If you're hiring for STEM roles, chances are you’ve asked yourself this:
“Should we go with direct hire or contract hire?”
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:
| 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) |
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, which are critical factors for sustained innovation and operational excellence.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 to18 months and requires long-term stability and expertise.
| Situation | Which is the better option? |
|---|---|
| Long-term role with business-critical responsibilities? | Direct hire |
| Short-term project requiring niche expertise | Contract hire |
| Tight budget but need to fill gaps quickly | Contract hire (lower upfront fees) |
| Need to reduce turnover and build IP internally | Direct hire |
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.
One of the main risks of contract hire is the lack of long-term commitment and cultural integration. Contractors may not always align with your company's values or vision, which could impact teamwork and continuity. Additionally, managing multiple contractors can increase administrative work.
Not always. Contractors are results-focused. That’s great for execution but can be a gap in long-term innovation or internal collaboration.
Contract hire often makes more sense initially due to budget and agility. But as your team grows, you'll likely want permanent hires for core roles.
Absolutely, and many companies use a hybrid model!
This approach offer scalability while maintaining stability in key areas.
Direct hire is often the right choice if your priority is long-term stability and team cohesion. For project-based or temporary needs, contract hire provides vital flexibility.
Many organisations benefit from combining both: using direct hire for strategic roles and contract hire for specialist skills or short-term projects. This hybrid model delivers the advantages of both approaches.
If you’re weighing your options, Airswift can help. We partner with STEM businesses to deliver strategic hiring solutions, whether it’s scaling rapidly or planning for long-term success.
Reach out to us today to learn more about how we can support your workforce needs.