Temps are NOT cheaper than permanent employees

I've never understood the statement that temps are less expensive and more cost-effective.

Yes, you don't have to give them PTO or benefits. Yes, you don't have to pay unemployment taxes or social security for them. But someone DOES. And ALL companies are in business TO MAKE A PROFIT. So, if a consulting company is paying someone to do a temp job for you, they're paying that person a reasonable wage that's in the same ballpark as the employees. They're giving them PTO or paying them a higher wage so that they can afford to take time off or get them through the gaps between temp gigs. They're offering that person benefits even though the employee is paying 100% of the costs. They're paying the unemployment taxes and social security taxes. AND they're making a profit, so that means in total dollars, Cisco and other companies are paying more per hour for that person's work than if they were employees.

But, because of accounting and dividing things into various categories, it's considered less of a liability to hire a temp than an employee. I get the flexibility of temps, where you can let them go "just because" instead of having to justify firing, but that flexibility comes with costs. Those costs are a higher cost / man-hour and less efficiency. With the constant churn of temps, you have to get a computer, a network account, an email account, access to various systems & tools, and get the temp up to speed on how/where to find documentation on processes and procedures. And then you have to revoke all those accounts/accesses once they leave and turn in the computer. How many man-hours are wasted on that, especially when all the temps you bring in all do basically the same job. Why not just have an employee do that work instead of a constant churn of temps?

The way that Cisco has been going though document repositories over the past 5 yrs, good luck keeping things documented so the new guy can hit the ground running as they say. Those little details that you only mess with once every 3-5 yrs as you upgrade systems can easily get lost when the documents move from Cisco wiki to WebEx Social to Confluence wiki to whatever is next. But that employee you let go who'd gone through several upgrades remembers that there's a few little "gotcha's" that get overlooked and goes searching for the old documents in his/her email. Too bad that email's now gone, along with all the notes on his/her laptop.

Bumped from @OmkzWaI-1vwc for visibility.

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Temps are always paid less than FTEs of similar experience.

BS. I sometimes made more gross wages as a temp than I did as an employee. After the higher cost of benefits, and the loss of pay during the year-end furlough, the unpaid company holidays, etc, my take-home ended up being about the same.

Although, if you want to consider approx $500 less in annual pay, then maybe I was paid less. But Cisco certainly paid more to the consultant agency than they paid me, so again, temps cost more than employees. It's just accounting when you say temps are not liabilities and employees are due to accrued, but unpaid PTO. They're more easily hired & fired, but that's not a factor to "cost".

Temps can be a cost-effective method to improve the morale of management. There is nothing like a daily a-- kissing from a temp living paycheck to paycheck.

Temps are 40% cheaper than FTEs. Temps are easy to offload. Cost of Temps vary from country to country. Temps are always paid less than FTEs of similar experience.

I started out as a red badge and worked as many hours as my blue badge team mates. ... As a red badge, I got zero OT, no bennies, nor PTO and could've just worked a 40 hour week but the work would not have gotten done. ... One of my teammates who had a high hourly was adamant about ONLY working 40 hours. Props to him but that doesn't fly with all teams.

It really depends on the team. Working a red-badge more than 40 hrs / week and not paying OT is a lawsuit waiting to happen.

My first time as a red badge at Cisco, I wasn't allowed to work more than "40", but there were lots of times that I did, and I took "comp" time later on to "balance the books", so to speak. It was pretty much an unwritten/unsaid rule that you worked to get stuff done on time, took off whatever time you needed, and just reported 40 hrs/week every week regardless of what you worked.

My second time as a red badge, on a different team, the manager was adamant that I could NOT work over 40. I couldn't work nights or weekends when maintenance work was happening even if I took a day off in the week so that the actual hours worked was only 40 hrs. Both times, I worked in IT and most of the critical work occurred outside of business hours.

Because of the way Jabber worked, if your laptop was on/awake and was connected to the Internet, you were visible in Jabber. I was really bad about changing my status to away or DND or even quitting it--mainly because I didn't want to lose my current chat history--and if the manager saw me "online" at night or during the weekend when the rest of the team was working, he'd contact me and confirm that I was NOT working. I usually left my laptop signed in because of all the mailing list emails I got. I wanted them to go ahead and get sorted into folders all night/over the weekend instead of crashing Outlook on Mon morning. Even after 12 months, that manager would contact me on Jabber to tell me I better not be working.

I hated it, because there was work to do, I was capable of doing it, and the more hands working the less time it takes to complete the work, but my hands were tied. I was usually available to "consult" on issues and only worked in the event something went wrong and made sure that I took "comp" time and that the manager knew it so that he stayed out of trouble, I stayed in his good graces, and we got the work done.

I do think that, because contractors don't get PTO, and have to take unpaid time at year-end, that they should get paid for hours worked over 40. Or get to take "comp time" when ever they need it to balance it out.

I started out as a red badge and worked as many hours as my blue badge team mates. I transitioned to a blue badge and tripled my salary, whilst still working the same way (10 hour days). As a red badge, I got zero OT, no bennies, nor PTO and could've just worked a 40 hour week but the work would not have gotten done. Trust me when I say Cisco's teams have a wide range of hourly contractual rates. One of my teammates who had a high hourly was adamant about ONLY working 40 hours. Props to him but that doesn't fly with all teams. I've experienced high hourlies and low. Cisco is working hard to lower the number of contract vendors and it is NOT to the red badge population's benefit, nor Cisco's. Not everyone is as hungry as me.

Many of the key/talented engineers in my team moved out within last 3 months! And the rest of those who are still here are preparing their resumes to jump out, so let them bring temp/new grad/unskilled folks and then complain about product quality, delayed releases.....

A team of mercenaries won't die for each other. Pre-2000, nearly everyone was FTE, and we sacrificed big time for each other. We all had skin in the game.

So, products come out half-baked pieces of ...

In terms of total cost contractors are usually cheaper to the same price as full-time employees.

Not all contractor companies actually provide PTO. In fact, at least one of the larger contractors for Cisco does not. I always felt bad when I had a contractor that had to take time off for illness, family emergency etc, because I knew they were not getting paid. From what I've seen their Health Care plans also s--- the big one compared to Cisco's.

Additionally because getting rid of a contractor requires nothing more than a phone call and whatever termination period is in the MSA or SOW they are much more fungible as resources. No severance pay outs, no HR reviews, no legal reviews just a phone call. Hiring contractors is also a lot easier. You can get a contractor approved in a few days. Getting a req approved takes weeks.

That was my point. In some cases, it might be cheaper, but in my experience it was always the same or more expensive to have me as a contractor wherever I worked than it was as an employee.

Sure, I didn't get PTO (usually), but I always figured out what I would, or wanted, to make as an employee, figured it into a weekly wage, and increased my rates by the amount of 2-3 weeks so I could afford to take the time off. I got time off, but my pay for that time was spread across 12 months and I had to have sufficient funds to cover the lack of pay when I did take my time off. But ultimately, I got paid the same.

Ditto for health benefits. Yes, they bit the big one and were very expensive, but again, my wages were high enough that my take home pay was the same.

The biggest gain that Cisco, and other companies, get out of contractors is the ease of hiring and firing. Much faster to get approvals, easier to terminate and cheaper to terminate too. But that flexibility does not always equate to cheaper, which was my main point.

I learned a lot over the years as I got more experience as a contractor in how to negotiate my wages/benefits. My first time, I asked for and received 2 weeks PTO. But the fine print said I couldn't take it until I'd completed 6 months with the company. It's rather hard to take your earned PTO after 6 months when it's only a 6 month gig. :-( The next gig, I found out that the vendor was keeping 70% of the bill rate from the client and I was getting taken to the cleaners since many of my co-workers were getting 50-60% of the bill rate. I've also discovered that it's not worth asking for PTO, as the vendor usually decreases the hourly pay by enough to cover that time off, and you usually end up losing more over the length of the gig than if you'd taken the higher rate and just taken unpaid time off.

Pay bananas. Get monkeys.

In terms of total cost contractors are usually cheaper to the same price as full-time employees.

Not all contractor companies actually provide PTO. In fact, at least one of the larger contractors for Cisco does not. I always felt bad when I had a contractor that had to take time off for illness, family emergency etc, because I knew they were not getting paid. From what I've seen their Health Care plans also s--- the big one compared to Cisco's.

Additionally because getting rid of a contractor requires nothing more than a phone call and whatever termination period is in the MSA or SOW they are much more fungible as resources. No severance pay outs, no HR reviews, no legal reviews just a phone call. Hiring contractors is also a lot easier. You can get a contractor approved in a few days. Getting a req approved takes weeks.

The real reason Cisco didnt want to change it's due to "kick back". It's from first level manager to all the way to VP. Again, not all managers are bad. But some of them do get a big nice $$$$ as a gift card. Sometimes really wish the CEO can do something about it. But I think his hands are tied due to other VPs are involved.

Investors don't like to invest in companies with a huge headcount. Only FTEs are included in CSCO headcount whenever CSCO files its earnings report. Currently there are about 73k FTEs and 55k contractors globally at CSCO.

I work at one of the contractor firms. It is absolutely more financially favorable to Cisco to leverage contractors, especially in unstable functions. WIth uncertainty about revenues and profits, a contingent workforce gives Cisco all the flexibility it needs, and it can (and does) pinch contractor firms for rate reductions - there is a massive effort underway to go to a smaller list of providers, who they can use their big Cisco leverage against, to drop rates, get rid of boutique contractors who are more expensive, and push for rebates or kickbacks from the survivors. Not to mention they don't need to go through the HR nightmare of LRs, severance packages and the like. From a compensation view, it's pretty much a wash. Contractors don't all offer benefits or PTO, so they can pay the person a bit more, but compared to a permanent employee the costs are similar to slightly favorable for Cisco.

It's tricky, but I think Cisco has done the math, and figured the cheaper option. At least in the short run.

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Temps are NOT cheaper than permanent employees

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