What is Meant by Contract Work? How DigiWorks Aids in Faster and Smarter Hiring
Feb 18, 2025 • 15 min read
The Growth of Contract Work in 2025
Companies usually deal with worker flexibility, cost-effectiveness, and guaranteeing the creation of high-quality output in today’s fast-paced workplace. Trying to keep afloat while juggling all of this has been more difficult. Hiring full-time employees for short-term projects has proved to be more and more costly and occasionally ineffective. However, what is contract work, and how can it help your company? These questions have become more and more frequent in today’s world. Employers have driven the increase in contract jobs’ desire for cost-efficiency, as they can avoid the financial obligations associated with full-time employee benefits.
This blog will discuss the function of contract work in the workplace, the challenges it resolves, and how companies might use it to expand. We’ll also discuss common and typical mistakes to avoid when incorporating and how DigiWorks may be able to help.
The Problem: Why Workforce Flexibility is Essential
Employing contract workers can be done for a variety of reasons. First, employing a contract worker is usually faster than hiring a full-time, permanent employee so that a business may obtain on-demand services. Additionally, a corporation may save money by not providing contract workers healthcare coverage, paid time off, or other benefits usually given to permanent employees. Other justifications for a business’s decision to use contract labour include addressing an immediate staffing demand full, filling strict deadlines with a high-priority boo, sting income, and enhancing corporate operations and outsourcing for highly skilled workers who don’t have access to them in-house—diversifying its operations by taking on new projects that need specialised knowledge.
Businesses face various workforce challenges, including:
- High labour costs: Permanent employees come with benefits, taxes, and long-term commitments. When companies hire many employees, the cost of employing is very high, becoming very costly and straining the company. This results in companies finding ways to minimise the cost of operating.
- Fluctuating workloads: Some projects require temporary expertise without permanent hires. Sometimes, sourcing the right person for the job becomes extremely difficult and expensive, as most companies are not familiar with the right avenues to use when these independent contractors.
- Specialised skills demand: Finding niche talent for short-term needs can be difficult and tedious, resulting in companies not hiring the most suitable person for the job.
- Speed to market: Hiring full-time staff is time-consuming and may slow down project timelines. It can be very expensive as at times companies have to train new employees and provide them with the required resources to work efficiently.
By embracing contract work, companies can reduce costs, increase efficiency, and access top-tier talent without long-term commitments.
You’ll learn:
- What is meant by contract work? An Interrupting Factor
- Types of Contract Work and Their Benefits
- Advantages and Disadvantages of Contract Work
- How to Implement Contract Work Successfully
- Common Mistakes to Avoid
- How Can Digiworks Help?
- Ways to Increase Employee Engagement
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Use the DigiWorks platform to hire, manage, and pay remote talent from all over the world.
What is meant by contract work? An Interrupting Factor
First, what is contract work?
This involves engaging experts for a particular project or time frame as opposed to engaging them permanently. These employees work as freelancers, independent contractors, or through employment agencies. They remain accessible until their assigned duty is finished, at which point they get payment. Contract workers typically receive compensation based on a pay structure that does not include benefits such as health insurance or paid leave, distinguishing them from full-time employees. Their contracts specify their roles and responsibilities, the duration of the said employment and the tasks they are meant to complete. They do not belong to any agencies but are hired based on the set of skills or services they provide. These jobs are usually temporary and not permanent. Companies can also find professionals for various contracted roles on platforms like Digiswork , facilitating access to necessary expertise without the commitment of full-time employment. Contract workers typically receive compensation based on a pay structure that does not include benefits such as health insurance or paid leave, distinguishing them from full-time employees.
A business entity will offer a job depending on the project or activities it wants accomplished after determining its business needs. When looking for hard-to-find skill sets, they could use staffing or employment agencies or post a contract position on job sites.
In order to decide on compensation rates and project completion dates, a client and contractor usually meet. For example, contract roles in the life sciences sector might be as brief as a few weeks or as long as many months or years. Although contract labor may sometimes be seasonal, in any event, a person joins the team for a predetermined period of time at a predetermined fee to carry out a specified task.
The question of whether to accept a six-month or one-year contract employment may cross your mind. However, ultimately, there isn’t a single solution. Your financial status and professional objectives should guide the ideal contract term, which naturally relies on what the firms are offering.
After a project is over, a business may choose to collaborate with the independent contractor again on related projects or hire them for more work under a different contract, but this is all purely speculative. Why would businesses utilise contract labor, then? In what ways does it help their companies? We’ll talk about some of these questions next
Types of Contract Work and Their Benefits
A lot of companies see right away how much it costs to hire independent talent. Although contractors don’t have the same expenses as regular employees, they could contribute the same knowledge and expertise. Companies are exempt from paying payroll taxes, offering paid time off, and providing employee benefits like health insurance. They also don’t have to pay the contractor if the job doesn’t need full-time hours. A broad spectrum of fields and skill sets are covered by contract positions, which provide companies access to specialised personnel for certain tasks.
On platforms like Upwork, companies can find professionals for various roles, ensuring they have the expertise needed to achieve their goals without the long-term commitment of hiring full-time staff.
Here are some common types of contracted jobs:
- create and maintain websites, mobile apps, and software solutions. Developers
- Graphic designers
- develop and manage social media strategies and campaigns. Social media marketers
- craft compelling content for websites, marketing materials, and advertisements. Copywriters
- SEO specialists
- Virtual assistants
- analyse and interpret data to inform business decisions. Data analysts
- Project managers
- Content creators
- handle customer inquiries and support through various channels. Customer support representatives
- Financial consultants
- HR specialists
Freelance work
Independent professionals offering specialised services. They usually work temporarily and are hired only when their services are required. They are usually independent and are not under any company. Freelancers work for different companies and organisations at the same time, this allows them to maximise their profits. Freelancers may as well be called independent contractors; this means they manage all their business affairs by themselves, and companies do not incur vicarious liability when it comes to them, rather than being on a company’s payroll.
Fixed-Term Contracts
For temporary work, fixed-term contracts are comparatively common. These are employment contracts that have a start and end date. This might be the start and finish of a project, a peak time of year, or other positions that just need temporary workers.
Contract-to-Hire
Employers benefit from contract-to-hire jobs by gauging a candidate’s performance and fit within the company culture before making a permanent hire. A contract-to-hire position allows both employers and employees to evaluate a working relationship before committing to full-time employment.
Independent Contractor
Unlike employees, independent contractors have more autonomy in their work, as they are typically given a job or project to complete without the company controlling how and when they do it. The onboarding and training processes for independent contractors differ significantly from those for employees, as contractors are provided only the essential information needed to complete specific projects.
Temporary Employment
Short-term employees hired through staffing agencies. They are usually hired for things like events or functions and are hired for a short time, usually until the end of the function or event. Examples of staffing agencies include waiters, caterers, etc. Temporary employment is defined by a fixed start and end date, often linked to the completion of specific projects or the fulfillment of short-term organisational needs. Temporary employment can be financially advantageous, as contract workers may earn more than their salaried counterparts while also gaining diverse experiences that enhance their resumes.
Project-based contracts
Professionals hired for a defined scope of work. These are usually hired temporarily and assigned to a certain task, when that task is completed, then their services are no longer required. Their skills and services are usually based on their previous experience from previous jobs.
Consulting contracts
Experts offering advisory services for specific challenges. They are usually hired for complex projects that need expert knowledge on particular tasks. They are usually hired for the duration of the project and work according to their schedules.
Remote contract work
Hiring global talent without geographic limitations. These are usually hired from all over the world. They are either temporarily employed or permanent. They work according to the tasks they are given and are usually the most qualified for the job at hand but are usually based anywhere in the world.
Retainer agreements
Long-term contracts with flexible working arrangements. Employers hire workers without guaranteeing a minimum number of hours. Workers are only hired when needed, which allows them to have great flexibility but the fluctuating jobs do not provide them with job security.
By choosing the right type of contract, businesses can optimise costs, improve efficiency, and access specialised talent without long-term commitments. assist.
Advantages and Disadvantages of Contract Work
Contract work provides flexibility in scheduling, allowing workers to balance personal commitments and project work more effectively.
Cost savings
No need for full-time salaries, benefits, or long-term commitments. As employers will not have to pay full-time salaries over a long duration of time, companies tend to save more. Companies will no longer need to allocate certain materials that have to be used by employees over time, for example, larger office spaces. Additionally, according to MASA, A company can avoid the financial burden of paying a full-time wage regardless of demand by allocating their money as efficiently as possible by just paying for labor as needed.
Access to specialised talent
Hire experts without permanent hiring risks. As these positions are often for people with specific skills, there is little to no room for the area when hiring them, therefore resulting in only the best person for the job being hired.
Scalability
Adjust workforce size based on project demands. Employers are about to hire people according to their current needs in the workplace. This would allow them to budget easily and accordingly, saving time and money.
Faster hiring process
Quickly onboard professionals for urgent projects. The hiring process will be faster as the contractor workers are hired specifically because of their expertise and talents. This is because only the employees with top knowledge will be shortlisted and hired, eliminating the unnecessary process of vetting applicants who are not suitable for the role.
Challenges of Contract Work
Contract employees negotiate their fees on a project basis and must manage their own benefits, unlike full-time employees who receive comprehensive company benefits. Instead of taking on extra duties that come with full-time employment, contract workers concentrate mostly on finishing the tasks outlined in their contracts. Contract work’s temporary nature usually results in substantial turnover, which may cause problems with processes and make it difficult to meet ongoing project deadlines. Certain jobs, like software engineers and project managers, are ones that many businesses post online as full-time, paid opportunities. Accordingly, those who land jobs at these companies are more likely to stick around for longer because of the job stability and extra perks they get. Therefore, workers who land these types of contractor jobs could be more inclined to change jobs if a better offer comes along. In this instance, the worker is not motivated to remain with the company by the contractor’s function.
In addition, contractors usually work via an agency, which means that their employer has less authority and oversight over them than it would have over an internal employee. If a project’s course changes halfway through the predetermined time frame, this might be an issue. The agreement a contractor has with the employer or third-party agency may prohibit some changes to the employee’s duties, unlike in the case of an internal employee who would only follow a new set of instructions from the employer.
How to Implement Contract Work Successfully
1. Establish Clear Expectations and Guidelines
Before starting a new project, identify the roles and duties of each party. An independent contractor agreement’s comprehensive scope of work is frequently the best approach to start discussions about expectations and rules. Give a summary of your goals, milestones, and any pertinent success measures. Future misconceptions can be avoided by establishing clear expectations early on. According to MBO partners, the job tends to run more easily when everyone is aware of the objectives and the desired methods of achieving them.
2. Foster a Positive Working Relationship
It will take a bit more time than usual project contact to develop a relationship with your freelance talent. Consider strategies for fostering camaraderie among your team. Organise a virtual coffee break or happy hour, introduce them to other staff members, or spend a few minutes checking in with them before each meeting to see how their day is going. Effective teamwork may be facilitated by these few extra efforts, which can go a long way toward building trust and collaboration.
3. Provide Resources and Support
Typically, independent contractors are in charge of giving them all the tools they require to complete their tasks (laptops, software, etc.), but there are several more ways you may help them during their contract. Assist them with the onboarding process, spend some time describing the operation of internal systems, and introduce them to important team members. Ensure they have access to and are aware of the location of essential papers. All parties involved will benefit from the project running more successfully if you are a trustworthy resource and make sure contractors have all they need to do their jobs well.
4. Embrace Flexibility
Flexibility is the first important factor to consider while considering a contract job. This offers the chance to experiment with various positions and businesses, as well as flexible working hours and project lengths. Apart from broadening your independent contractor’s exposure to innovative projects, cutting-edge technology, and diverse work environments, the opportunity to try out other positions and organisations also aids in the development of your professional network within the industry. By definition, independent contractors are the most flexible employees. Unless their contract specifies otherwise, people are free to choose how, when, and where they work. According to MBO Partners, for certain managers, this may be both a significant benefit and a difficulty. Be open to modifications and adaptations along the road to embrace this flexibility. Talk to your independent talent to learn about their preferred methods of operation and to give them space to be creative and innovative. Be prepared to modify your typical team management approach to attain optimal outcomes.
5. Practice Effective and Transparent Communication
The foundation of every effective team effort is communication. Communicate with your independent contractors regarding communication channels from the beginning of a project or contract. During a project, find out how they prefer to communicate and provide your own guidelines and preferences. In what format and with what kind of status updates would you like to receive them? How do you want your contractors to give you feedback and how will you provide them feedback? Building an atmosphere of respect for one another and candid communication will help build trust and set up your project for success.
Ready to build your remote team?
Use the DigiWorks platform to hire, manage, and pay remote talent from all over the world.
Common Mistakes to Avoid
1. Skipping the research phase
Choosing a contractor too quickly without doing adequate research is a typical error made by homeowners. However, it’s essential to spend time meeting with several candidates and learning about best practices for your project if you want to make sure your makeover is a success.
If you skip the interview procedure, you will not have the chance to compare various methods, costs, and levels of experience. Because of this, you can end up overpaying or employing someone whose goals and abilities don’t match yours. Vulnerability might also result from failing to investigate the procedures and actions involved. In addition to making it harder to ask the proper questions, you run the danger of settling for mediocre work or hiring untrained people.
2. Choosing based solely on price
Selecting your favorite candidate comes after you’ve interviewed them and looked over their offers. According to Indeed, to avoid the mistake of jumping to the lowest bid, though.
Although it’s normal to desire to cut costs, choosing a contractor only based on pricing might be an expensive error. Very cheap bids might be a sign of shoddy construction, sloppy work, or unstated expenses that will come to light later.
When assessing bids, be sure to compare “apples” to “apples” and consider aspects such as scope, timeliness, and quality. Are they completely insured and licensed? How long has the company been operating? Do they provide a warranty for their work?
3.Neglecting to confirm credentials & Insurance
It’s normal to have high expectations of a contractor once you’ve built a strong relationship with them. However, it might backfire if you don’t verify licensing and insurance and check references.
You run the danger of safety and code problems when you choose an unlicensed or inexperienced contractor, not to mention poor quality work. If someone is wounded at work, you can have to pay for expensive repairs, legal fees, or even hospital costs without the right insurance.
According to Indeed, ignoring a reference check can have just as much of an impact. It’s your greatest chance to make sure that their assurances and your expectations are in agreement.
4. Moving forward without a formal agreement
Although it may appear amicable and simple, a handshake agreement is a certain way to cause miscommunications and possible legal problems. In addition to being hard to enforce, verbal agreements can lead to misunderstandings regarding project scope, budget, and schedule.
Rather, before any work starts, you should have a written contract. Paperwork can be tedious, but don’t skip the important step of carefully reading over your contract, asking questions, and pushing back on any terms that make you uncomfortable.
Don’t forget to ask for payment receipts and document any change orders or issues that arise throughout the project, as well.
5. Paying too much upfront
Paying the entire project’s cost in advance or in full before the job is finished is another typical mistake. This may expose you if the contractor vanishes with your money or does not finish the job.
No more than 10% to 15% of the project’s total cost should be paid in upfront deposits. The remaining sums must be linked to the progress goals specified in your contract.
- Failing to get necessary permits
It may seem like a good idea to skip the permission procedure to save time and money, but doing so might have detrimental effects. You face the danger of violating local construction laws and regulations without the required permissions, which might lead to penalties, the removal of your work, or even legal action.
Unauthorised work may also jeopardise your home’s structural integrity and safety, which might result in dangerous situations or lower market value. Furthermore, since insurance companies sometimes do not cover unpermitted modifications, homeowners may find themselves without options if problems subsequently emerge.
Remember to review the rules of any condominium or homeowners’ organisation that may have authority over you. If you want to make changes to your house or yard, you might need permission beforehand. Disregarding these limitations can lead to fines or delays.
- Ignoring red flags after the project has started
Occasionally, a contractor can fulfill all the requirements—until the job starts. Red flags discovered in the middle of a project, however, may be particularly difficult to resolve.
If you’ve already made a sizable payment or had a part of your house destroyed, you could feel stuck in a difficult circumstance. If the contractor refuses to fix significant issues, however, it might make matters much worse.
According to Indeed, don’t be scared to get professional or legal counsel if problems continue. For the project to succeed in the end and to protect your investment, you must move quickly, intelligently, and decisively.
Experts in the law advise against paying a larger portion of the project’s cost than the proportion of work carried out. If you are unhappy with the outcome, you’ll have much less leverage if you’ve already paid.
How Can Digiworks Help?
Digiworks can provide help to companies that may be facing challenges as they try and transition from the traditional working environment to remote work. We at Digiworks can provide you and your company with extensive research and open an online platform that can make the transition smooth
- You may look for remote talent worldwide with the aid of the internet platform that Digiworks offers. This makes it feasible for a small firm to grow and hire the greatest staff based on its requirements. You can accomplish all of this while lounging in your house
- Digiworks can guarantee the safety of both you as an employer and the possible workers by enabling you to pay a subscription for each talent you hire. This will guarantee that all legal procedures are followed and that everything goes without a hitch.
- Furthermore, at Digiworks, we’ll give you a platform that lets you easily train your staff members and remotely screen, evaluate, and manage your personnel. By holding lectures on our platforms.
Final Words
Contract work is a powerful tool for businesses looking to minimise costs, harness specialised talents, and expand efficiently. Using a reputable platform like DigiWorks and avoiding the many common mistakes may result in maximising the benefits of contract work. Don’t let limited hiring slow you back and slow you down; start using DigiWorks to recruit more wisely immediately! Take a look at our contract talent pool now.
Ready to build your remote team?
Use the DigiWorks platform to hire, manage, and pay remote talent from all over the world.
Conclusion
Remote workers are an important part of a growing number of businesses. They help employees work faster, improve customer experience, and save money. If you’re not sure where to start when it comes to hiring one, DigiWorks is an amazing solution. The DigiWorks team will connect you with a global talent pool so you can find someone who is a great fit for you and your business!
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About DigiWorks
DigiWorks is an easy-to-use platform that helps small businesses and start-ups hire amazing remote talent from around the world. DigiWorks offers a way for you to hire, manage, and pay people from all countries. If you find an amazing virtual assistant from the Philippines, a content writer from Nigeria, or an operations manager from South Africa – manage and pay your entire team from one platform with no hassle.