ShouldYouScaleYourTechTeamWithContractors?

Nearly every startup we have worked with has faced this dilemma…

Deciding when and how to hire engineers is a question that haunts startup founders. It's not a one-time dilemma either; it comes up repeatedly as your company grows. In today's market, with shorter runways and tighter budgets, the stakes are even higher. Not that startups needed more pressure.

I've been on both sides of this fence. In my journey as a founder and tech leader, I've hired full-time developers and I've hired contractors. Each choice has its place, but knowing which to pick depends a lot on where your company is and what it needs right now.

When you're just starting out, you might be low on funding and still trying to figure out if your product idea even makes sense. You need to build something quick to test your hypothesis—a minimum viable product. This is where contractors shine. They're great for getting something off the ground without the long-term commitment. It doesn’t mean you have to only work with them in the short term, but they aren’t expecting a long term commitment.

I remember when we launched Currikula. We had this idea for an edtech platform to facilitate research and writing for university students but back then we lacked the in-house team to build it. So we brought in a contract team. They helped us get our MVP up and running. Once we had validation and raised some funding, we started bringing on full-time team members.

But contractors aren't just for startups in their infancy. Even as you grow, you'll face high-priority projects that your team doesn't have the bandwidth to tackle. Contractors can plug that gap quickly.

However, there's a limit to how far contractors can take you. If your product is going to evolve—and let's face it, in tech, it always does—you need people who are in it for the long haul. Full-time developers are fully invested in your company's vision. They're the ones who will adapt your product as the market and customer needs change.

Full-time employees also build your company's culture. They're committed, they collaborate, they share knowledge. They become ambassadors, helping to recruit the next wave of talent. If you're working on something technically complex—like AI, cleantech, or fintech—you might need that deep, long-term commitment.

However, I think the world is shifting. The requirements for full time employees and the benefits of them are starting to evaporate. People want more flexibility in work. They want more freedom. Already we are seeing a reduction in the average length of time employees stay at one firm. Even manufacturing which used to be the gold standard for long term employment only averages 5.3 years per employee and in startups its even less at 3.3 years.

That’s just a long contract.

So how do you decide which to hire? There's no universal answer. It depends on factors like your funding, your runway, where your product is in its lifecycle, and the technical complexity you're dealing with.

In my experience, balance is key. Contractors offer flexibility. They can jump into projects quickly and bring specialised skills. They're adept at switching contexts because they have to be. Plus, good contractors often know other good contractors, which can help you scale your team faster. And that is not something to ignore. Being able to scale a team quickly and reliably is the closest startups can get to a cheat code in business.

But relying solely on contractors isn't a magic solution. You need a core team of permanent employees to maintain your company's culture and ensure continuity. Contractors can augment this team, often working in different time zones, sometimes even getting work done while the rest of the company sleeps.

Communication becomes crucial in this hybrid model. Without clear channels, you risk misalignment and mistakes. Working with contractors too many hours away can be challenging. In my experience, an overlap of at least four hours in the workday is ideal; it gives you enough time to communicate effectively.

Managing a distributed team isn't without its hurdles. You have to ensure consistent coding standards, maintain a cohesive vision, hit deadlines, and keep iterating on design and product. But I believe these are areas where AI will increasingly assist us. After all, many of us are already using AI note-takers. There are tools to help with code standards and AI “manager assistants” will be coming soon to check in on your progress or update the sprint.