Contract-to-Hire Vs Direct Hire: What to Expect?

By Sthitaprajnya Panigrahi Monday, 18 October 2021

Currently the organizations are going through challenging times and are seamlessly engaged in recruiting the required resources. Since recruiting new candidates is not only a time-consuming process, but can also be onerous, depending upon the professional requirements and the level of experience that is obligatory in a potential candidate, most of the organizations get confused between which strategy to opt during the recruitment, Contract-to-Hire or Direct Hire. During the hiring process, it’s vital to comprehend the major distinctions between contract-to-hire and direct hire, as both the methods are premeditated to suit different needs.


Placing the employees in a short-term position for a set period of time, contract-to-hire offers the option of being employed full-time when the contract ends. The brief contractual engagements allow both the employer and employee with the prospect of a trial period before pledging to full-time employment.

Direct Hire

In direct hire, a candidate is offered with a job from the client company, where the job profiles typically encompass the permanent positions within the company. The employee who is recruited via direct hiring is bestowed with all the company benefits and remuneration.

What to Expect from Contract-to-Hire?

Opportunity to Evaluate the Worth

Contract-to-hire procedure gives the organizations a chance to evaluate a potential hire in action without guaranteeing to put them on workforce. There is also less risk involved on the employer’s part, enabling them to evaluate cultural fit and efficiency in the particular job profile before assuming the supplementary costs of a new full-time hire. Apart from that, it also gives the candidate a chance to judge the organization and role, lowering the possibility of the wrong candidate ending up in a position where they’re not satisfied or happy, ultimately hampering their productiveness.

Quicker Interview Process

Although functioning with a staffing firm is an established way to lessen the organization’s time to hire the direct recruits, the impacts are even faster for contract-to-hires. Coming with a shorter interview process, contract-to-hire recruiting tends to accelerate the hiring cycle. 

Benefits of Controlled Costs

Since contract workers often continue staying on the staffing agency’s payroll until the organization or company decides to hire them, contract employees are paid only for the hours they work. Since, they do not go on benefit plans or direct salaries until they become a direct employee, this can certainly help in controlling the costs. 

Adapting with the Uncertain Timelines

While dealing with an uncertain workload or timeline, contract-to-hire is a good option as it gives the opportunity to get someone to fulfil your immediate need with the option to keep them on full time if the demand for their skills persists within the industry. 

What to Expect from Direct Hire?

Promotes Loyalty

Direct-hire recruiting allows the new employees to feel like a “part of the team” from day one which not only promotes a sense of faithfulness to the company but can also lead to greater retention over time. Certain positions such as the leadership roles and those positions where an employee spends a lot of hands-on time with the customers, aren’t ideal to a huge amount of turnover.

Enables Speed

Working with the direct hire employees, enables the organizations to fill permanent and full-time job profiles much swiftly meanwhile ensuring the productivity to remain high and downtime to a least. Providing the organizations with the advantage of being able to respond quickly to variations in the marketplace and track down niche skills much earlier.

Attracting Stronger Talent

Offering much prolific job security than a contract-to-hire, the direct hire positions can be more attractive for the talented candidates. This holds particularly true for the passive candidates in need of more incentive to consider leaving their current job than those who are actively in the quest of jobs.


As the direct hire candidates go straight into the organizations’ payroll, any type of extra cost markups related with the staffing agency can be avoided by keeping the new hire on their payroll. Although the flexibility is much less in this case, paying a one-time fee to the recruiting agency is naturally a more cost-effective decision. Direct hire recruiting is a great option while recruiting permanent staff, as it not only finds the fit talents fast but also appeal the candidates who are more devoted towards long term commitments.  


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