Direct hire VS contract hire: What's best for STEM roles?

If you're hiring for STEM roles, chances are you’ve asked yourself this: “Should we go with direct hire or contract hire?”

It’s a fair question—and one that doesn’t have a one-size-fits-all answer. Both hiring models have distinct pros and cons. Your choice will ultimately depend on what your business needs now and what it may need in the future.
In this comparison guide, we’ll break down:

• The core differences between direct and contract hiring

• When to choose one over the other

• Cost, flexibility, and culture considerations

---

What is the difference between direct hire and contract hire?

Hiring Model	Direct Hire	Contract Hire
Definition	Permanent employee hired by the company	Temporary professional hire for a fixed term
Typical duration	Ongoing	Project-based, short to mid-term
Payroll	Paid and managed by the company	Often managed by staffing partner or agency
Benefits	Full benefits (health insurance, paid time off, retirement contributions)	Rarely includes benefits
Common use cases in STEM	Long-term strategic roles (engineers, IT leads, researchers)	Specialist skills for project delivery ( data scientists, IT consultants)

---

Pros and cons of direct hire for STEM roles

Why companies choose direct hire?

Stability

Direct hire provides both the company and the employee with job security. Employees in permanent roles often experience greater financial security and clearer career progression paths, which can boost motivation and productivity. For companies, this stability supports knowledge retention and fosters deeper expertise within technical teams—critical factors for sustained innovation and operational excellence.

Company culture alignment

Full-time employees tend to be more invested in their roles and often more committed to your organisation’s vision, work processes, and values. This alignment contributes to a cohesive team environment where collaboration and productivity can thrive. 

Lower long-term costs

While upfront recruitment costs and benefits may be higher, direct hires often save money over time by reducing turnover and recruitment expenses and maintaining consistent productivity with experienced staff. 

Challenges of direct hire

Time-consuming recruitment process

Hiring permanent staff can take time - from sourcing candidates to background checks and finalising contracts. In fast-moving STEM industries, this can be a drawback if you need to fill a position quickly or in response to sudden demand. 

Long-term commitment and related costs

Bringing on permanent employees means ongoing costs like salaries, benefits, training, and potential severances. This makes direct hire less flexible if your business needs change rapidly. Though predictable, these costs can be substantial upfront.

Limited flexibility during market shifts

STEM projects often require agility. A permanent workforce can restrict your ability to scale up or down quickly in response to shifting demands or technologies, which can be challenging when short-term skills are needed.

Pros and cons of contract hire for STEM roles

Why companies choose contract hire?

Flexibility and adaptability for project-based needs

Contract hire gives you the ability to bring in expert skills exactly when you need them. Whether it’s software development, engineering design, or a research project, contractors let you scale your workforce up or down without the long-term commitment of permanent hires. 

Access to specialised skills

STEM roles often require niche expertise that may not exist in your current team. Contracting allows you to tap into highly specialised professionals, like data scientists, cybersecurity experts, or renewable energy engineers, who can bring in-depth knowledge and experience for the duration of a project. 

Easier to scale teams for fluctuating demand

Contract hire offers flexibility to adjust staffing levels quickly in response to changing workloads or new projects. This agility allows businesses to meet short-term needs without the longer timelines often involved in permanent hiring. Meanwhile, engaged search services provide a thorough, targeted recruitment process that ensures high-quality long-term hires, though they typically require more time to deliver candidates.

Challenges of contract hire

Lack of long-term loyalty and cultural fit

Contractors typically focus on delivering their specific tasks and may not fully integrate into the company culture or long-term goals. This can create a disconnect between the contractor and permanent teams, affecting collaboration and continuity.

Potential for higher hourly rates or daily costs

Contractors often charge higher hourly or daily rates compared to the equivalent cost of a full-time employee’s salary. This is due to the temporary nature of the role and the lack of job security. In some cases, this can lead to higher overall costs, especially if the project or contract extends beyond the anticipated time frame. 

Administrative complexity in managing multiple contracts

Hiring and overseeing multiple contractors requires careful management. You’ll need to handle contract negotiations, ensure regulatory compliance, and coordinate terms across projects and departments, which can add organisational challenges. 

Comparing direct hire and contract hire for STEM roles

When deciding between direct hire and contract hire, remember that both can significantly benefit your business, but in different ways. There’s no right or wrong. It all depends on your company’s strategy,  goals, and current needs. 

If your focus is on long-term expertise, stability, and building dedicated teams, direct hire is usually the best fit. For project-based work that requires temporary expertise and flexibility, contract hire often makes more sense. 

Many companies find success by blending the two approaches—using direct hire for core, long-term roles and contract hire for specialised skills or short-term projects. This hybrid model offers the advantages of both worlds.

Which hiring model is more cost-effective?

It depends. Contract hire offers lower upfront costs for short-term projects or specialised skills, while direct hire is usually more cost-effective over time—especially if the role is expected to last beyond 12–18 months and requires long-term stability and expertise.

Can I combine both hiring models?

Absolutely - and many companies use a hybrid model!

• Use direct hire for core, long-term roles and contract hire for project-based or seasonal expertise (e.g. systems engineers, senior developers). 
• Use contract hire for specialised, project-based roles (e.g. cybersecurity consultants, AI researchers).

This approach offer scalability while maintaining stability in key areas. 

3 key factors to consider in your decision-making

1. What are my team needs and business goals?

Consider whether the role requires deep integration with your company culture and long-term commitment, or if it’s focused on completing specific, time-bound tasks. Direct hire suits ongoing, strategic roles, while contract hire works well for projects or fluctuating workloads. 

2. What does my budget look like?

3. What is the current market landscape?

Frequently asked questions

• What are the risks associated with contract hire in STEM roles?

• Will contractors care about my long-term company goals?

• What's the best hiring model for startups or small and medium businesses?

So, what should I choose?

There’s no universal answer—but there is a smart one for your business. It all comes down to your:

• Timeline
• Budget
• Project goals
• Internal resources
• Growth plans

If you’re still unsure, we’re here to help. At Airswift, we support companies across the STEM space with both direct and contract hiring. Whether you need to scale quickly or build a long-term workforce strategy, we’ll guide you toward the right fit.

Reach out to us today to learn more about how we can support your workforce needs.