Short answer: hire people whose knowledge is part of your company's long-term, day-to-day operations. Contract people you need for a project, a peak period or a rare specialism. Hiring IT specialists is slow, expensive and uncertain, especially for an SME. So in most small and mid-sized companies the right setup is a mix: one or two internal people who know the company, and external specialists who come in when needed.
How big is the shortage?
According to Eurostat, 57.5% of EU companies that looked for IT specialists in 2023 had trouble filling the vacancy. The difficulty grows with company size: 68% of large companies, 59.2% of medium-sized ones and 53.4% of small ones. The most common reasons: too few applicants, a lack of qualifications and high salary expectations.
Only 14.04% of small companies employed any IT specialist in 2024, against 78.44% of large ones. In 2023, only 6.23% of small companies even tried to hire one.
IT specialists made up 5.0% of total EU employment in 2025, and the EU's Digital Decade target of 20 million by 2030 is still far off. The shortage isn't going away. An SME rarely wins on salary or career prospects against large companies, so it's worth being realistic about which roles it can fill permanently and which not.
What does it cost?
Salaries in IT are well above average across Europe. In Hungary, for example, statistics office data for 2025 put average gross monthly earnings in the IT sector (telecoms, programming, IT consultancy, computing infrastructure) at about 1.64 times the national average, and experienced specialists earn considerably more.
But salary is only part of the cost. The full cost of a hire includes:
- employer's social contributions;
- recruitment (adverts, headhunters, managers' time in interviews);
- onboarding, until the person is fully productive;
- equipment, licences, training;
- the risk that they move on after six months.
Time to hire is a cost too. According to SHRM, the US-based HR professional body, the median time to fill a non-executive role is 39 days, and in IT the shortage often makes it longer. Until then, the work either stops or someone else does it on top of their own job.
When to hire
- When the knowledge is part of your competitive edge: developing your own product, knowing your key systems inside out.
- When the work is long-term and continuous, not project-based.
- When deep knowledge of the company, its processes and people is needed: the internal IT person who knows who uses what and why.
- When knowledge must stay in the company rather than with an outside partner.
When to contract
- For a project: an ERP rollout, a migration, a development that runs for months and then ends.
- For a rare specialism: a security audit, database optimisation, AI integration, which an SME needs for a few weeks a year.
- For a peak: when you temporarily need more capacity than the internal team has.
- For speed: when there's no time for months of recruiting.
- To find out: when you don't yet know exactly what expertise you'll need long term, and want to learn before committing.
A simple decision table
| Question | Lean towards hiring | Lean towards contracting |
|---|---|---|
| How long is it needed? | for years, continuously | for weeks or months |
| How specific is the knowledge? | your own systems and processes | general or rare specialism |
| How fast is it needed? | there's time to recruit | now |
| How predictable is the workload? | steady | fluctuating, project-based |
| Who should own the knowledge long term? | the company | documented handover is enough |
If most answers fall in the left column, hire. If in the right, contract. If mixed, use the combination described below.
Time and materials or fixed price?
A contracted specialist or team can be paid in two main ways:
- Time and materials (hourly or daily rate): flexible, you pay for work actually done, and the task can become clearer along the way. Costs are less predictable.
- Fixed price: a known cost for a precisely described result. Every change needs separate agreement, and the supplier prices in the risk.
A study of 237 software development contracts at a bank found the choice depends on the project's uncertainty, complexity and specificity, not just its size. Put simply: if it can be described well and is stable, fixed price works; if it becomes clearer along the way, time and materials.
The mixed setup
In most SMEs the best answer isn't either/or:
- one internal owner who knows the company, is responsible for IT and works with external partners;
- one regular external partner for operations and day-to-day support;
- contracted specialists or teams for projects and rare specialisms.
The point is that decisions and knowledge stay with the company, while capacity stays flexible. In a 20 to 50-person company the internal owner often isn't a full-time IT person, but a technically minded colleague or manager who keeps in touch with external partners. What matters is that someone in the company understands what's going on and can make decisions.
How to integrate a contracted specialist
A contractor delivers most when they're part of the team from day one, not an outside island:
- A clear goal and deadline: write down what they need to achieve, and by when.
- Access on day one: accounts, systems, documentation. Every day spent waiting is money wasted.
- One internal contact who answers questions and can make decisions.
- Short, regular check-ins: once a week, what's done, what's blocked, what's next.
- Inclusion in team life: shared meetings and channels. A good contractor learns from the company this way, and the company from them.
The cost of an empty seat
Decisions rarely account for what it costs when a role stays empty. A postponed development, a delayed security update, a system rollout dragging on for months: all real costs, just not on an invoice. If recruiting takes months, a contracted specialist in the meantime often isn't the more expensive option; it's the only way the work moves forward until the hire arrives. Some companies use exactly this as a bridge: a contractor starts the work and documents it, and the new employee takes over a running system rather than a backlog.
How to keep knowledge in the company
The biggest risk of contracting is that knowledge leaves with the specialist at the end. You can prevent it:
- documentation is part of the contract, not an afterthought;
- the internal owner takes part in the project, not just the handover;
- a handover period at the end, when the internal team works on its own but the specialist is still reachable;
- access (servers, accounts, code) is in the company's name.
How to choose a partner
- Do the same people stay on the project throughout, or do they rotate? Frequent rotation means lost knowledge.
- Do they have experience with companies of your size and industry? Ask for a reference and talk to a previous client.
- How do they document, and what do they hand over at the end?
- Who is the contact, and how fast do they respond?
- What language and time zone do they work in? With a nearshore partner in Central Europe this is rarely an issue; with a distant offshore partner it can be a daily one.
- What data protection and security guarantees do they give if they access your systems and data?
Common mistakes
Comparing hourly rates only. A cheaper but slower or less experienced specialist ends up costing more. What matters is the total project cost.
No internal owner. If nobody in the company is responsible for the external partner's work, the project drifts and the partner ends up making decisions for you.
Knowledge doesn't stay. Without documentation and handover, you depend on the external partner again after every project.
A critical task on one external person. If only one contractor knows an important system, that's the same risk as an internal key person. Have a backup or documentation.
What we've seen
On an earlier project, an international animal health company with more than 7,000 employees rolled out a single CRM across 27 countries. Our team took part with five people: a project manager, an architect, two business analysts and a sales expert. Others took part in the project too; the developers, for example, didn't come from us.
It shows one of the best forms of contracting: bringing in not individuals but an experienced team assembled for the task, filling exactly the roles the project needs, and leaving when it's done. The company keeps the result and the documentation, without having to build and later dissolve a team of its own.
What to do now
- List the IT tasks in your company, and which are continuous and which project-based.
- Decide what the key knowledge is that must stay in the company.
- Work out the full cost of a hire, including recruitment and onboarding.
- For projects and rare specialisms, find a reliable external partner.
- Put documentation, handover and access in the contract from day one.
- Name an internal owner who works with external partners, and review the setup yearly.
If you'd like us to provide the right specialist or team for a project or a rare specialism, have a look at our IT outsourcing service.
FAQ
How long does it take to hire an IT specialist?
According to SHRM, the median time to fill a non-executive role is 39 days, often longer in IT because of the shortage. Eurostat found 57.5% of EU companies looking for IT specialists had trouble filling the vacancy.
When is contracting better than hiring?
For projects, rare specialisms, peak periods, and when you need capacity fast. If the knowledge is part of your long-term operations, hiring is better.
Time and materials or fixed price?
Fixed price if the task can be described well and is stable; time and materials if it becomes clearer along the way. A mix often works well: a fixed-price assessment, then time-and-materials delivery.
How do we keep knowledge in the company when contracting?
Put documentation in the contract, have the internal owner take part in the project, plan a handover period, and keep access in the company's name.
How many small companies employ IT specialists?
According to Eurostat, 14.04% of small EU companies employed an IT specialist in 2024, against 78.44% of large ones.
Sources
- Eurostat – ICT specialists – statistics on hard-to-fill vacancies in enterprises
- Eurostat – ICT specialists in employment
- SHRM – Recruiting Benchmarking
- Euronews – Looking for a job in ICT? These European countries are desperate for new hires
- Fink, Schechtman, Lichtenstein – Contract choice in software development outsourcing (MCIS 2010)
- European Commission – Digital Decade 2025 country report: Hungary
- KSH – Average monthly gross earnings by industry, TEÁOR'25 (in Hungarian)
