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IT contracting/permanent work
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Hello all,
Are there any IT contractors amongst this fine forum's readership?
If so, I'm considering moving into contracting. I currently have a permanent position (test team lead role) and am wondering if anyone has any tips or experiences about going from permanent work into contracting?
Thanks
Are there any IT contractors amongst this fine forum's readership?
If so, I'm considering moving into contracting. I currently have a permanent position (test team lead role) and am wondering if anyone has any tips or experiences about going from permanent work into contracting?
Thanks
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I've also read that the difference in income isn't always what it seems. By the time you factor in time spent looking for a contract, paying for your own pension and health cover and time off for holidays the gap has narrowed. I got the impression that only above average contractors earn the really good money.
http://www.hays.co.uk/features/HAYS_005132
If you've got a particularly marketable skill, it's worth it. Luckily for us, Scrum Masters are in quite high demand!
PS I wouldn't say it's a young man's game - he's in his late thirties, and is the youngest of his group of friends doing the same job.
Pros of contracting are:
More money, if you're better than average at your job (and that takes an honest assessment) it's far easier to build a higher rate and rates can still be significantly higher than a permie role.
Less involvement in company politics, appraisals and that kind of nonsense.
New faces and new challenges on a regular basis. You'll also be exposed to a lot of different ways of working which means clever ideas you pick up in job 1 you can suggest in 2,3,& 4 and people think you're a genius. Especially by the time you're in job 14 and taking credit for so many people's ideas
Cons of contracting are
Again this one takes a level of personal honesty. If you're not up to the job you'll get binned quickly. No attempts to train you or solve the problem just at worse case a don't come in tomorrow and at best a by the way we're not extending your contract. If that happens too often you'll build up a cv that's nothing but very short term contracts and that's something that stands out and can stop you even making it to the interview stage
Pressure to convert. Lot's of companies recruit contractors then lean on you to take a permie role. You need to be in a position to walk away. This conversation can come up every three months if that's the typical contract length at the company.
You'll be first out the door when budgets get tight. Notice can be as short as a day and if a project is in trouble bean counters like nothing better than to replace expensive UK contractors with £80 a day residents of Mumbai. Or failing that simply cull the contractors and run the project longer with permie staff.
You need to fund your holidays, your pension, your health cover, pay your liability insurance and build a significant rainy day fund
Needs of contracting
Networking is key. Building your reputation and keeping in touch with those you've worked for in the past can generate more opportunities than you'll ever likely get from a pimp. It's hard to pick up your first contract, it gets a little easier every time. Half of my contracts came about because I was approached by someone I worked with in the past and I've an open offer of contract work at the moment from two ex colleagues should I choose to move from my current place.
Training. Depending on your skill set and area you have to think about paying for your own training, and look for every opportunity to cross train whilst on contracts. When working as a software developer I had two languages die of old age on me. People don't really employ contractors that need training. They look to them to come in fully up to speed.
Flexibility of location. If you live in London, then there's a chance you can find enough work to keep you employed - but anywhere else or if you're planning on doing it for years then you need to be comfortable with the fact that you could be changing city every six or twelve months. Most of my contracting life I've been living out of hotels, and unlike the good old days of uncapped expenses chances are today you'll be paying for those out of your day rate. This more than anything else is what pushes it to be a young man's game I think.
Drawbacks
Pimps. If you get a job through an agent they're going to stick a charge on top of your day rate, and they're going to keep taking their cut on every renewal. You can be priced out of the market by the pimps adding this kind of hidden cost. Too many people see the pimp as working for them. Speak to other contractors in your area, find out which agencies they like and which they'd avoid. And remember the pimp sees themselves as working for the company that's paying them regardless of what they say to you.
Job interviews. You'll have to do a lot. Plus side is most contractors do get very good at it just because of the sheer number
Adverse market conditions. Do a search the www.theregister.co.uk for contractor pay cuts. When companies think they can get away with it you might get told to swallow a 10% cut or sod off. That happened a lot over the past few years
Money management. You need to be good at this and realistic about how long you're likely to be out of work for between contracts. The sensible guys I know tend to build funds to cover 3 months of unemployment as quick as possible and keep their hands off it. I tended towards doing that kind of thing only when I new the project was coming to a natural end, and as a result have been caught out on occasion by a contractor cull.
Paperwork / IR35 / HMRC. Contracting can be very "efficient" from a tax avoidance perspective, but running your own company can be daunting, a bit of a hassle, and requires correctly worded contracts etc. Again you need to be responsible in how you handle the pot of money you have that isn't really yours.
Conversely using an umbrella company takes all of those problems away from you - but there's a lot less you can get away with tax wise. I'd certainly recommend an umbrella company to any first time contractor. It's many years since I used them but Parasol where excellent in that regard. It's as simple as filling in a web form, and you're up and running as an “employee” of their company. You send them timesheets and submit your expenses, and they pay your salary after tax into the bank.
Finally have a read of this http://www.theregister.co.uk/2013/05/20/contractors_guide/
and here http://www.parasolgroup.co.uk/contracting-guides/
Contracts can run anywhere from a few months to a few years, I preferred the short term contracts because if you didn't like a position then you can always move on straight after.
You will be required to hit the ground running on your first day, the idea is to have a contractor who already knows what they are doing and don't require training. Thats one of the reasons why the pay is more lucrative.
Most contractors are expected to be a limited company or at least with an umbrella company and so will be responsible for your own payroll as it were so unless you are financially minded then an umbrella company might be best to start off with, who will deal with the invoicing and payment for a fee.
Holiday and sick pay are not normally paid and so you need to prepare for any eventuality, and also be prepared for periods of not working if you can't line up another contract straight away,
I loved it because you get to meet so many more people and if you're as bubbly and friendly as I am then it can be fun. If you don't like change, meeting new people, dealing with different companies and different working practices, the contracting may not be for you.
Also bear in mind, unless you specifically go for specific roles then advancement in terms of promotions aren't normally given to contractors. So progressing in your field will be down to the contracts you choose.
Also have a quick look to see if there are many contracts for your type of roles, if they are few and far between then you will be up against a lot of competition and may not always find consecutive contracts. Unless of course your skills are a real commodity, then the roles find you.