When it comes to assembling effective software development teams, businesses face an important decision: using contractors or hiring full-time employees. Both options come with their own set of advantages and challenges and each approach can be beneficial for different circumstances. We have looked at the pros and cons of each to help you make an informed decision for your company. 

Pros of Hiring Contractors: 

1. Flexibility and Scalability: 

One of the primary benefits of hiring contractors is the flexibility they bring to your team. Contractors can be engaged for specific projects or tasks, allowing you to scale your workforce up or down as needed. This is particularly advantageous in the tech industry where project scopes and requirements can change rapidly. 

2. Specialized Skills: 

Contractors often bring a specialized skill set acquired through diverse project experiences. By hiring contractors, you can tap into a pool of experts who have developed their skills on various projects, providing a fresh perspective and innovative solutions to your software development challenges. 

3. Cost Savings: 

While the initial hourly rates of contractors may seem higher, businesses can save on costs associated with benefits, time off, office space, and other overhead expenses. Contractors are responsible for their own taxes and benefits, allowing you to allocate your budget more efficiently. 

4. Time to Market: 

Contractors are focused on the project they are brought on to complete. They don’t typically get pulled into other company issues and can dedicate their time to development. This speeds up the rate of progress and projects are often completed faster.  

Cons of Hiring Contractors: 

1. Limited Integration: 

Contractors may not be able to be integrated to the same level as full-time employees. Thus, they may not feel the same level of commitment to your company as full-time employees. This lack of integration can impact team cohesion and company culture, especially when a significant portion of your workforce consists of contractors. However, with a proper blend of employees and contractors, this usually isn’t a big issue.  

2. Risk of Dependency: 

Relying heavily on contractors for core development tasks may pose a risk to your business continuity. If contractors are used to build software and then taken off the project, knowledge transfer could be more difficult, and timelines could be impacted. Also, as a project wraps up and contractors are no longer needed, it may leave the company without the resources to continue refining the software.  

3. Communication Challenges: 

Contractors may not be physically present in your office, leading to potential communication challenges. Effective collaboration and knowledge sharing may require additional effort, especially if your team is distributed across different locations and time zones. 

Pros of Hiring Full-Time Employees: 

1. Company Loyalty and Culture: 

Full-time employees are more likely to align with your company's values and long-term goals. They have the opportunity to become deeply integrated into your company culture and team, fostering a sense of loyalty and commitment that can positively impact the team. 

2. Consistent Availability: 

Full-time employees are always available during regular working hours and can be more easily reached for impromptu meetings or discussions. This can facilitate better communication and collaboration within the team. 

3. Investment in Skill Development: 

By hiring full-time employees, you have the opportunity to invest in their skill development through training programs and continuous learning initiatives. This can contribute to the growth of your team's expertise and overall productivity. 

Cons of Hiring Full-Time Employees: 

1. Fixed Costs and Overhead: 

Employing full-time staff comes with fixed costs, including salaries, benefits, and office space. This can be a significant financial commitment, especially for smaller businesses or startups with limited budgets. 

2. Limited Scalability: 

Unlike contractors, full-time employees may not provide the same level of scalability. Hiring additional full-time employees may take time and resources, making it challenging to quickly adapt to fluctuating workloads. 

3. Risk of Skill Gaps: 

Depending on your hiring process, there's a risk of bringing in employees with skill gaps. This may require additional training or hiring to fill the void, impacting project timelines and deliverables. 


The choice between hiring contractors and full-time employees is not a one-size-fits-all decision. Your company may start with one strategy and pivot to another. Each approach comes with its own set of advantages and challenges, and the right choice depends on your company's unique needs, project requirements, and long-term goals. 

Another option is to outsource your development and hire a top tier full agile scrum team to build out your project as a cohesive unit. But that’s a topic of another blog post.  

SolutionStream helps companies determine the right strategy for hiring software developers and specializes in delivering top-tier talent both in the form of contractors and full-time employees. With access to resources around the world, SolutionStream ensures the cost and expertise of software developers match your business needs. Contact us today to build your team with software development experts.