in employment agreements.

6. Streamlined Onboarding With Fewer Legal Strings (+)

Because contract-to-hire workers are technically employees of the recruitment agency during the contract period, your company doesn’t have the same legal or administrative obligations. Your HR department doesn’t have to worry about background checks, salary negotiations, payroll, or dismissals.

The workers in question are legally considered employees, not independent contractors. You have the freedom to set work guidelines, office hours, schedules, and project specs. In other words, you can manage your team as you see fit, but the recruitment agency takes care of time-consuming employment details.

7. Hourly Pay Model Instead of Salary (-)

One downside of contract-to-hire is that workers receive hourly pay. For organizations that typically require overtime work every week, not having salaried employees can get expensive quickly.

8. Greater Competition for Leading Job Candidates (-)

Contract-to-hire arrangements generally skew in the employer’s favor. Highly sought-after professionals often prefer direct employment with perks instead.

9. Lower Job Loyalty (-)

Short-term contracts don’t foster a feeling of trust between workers and employers. The worker may choose to leave for a better offer at the end of the contract period, if there’s one available.

10. Potentially Higher or Lower Hiring Costs (- or +)

Because this model operates via a recruitment agency, hourly wages are higher than when hiring individuals directly. That said, without needing to provide health insurance, PTO, or other benefits to new hires, you may save money instead.

WHICH ORGANIZATIONS AND INDUSTRIES BENEFIT FROM THE CONTRACT-TO-HIRE MODEL?

Companies of any size can benefit from contract recruitment services, but contract-to-hire is especially valuable for mid-size and enterprise-level organizations:

• Software developers
• AI, SaaS, and cloud computing companies
• Enterprises with on-prem or hybrid data centers
• Organizations with growing cybersecurity needs
• Manufacturers and defense contractors
• Healthcare networks

This model simplifies IT hiring for a range of positions, from on-site maintenance technicians to cybersecurity analysts.

WHEN IS CONTRACT-TO-HIRE A SMART CHOICE?

Contract-to-hire has pros and cons, like leasing a new vehicle instead of buying it directly. The process is faster, easier, and more flexible.

It can cost more in the long run compared to direct hires, but the benefits are hard to ignore. If the scope of your projects or your workforce requirements shift significantly during the year, this model can be an ideal solution for your business.

IS CONTRACT-TO-HIRE WORTH IT FOR YOUR ORGANIZATION?

Contract-to-hire is an excellent solution to modern recruitment challenges. The key is to customize hiring programs to your unique company environment and objectives. At TSP, we have extensive expertise in managed IT, cybersecurity, and recruitment services. Contact us to see the benefits of contract-to-hire for your organization.