A Guide to Hiring a Software Developer Contractor

Software contractor or full-time software developer? It depends. IT contractors are known not only for their flexibility, but also for their more streamlined, straightforward, and fast hiring process. Many software companies even call them game changers. But are they really that good? There are numerous factors to keep in mind when deciding on one of two ways of development to choose for your project (or a mix of them).

In this blog, we’re going to look closely at the 3 types of software developer contractors (independent employees, contract-to-hire, and agency-based contractors), types of engagement models to choose from, and benefits of working / potential risks. Eventually, you’ll have a step-by-step guide, detailed comparison, tools, and best practices, as well as real-life examples for hiring and managing them – more cost-effectively, reliably, and predictably for your project.

What Are Software Development Contractors?

Known as skilled professionals hired on a temporary / project-based basis to work on specific areas or tasks for a predetermined duration, they operate under a flexible contract arrangement. Although not part of the permanent workforce, they are valued for bringing in specialized skills, giving a helping hand to meet deadlines, or filling resource, knowledge, or technology gaps in in-house teams. Contractor roles can range from independent (otherwise, single developers on a freelance basis) to contract-to-hire programmers and professionals sourced through agencies.

Most commonly, you would want to contract developers remotely for their expertise in specific programming languages, technologies, or frameworks. They can easily work remotely, onsite, or in hybrid setups – depending on the client’s development team – and their roles are well-suited for projects looking for cost-effective staffing solutions, for example, to manage fluctuating workloads or for the lack of expertise unavailable locally.

Comparing Software Developer Contractors vs. Full-Time Workers

When building your development team or boosting the existing one, it’s important to choose the right employment model, based on your current needs, global business objectives, available time and resources. Contractors (as a form of staff augmentation) and full-time software specialists (who come into the office / work remotely or hybrid) each have distinct advantages and disadvantages. The table below highlights the key differences between these two types of hiring, for you to make a fully informed decision.

Types of Software Contractors and Engagement Models

Independent Contractors

Also known as freelancers, or consultants, they work directly with clients on the agreed terms and conditions. They handle their own taxes, contracts, project negotiations, and provide flexibility coupled with maximum cost-efficiency.

However, this type of contracting needs careful vetting before hiring and bears certain potential risks (misfitting skills and knowledge, especially during the trial period). Additionally, they might have multiple clients they are working on at the same time with forecasted or not too much forecasted involvement assumed – meaning they can be unavailable for rapidly-changing project requirements (for example, unexpected fixes / feature releases, ongoing support & maintenance, or massive troubleshooting activities).

Contract-to-Hire

These specialists are hired on a temporary contract with the option to transition into full-time employment after some period of time – combining low-risk hiring with cost-efficiency, and giving more flexibility to both parties of the deal.

This type of contractors still bears some potential drawbacks, for example, the lack of focus – as during the contract phase, the developer may not be as committed as a permanent hire. In competitive markets or specialized niches, the developers can find another, more interesting or highly compensated, opportunity before transitioning to full-time. Their performance may be also impacted by the lack of guarantees for becoming a good fit and getting permanent employment.

Agency-Based

Sourced and quickly handled by an external staffing vendor or managed service provider, these contract workers are fully taken care of – meaning the client will be free from vetting and administrative responsibilities.

Agencies often have access to a broad global pool of experienced developers with niche skills. The hiring process is more time-efficient, as the vendor has extensive recruitment and tech interviewing capabilities to pre-screen qualified candidates and present you only the best ones. But here the challenge is to choose the right vendor – look for specific criteria: years in the industry, transparent cost structure, relevant projects in their portfolio, available geography for hiring, approximate number of weeks to close a vacancy, and readiness to adapt to changing needs. Learn more about practical steps to implement team extension.

Contract to Hire vs. Agency-Based Contractors

Benefits of Hiring Contractors

The option to hire remote developers has become an increasingly popular solution for projects looking to meet dynamic demands, access to emerging technologies, or quickly fill the skill gap. Contractors offer a flexible, scalable, and cost-effective way to access specialized skills, deliver projects quickly, and reduce administrative burdens. Here’s a closer look at the top benefits and how they can become your advantages.

Flexibility: Upscaling / Downscaling Workforce When Necessary

Tech projects (particularly when it comes to custom software) often face fluctuations and a lack of predictability in workload. Contractors can help you scale the workforce up during peak application development phases and scale down once the milestone is completed. This flexibility ensures you can manage resources efficiently without overcommitting to permanent hires – and it’s particularly efficient for short-term projects or companies operating in industries with seasonal demand.

Cost Efficiency: No Overhead Costs Like Benefits, Equipment, Termination

Unlike full-time employees, they typically don’t require benefits like health insurance, retirement plans, or paid leave. You can also save on equipment costs, as they typically work remotely and use their own devices. As you pay only for the work performed, your project will be able to allocate resources more effectively, focusing budgets on essential operations, innovation, or faster delivery.

Specialized Expertise: Access to Hard-to-Find Skills / Emerging Technologies

Remote IT contractors can often bring in highly specialized skills, technologies, or hands-on industry experience to the table, which may not be available in-house or even locally. You can tap into niche expertise without committing to a long-term relationship, accessing niche expertise and allowing your project to stay competitive in the industry.

Global Talent Pool: Hiring Top Talent Worldwide with No Barriers

Today, the rise of remote work allows companies to tap into a global talent pool, giving access to top-tier expertise from around the world. This allows businesses to find the best fit for their specific project needs, regardless of location, get diverse perspectives, and use innovative tech sets unavailable so far.

Time Savings: Quick Onboarding with Minimal Training to Deliver Results

Contractors are often hired for their readiness to deliver right from day 1. They join your existing team with the necessary skills and experience, minimizing onboarding time and eliminating the need for lengthy training programs. This hiring and onboarding speed can make a critical difference in fast-paced industries where time-to-market is a key success factor.

Challenges and Potential Risks

While hiring software developer contractors can offer numerous benefits for business, you must also be aware of the challenges and potential drawbacks that come with such arrangements. In the worst-case scenario, these risks can impact productivity, team dynamics, and long-term project success. Below are the key challenges to keep an eye on and some practical solutions.

Lack of Loyalty: Contractor’s Attention Is Split for Multiple Clients

Given that when you hire an independent contractor, he doesn’t work for one client at a time – you will face slower response times. You can also deal with lower commitment, as they might not care as much as full-time employees who focus solely on your project. This could be a project (startup) to contract software developer on a freelance basis, for example, to build critical back-end features for their MVP. However, the contractor is also working on two other projects – and everything ends up with missing deadlines, delaying the startup’s launch date, and potential issues with shareholders.

Solution

Hiring exclusively (negotiating exclusive contracts where the programmer commits to only your project during the contract period) is a good way to get a focused approach. Setting clear expectations, deliverables by the deadline, and communication protocols can also help you prevent the lack of loyalty upfront. Additionally, you can encourage the contractor to prioritize your project by offering competitive compensation or performance-based bonuses.

Knowledge Transfer: Risk of Losing Critical Information

Contractors often work on short-term projects, and when they leave, there’s a risk of losing critical knowledge about the project, system architecture, or workflows. Without proper documentation, future software engineers or teams might otherwise struggle to pick up where the contractor left off. For example, a fintech project gets a remote programmer to implement a new API for their payment processing system. Once delivery is completed, the contractor leaves – but with no detailed documentation available. Months later, when the time comes for another update, the internal team will struggle to understand the implementation, eventually delaying critical product releases.

Solution

To prevent the risk of losing critical information when a contractor leaves, you should require to document the code, workflows, and product design decisions. You can use tools like Confluence, Notion, or GitHub to keep all data in a single source of truth. Consider team mentoring and pairing remote programmers with your in-house software specialists for code reviews and knowledge-sharing sessions. Also, don’t hesitate to ask your contractors to record video walkthroughs of their work using tools like Loom or Zoom, which can be referred to in the future.

Skill / Cultural Misfit: Incorrect Evaluation of Your Candidates

When software developer contractors do not undergo a rigorous hiring process, this can result in skill mismatches or cultural misalignment, which impacts the overall quality and team cohesion – not to say that you’ll be paying with time and resources. However, it can be hard to handle an all-around skill evaluation and verification for candidates, unless you have a fully stacked recruitment team in-house or at least several experienced tech interviewers.

Solution

Conducting coding tests or trial projects to evaluate the contractor’s skills before hiring is the way to go. Tools like HackerRank or Codility can be useful for skill assessment. You should also review past projects, client testimonials, and GitHub repositories to gauge the contractor’s experience and quality of work. And don’t forget to evaluate soft skills – communication and teamwork ability, especially for contractors who will be integrated with your in-house working environments.

Step-by-Step Guide to Hiring Software Development Contractors

To ensure success, you should follow a structured process that helps to find the right person, set clear expectations, and maintain efficient workflows – to eventually get the expected performance. The following steps ensure you boost your in-house team under minimal risk and with maximum efficiency.

Step 1: Set the Project Scope, Define Your Needs

Before you start searching for a contractor, clearly define the current project requirements, global business goals, and final deliverables. Outline the specific technical skills and experience you will be looking for to achieve the objectives. Define the scope, project milestones, deadlines, and key performance indicators (KPIs) to measure success over time.

Setting a clear project scope and realistic expectations ensures you engage cutting-edge software developer contractors with the right expertise and technologies, allowing both parties to align from the start.

Step 2: Decide on Budget and Payment Structure

Determine your hiring budget based on the scope, duration, and complexity of the project. Consider whether you’ll pay the contractor hourly, per agreed milestone, or on a fixed-price basis. Research market rates for specialists with the required skills in various regions to ensure competitiveness and ensure your budget expectations are realistic.

Having a well-defined budget will help you prevent overspending, and help attract qualified candidates who meet your financial expectations.

Step 3: Create Detailed Job Listings for Posting

Write a comprehensive job description that outlines your project requirements, the skills / technologies you’re looking for, years of experience, the duration, and the expected outcomes. Include specific tools, programming languages, and frameworks. Also mention time zone or location preferences, and collaboration tools used by your team.

Creating a detailed, transparent, and well-structured job posting will help you reach out to the right candidates and reduce the probability of mismatched applications.

Step 4: Check Applications, Screen and Review Portfolios

Once you have several applications coming in, screen your potential candidates by evaluating their resumes, portfolios, and work samples. Look for relevant experience (this could be a past project in the industry similar to yours), proven technical proficiency in the required technologies, programming languages, or frameworks you need to bring in. Create a shortlist of the most promising candidates who have the best chances to align with your project requirements.

Running a thorough review of portfolios ensures you filter out unqualified or mismatching candidates early, eventually focusing on those who have delivered quality and highly relevant work in the past.

Step 5: Run Technical Interviews with Practical Assignments

Even great-looking candidates should still be interviewed thoroughly. Schedule interviews with shortlisted candidates to assess problem-solving abilities, technical expertise, as well as communication skills, and cultural fit. During interviews, you will have a grasp of their work approach, development process, availability, and commitment level. Use Tools like HackerRank, Codility, or TestGorilla to speed up technical tests or coding challenges.

Handling interviews and technical tests will help you ensure the contractor possesses the required technical skills, confirms the industry experience, and can communicate effectively within your in-house team. However, it may be challenging to run a proper tech evaluation without an experienced technical interviewer who has the right skill set and practical knowledge.

You can also run reference checks by contacting previous clients or employers listed as references. Ask about the reliability, ability to meet deadlines, and overall performance.

Step 6: Draft Your Contract Agreements and Take Care of Onboarding

A well-thought-out contractor agreement will help you ensure both parties are aligned on expectations, reducing potential misunderstandings and legal risks. Contract types are different. But if you want to deal with a fully predictable employment, you should sign a contract that clearly defines the terms of engagement. And don’t forget about a non-disclosure agreement.

• Original Scope of Work. A detailed description of the tasks and deliverables.
• Expected Timeline. Project duration, milestones, and deadlines.
• Payment Terms. Payment structure, bill rate, and invoice schedule.
• Confidentiality. Protects your intellectual property and sensitive data.
• Termination. Rules and conditions of the end of the contract early.

Once you contract software developer remotely, you should ensure a smooth and efficient onboarding process. Share a project kickoff document that includes timelines, deliverables, communication guidelines, and team responsibilities. Provide access to the tools, systems, repositories, and documentation needed to get down to work immediately. Make a friendly introduction to the team, workflows, and project management software used by your team.

Don’t forget to assign a point of contact who can address any questions or blockers. Doing so, you will help your new employees hit the ground running, reducing delays and improving efficiency from day one.

Best Practices & Tools for Managing Your Software Developer Contractors

Managing your new employee remotely relies on a mix of robust tools and well-defined, clear, and transparent processes. The following best practices and tools will help you maintain accountability, ensure high performance, and minimize bottlenecks.

Project Management

PM tools play a crucial role in organizing tasks, tracking progress, and maintaining transparency between your team and remote contractors. Tools like Jira, Trello, Asana help to create a centralized workspace where tasks can be assigned, monitored, and updated in real-time. Make sure to always provide your contractors with clear deadlines, priorities, and instructions using tools – this will give them all the necessary information to stay on track. Also, allow them to log the number of hours per week, providing visibility into how much time is spent on each task. This is particularly recommended for hourly contractors.

1. Jira. Use this tool to break the project into epics and smaller tasks, assigning deadlines and priorities. It’s ideal for software projects following Agile methodologies, allowing to create sprints, track bugs, and manage development workflows.
2. Trello. A simple, visual tool you can involve in task management and planning through interactive boards. It’s perfect for smaller projects or mixed teams looking for a lightweight solution to organize workflows and track progress.
3. Asana. This tool is recommended when you’re managing larger projects with multiple remote employees. It offers timelines, more complex task / subtask dependencies, and project overviews to ensure nothing falls through the cracks.

Communication

Effective communication is critical for all, both your in-house team members and remote contractors, especially when working across different time zones. Reliable tools help maintain alignment, reduce misunderstandings, and foster collaboration. Make sure to establish communication protocols from the outset – decide on daily check-ins via Slack, weekly video meetings, and real-time updates for urgent matters. Encourage everybody to be responsive during agreed hours – this would be particularly helpful when working across different time zones. As it was already mentioned, you should ask to record video of problem-solving or other specific activities that need attention. The same is for having detailed documentation for the future reference.

• Slack. Use this simple real-time messaging tool to keep communication quick and organized. You can use customizable dedicated channels for different projects, specific areas of development, updates, or teams, ensuring all discussions remain accessible and searchable for everybody.
• Google Meet / Microsoft Teams / Zoom. Use one of these tools for video calls, virtual meetings, and technical discussions. Regular video conferencing will help you clarify project expectations, address roadblocks, and maintain a personal connection between remote and your in-house employees.

Accountability & Quality

Combine accountability tools with a supportive approach. They often perform better when expectations are clear but accompanied by collaboration and constructive feedback. The following best practices will help you maintain accountability and ensure high performance.

• Set Clear Deliverables and Deadlines. Break the project into milestones and smaller tasks with specific deadlines. Contractors perform best when expectations are clear, timelines are realistic and set upfront.
• Introduce Performance Metrics. Define KPIs such as on-time delivery, code quality, and task completion rates. Track how often the deadlines are met and the number of revisions per deliverable to ensure efficiency.
• Run Code Reviews / Quality Checks. Schedule code reviews with in-house team or senior engineers to assess the work. Use platforms like GitHub or Bitbucket to review code for functionality and efficiency.
• Encourage Open Feedback Loops. Provide constructive feedback to help contractors improve and address issues early. Encourage everybody to communicate any blockers or areas where they need additional support.

Alternative to Hiring Software Contractors Independently

Handling the whole screening, tech vetting, hiring process are daunting and time-consuming tasks. Not to mention the paperwork, administrative management, and potential hiring mistakes (they may cost much more than just time and money). At Mobilunity, we specialize in helping clients across various industries (fintech, e-commerce, healthcare, SaaS, and many more) contract developers and best software consultants tailored to their specific needs. With a proven track record and global recruitment capabilities, we can take the complexity out of hiring.

Bottom Line

So, a contractor or a full-time worker? It’s up to you to decide. Hiring a software developer contractor or a dedicated remote development team can bring unparalleled flexibility, specialized expertise, and cost-efficiency to your project – yet, with proper legal, taxation and organizational matters fully resolved. Whether you’re looking for a freelance software developer, contract-to-hire jobs, or agency-based professionals it’s important to understand the unique benefits and potential drawbacks of each. By leveraging the recommended tools (project management, communication, quality control), clear processes, and a thorough hiring approach – you can ensure they seamlessly integrate into your team and deliver expected results.

Written by:

Bohdan Govdya

Market Researcher