Consulting vs. Contracting: What’s the Difference? 🤔
- Remote Working & Freelancing
Explore the differences between consulting and contracting, along with the unique landscapes of each business model and their benefits and drawbacks.
Deciding on a suitable business model for your project is more than just a coin flip. Considering consulting versus contracting — and deciding which is better for you — is an intricate dance that involves understanding your unique needs, the benefits of each approach, and the potential pitfalls you could encounter.
Below, we’ll explain the divergent worlds of consulting and contracting to empower you to make intelligent decisions. We’ll also outline each approach’s benefits and drawbacks to help you determine that best suits your business requirements.
What are consulting and contracting? 📊
In the cityscape of business jargon, there are two prominent skyscrapers –– consulting and contracting. While these buildings might seem similar from the outside, we can see the structures’ distinct architectural divergences if we zoom in.
Companies often employ contractors (or freelancers) as skilled workers to accomplish specific tasks. For example, a brand may hire a web designer to rock specific project deliverables, such as a new website or web application, on a finite timeline. Working this way has considerable benefits, including long-term advantages for budgets.
Consultants, on the other hand, step into more expansive roles. They lend their expertise to a broader range of tasks, and their insights are often instrumental in shaping strategies, solving complex problems, and refining processes for businesses of all shapes and sizes. For example, an organization may hire a consultant to optimize accounting workflows.
By understanding these fundamental differences, you can better assess which structure aligns with your business goals.
What does a consultant do? 📁
A consultant is a guide through the complex wilderness of business operations. These professionals leverage their impressive knowledge and skill set to perform specialized tasks. They often possess many years of industry experience, helping them pursue a niche role. Businesses typically hire consultants to analyze, advise, and strategize, as well as to offer fresh perspectives to tasks and inspire teams to creatively execute operations.
Like contractors, many consultants are self-employed (and many are digital nomads). Hired for big-picture thinking, they offer a bird’s eye view of the business landscape, including patterns, opportunities, and obstacles less visible to those in the trenches. From boosting efficiency and offering advice to streamlining processes and managing change, consultants navigate shifting terrain, steering an organization toward its desired destination.
What is a contractor? 💻
Freelancers, or contractors, are like expert artisans. Typically hired to complete specific tasks or projects, they offer honed technical skills and focused experience for achieving clearly defined goals. Freelancers, as the name implies, don’t work for companies as full-time employees. Instead, they’re self-employed and work directly with clients.
This business model offers flexibility, allowing companies to hire specialist talent on demand. For professionals, contracting provides the opportunity to craft a portfolio of varied experience across multiple industries and business sizes. For instance, a contractor could work as a freelance copywriter for an SEO agency or a graphic designer for a social media influencer.
Consultants versus contractors: The key differences 🔑
Now that you know what consultants and independent contractors do, it’s time to dig into their differences. While they’re both hired by businesses as experts to accomplish specific goals, how they do so differs significantly.
Here are some essential distinctions between the roles:
- Scope of work: Consultants often have a broader range of work –– they examine tasks, strategize unique execution techniques, and advise on overarching procedures. Independent contractors, however, focus on narrower tasks or projects.
- Depth of involvement: Consultants immerse themselves in business operations to understand the organization’s culture, challenges, advantages, and more. Contractors, on the other hand, operate with a degree of separation, focusing solely on their assigned workload.
- Duration of engagement: While contractors and consultants can work on temporary assignments, the latter are often hired for longer-term work. Contractors are generally employed to complete specific tasks, after which their contract ends.
- Industry knowledge: Consultants often solve complex, high-level problems that require an in-depth understanding of their niche, while contractors offer a less nuanced level of expertise.
- Employment relationship: Consultants typically maintain a strategic advisory relationship with companies, sometimes influencing essential decisions. However, the relationship between companies and contractors is more transactional.
- Pay structure: Consultants charge businesses and clients according to the value of their advice, which may be a fixed fee or an hourly rate. In some cases, contractors are paid based on task completion as outlined in their contract.
- Learning and development: Consultants learn from varied client experiences and can transfer knowledge to organizations, in turn contributing to their professional development. Contractors tend to develop more profound expertise in their specific skill set.
Why hire a consultant? 📈
The business world constantly evolves, and many companies turn to consultants to help them navigate uncertain waters. Here are eight key reasons why an organization might choose to hire these professionals:
- Expertise: Consultants are subject matter experts, and companies can leverage this knowledge to resolve complex issues or devise and implement new strategies.
- Objective perspective: Because consultants are external to the company, they offer unbiased, objective viewpoints. In many cases, they set fresh eyes on a business problem and develop an innovative solution that works or even suggest a compatible software to help resolve the issue.
- Change management: Consultants implement strategies and processes to help manage change, especially during transitional periods for businesses.
- Cost efficiency: Hiring a consultant is often more affordable than recruiting a full-time employee, especially for short-term projects or tasks that require specialist knowledge.
- Resource flexibility: Consultants swoop in (and sometimes save the day) when a company lacks the internal resources or skills needed. This saves time on training and development.
- Project management: Many consultants are skilled project managers who can help keep large projects on track, on time, and within budget.
- Knowledge transfer: Beyond providing solutions, consultants help enhance the skills of in-house teams through education. This is just one-way consultants leave lasting impressions on their clients.
- Risk mitigation: By using their industry experience and broad perspective, consultants help companies identify potential risks and develop mitigation strategies. They’re key players in keeping many businesses protected.
Why hire a contractor? 👔
Independent contractors offer a unique combination of specialized skills, flexibility, and cost-effectiveness. These factors are just a few reasons why so many companies, ranging from start-ups finding their footing to established corporations expanding their operations, hire these professionals.
Here are eight additional reasons why companies choose independent contractors:
- Specific skills: As industry experts, contractors bring skills to the table that might not exist within the company’s current workforce.
- Flexibility: Contractors offer unrivaled flexibility. Companies can recruit them as needed, adapting quickly to changes in workload or project scope.
- Cost-effectiveness: Hiring a freelancer can be more cost-effective than finding and hiring a full-time employee, particularly for short-term projects.
- Speed: Because of their nuanced technical skill set, freelancers can jump into new projects regularly, allowing them to get up to speed quickly and reducing time wasted on onboarding.
- Project-based work: Independent contractors are ideal hires for project-based work. Once the project is completed, companies can easily conclude the contract and reach out to these professionals as and when needed.
- Reduced overhead: Contractors typically don’t require office space, benefits, or long-term resources, saving companies some serious cash on overhead costs.
- Risk reduction: By hiring a freelancer, companies can test out new roles or projects in a low-risk way.
- Fresh perspective: Like consultants, contractors offer new project viewpoints due to their varied experience.
Hire Freelancers on Contra ✅
Business is a dynamic voyage, and choosing between hiring an independent contractor and a consultant is like selecting a suitable vessel. Each offers unique skills, but their roles, areas of expertise, and levels and methods of engagement significantly differ. Ultimately, your choice depends on the needs of your specific project, but these questions might help you decide, too.
Whether you need strategic guidance or task-specific expertise, Contra’s here to help. Experts in matching businesses with freelancers, our commission-free platform can be the compass guiding your company to success. Hire a freelancer today.
