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What Elon Musk Got Wrong About Contractors

Jake Northey

Jake Northey

Elon Musk made the headlines a few years ago when he made an announcement about consultants and contractors at Tesla. For people who have some experience with using or being a consultant, it may have resonated with them but they might not have the full picture of what made the news. 

In 2018, Elon famously said that any consultant or contractor that a full-time Tesla employee did not personally vouch for would have their access shut off from the company over the weekend. It was big news, and many people saw it as an attack on the consulting industry in general. This also put the reputation of Tesla employees on the line. 

That news left many people with the feeling of preferring employees over consultants, which I agree with; you must have great employees to build a great company. However, the takeaway many people had was more negative than it should’ve been. I want to clarify what Elon did and discuss some best practices for hiring and using consultants to get things done. 

When the announcement was made, Elon didn’t say “let’s get rid of all the consultants at Tesla.” He was really looking for what consultants weren’t being effective – the ones who were billing time and materials without getting anything done. At that time, Tesla wasn’t profitable so Elon was looking to make the company as efficient as possible. He wanted to identify and keep the good consultants that would help move the company forward. 

Everybody’s had an experience with a mechanic or some other service provider that didn’t meet their expectations. There are good service providers and there are bad ones. The same thing happens with consultants, there are amazing ones and you can get bad ones (and everything in between). 

3 Reasons Your Software Company Should Be Using Contractors and Consultants 

The ability to outsource work has many benefits that many leaders may not have experience with. As a leader with experience hiring consultants and doing consulting work, there are a few things that are unmatchable from full time employees to consultants and contractors.

1 – Expertise & Experience

When you bring in a consultant contractor, you’re bringing a level of expertise and experience that you might not already have in your company. You might be hiring a software development firm like Creative Mines which means you’re bringing a team in that’s done multiple projects and has learned a lot of skills across the industry. Companies like ours can bring a lot of knowledge to your company. Whereas your full-time employees may have gained the bulk of their experience at your company. So bringing fresh ideas really helps make the organization more effective. 

Companies may have general developers but need a team of specialists because they don’t have that expertise within their team. That team of specialists can add value right away by having that expertise. 

In the extreme case, I worked for a company in the FinTech space that was completely built by consultants and contractors. There was one individual owner and he was hiring out everything the company needed to contractors. It’s almost like using capital expenditures versus operational expenditures to build something as opposed to having employees. 

2 – Ramp Up and Down Quickly

The big thing about hiring people is that you can ramp up quickly. However, a lot of companies in the technology space right now are having issues finding and hiring good employees. Finding experienced employees is important, but they should also match your company’s core values. And all of that takes time. 

So by outsourcing some of this work, you’re now able to get a team ramped up quickly while taking the pressure off of hiring. This allows you to hire at the right cadence. You can wait to find the right people and then get them up to speed as they integrate with the consultants. This takes a lot of initial pressure off the employees. 

The value of using consultants and contractors is that it allows you to ramp up and down as needed. You can bring on additional teams for a year to get a project across the line and ramp them down at the end of that process. 

3 – Backup Experience You Can’t See

With the exception of independent contractors, consulting firms and software contractors have a whole team behind them. When you hire a consulting firm, you’re getting access to employees with additional expertise.

Even if you’re just hiring a full-stack developer, you might actually be getting senior-level experience behind that person. Oftentimes, full-stack developers will go back to their seniors to ask questions and get advice. In that case, the problem will be solved even better because they have the ability to do the work and the experience they can rely on within their organization. 

With all that said, full-time employees are still very important for a company. Companies are built on having great people. But great people can come from full-time employees and they can come from contractors. Software consultants and contractors are just as invested in your vision and goals as your employees and the good ones become part of your company and culture. 

Bonus Tip: Identity the Work to be Completed

When you’re using contractors and consultants, the best way to address the work that needs to be done is to identify one of two things: 

  1. Identify a very specific project that the contractor can do to improve your organization and move you closer to your goals. 
  2. Create a value stream by bringing on a group of consultants who will provide additional capacity to solve specific problems within the company on an ongoing basis. In this case, you may be looking to build additional functionality on top of an existing software product, and your current teams don’t have capacity to take it on. 

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