So you want to be a contractor? Well, here's how it works Back in the heady days of 1984, working on the development of Microsoft Unix (yes, that was a real product, AKA Xenix), we needed to write an Ethernet driver, but none of us really felt up to that. We needed to hire an expensive specialist. And so I met my first contractor, who turned up in a far better car than anyone else …
"Easy prey" meaning what, exactly? Hypothetically speaking, were I to simply declare everything I received as income, offset it against my expenses and, err, nothing else, how out of pocket would I be (bearing in mind that I would just be filling in a Self Assessment Form, much as I do right now)?
Personal liability, as I understand it. Imagine making a coding error that costs the company that hires you £200,000. They can claim that off you personally if you are a sole trader, or off your company if you are in a Ltd Co.
I'm sure there are insurances to be had in either circumstances.
Also, it may expose the hiring company to IR35 investigations, too. When I did a stint in contracting, it seemed the norm for a couple of tiers of separation between my Ltd company and the hiring company.
A. Somewhat Vague article. This is a such an involved area it could be a series of articles. I'd like to see more detail namely :-
#1. Example contracting rates by specialty for UK and USA at the very least...
#3. Sample agent fee cuts...
#3. Broad discussion of tax considerations...
#4. Discussion of the low-or-zero-tax lucrative Expat contracting market i.e. HK, Singapore, Dubai etc.
#5. Future markets, contract rates for outsourced telecommuting type work...
B. I didn't see it discussed here, but one of the hidden benefits of contracting is taking career breaks. Its much easier than trying to hide gaps in your CV. You have to graft though on your return, and you must have natural talent. But what is nice is you can travel the world for a few years, write a book, be a musician or an actor etc, and still return to IT and make excellent money. Its not without risks but it has some advantages, in that you tend to avoid burnout. You return more energized and more productive and often outperform those who work continuously, because you can see a wider range of solutions by having a fresher outlook....
B: Very true. I tend to use qualifications to paper over the gap in the CV at that point. If I take six months off to go somewhere, I usually spend a month or two getting the latest MS exams done. Any question as to why I have a six month gap "I took the latest round of MCSEs". I just neglect to mention that some of the study time was done on a beach with cocktails being replaced as fast as they were drunk.
Indeed this article could well be a series of articles, much like any other topic in the world, aside from your poor grasp of numbered lists, I reckon we could cover that in a paragraph.
Frankly there would have been absolutely no benefit in listing out rates for certain roles in a given industry since there are way too many variables. Besides, the point about rate variance covers this well enough for the article. Dom wrote an excellent piece a while back on the relationship between income and ability (or lack of) - go and read that.
A debate on tax management, ex-pat opportunities and future markets are not at all what this article was about. I think you need to browse the many contractor forums to have these debates.
And as for point B; what are you on about? Sure you can take a year off and learn to play the guitar. You could also take 3 months off and train yourself to hold your breath for ages... I don't see what relevance this has to do with contracting? Anybody in any type of employment could take time out if they'd planned for it, and if they were as odd as you.
DB
I had a budget 2,500 words to do the whole thing, and the agent fee cuts is actually at least that all by itself the game theory is interesting and occasionally funny. Feel free to ask the Reg leadership to get me to write more.
Anything I wrote about specific rates would be get dated very quickly and have dozens of variables, the highest paid contractor I know did drag & drop on Reuters screens, she'll be in a future article, but be realistic.
The tax thing is complex, SJD are offering a 60 page booklet and they are at pains to say its not complete, would you also like me to explain C++ programming from first principles in 2,500 words ?
I am going to do "future markets", actually that's a pervasive theme in most of my careers articles and the forces are similar to that for permies, my goal in this piece was to highlight the fact that the factors have different effects.
Career breaks, yes, that ought to be an article good idea, be aware that the Reg doesn't exist solely to publish my work so don't hold your breath.
> the highest paid contractor I know did drag & drop on Reuters screens, she'll be in a future article
I'd be very interested in knowing what that figure is. "drag & drop on Reuters" fairly sums up my current contract, although I assume there are some crossed wires here…
I have been contracting since 1998 and I have never been out of contract. I started as a Ltd and then used Umbrella schemes for a while. The first Umbrella scheme I used started to sound very dodgy and was making late payments so I quit and worked under a different one which could not have been easier. Since I started my latest contract 2 years ago I have reverted back to being a Ltd company. It took 20 minutes to set up the company. About the same to sort out liability insurance (I used this neat tool called 'the Internet' to do both) and about half a day to sort out a business bank account. I use SJD accountancy who basically ask me to keep a spreadsheet of my expenditure and income. I send them a copy each quarter and they send me emails periodically telling me to pay X amount VAT, tax etc. Piece of piss.
I don't get involved in office politics, I don't have objectives or have end of year reviews. I don't have to attend company presentations. I just get on with my work. If the contract I am working on comes to an end or I start to find the work boring I thank the client, work my notice and part on good terms. Next!
What's not to like.
I was a contractor for decade before I started my own company and hired staff. I had a blast too: Made scads of money and got to travel a lot. I made more than enough and the salary I paid myself through my LLC kept me up through lean times and I learned a lot about many different industries. Then I got married...
I love being married but it simply wasn't compatible with being a highly paid contractor. As a contractor you don't get any of the perks of permanent staff. Holidays are for when you don't have work (worst time to take a holiday), days off are when there's a bomb threat in the home office and sleep is something you've read about and are pretty sure is important but you're working with developers, sales teams and operations people in four different time zones so you're always communicating with someone who penciled you in after their 2PM (for them) meeting. You do get paid for that though so you just accept it. Trying to live that way with a family who expects (and deserves) a reasonable expectation of stability and a regular schedule is very difficult. Some people do make it work but it wasn't good for my family. It sure was a fun ten years though.
"Holidays are for when you don't have work (worst time to take a holiday), days off are when there's a bomb threat in the home office and sleep is something you've read about and are pretty sure is important"
Holidays are for when you're in a contract, when you're not it's time to be hunting for a new one and not spending a lot.
Days off are for whenever you like, so long as it's not going to piss off your client.
Sleep is something that happens after you've had an evening doing whatever you like, which happens after you've done your 7.5hrs and gone home. Your contract either specifies a professional day or around 7.5hrs, it doesn't say they've bought your soul for 6 months.
Maybe it varies depending on sector or location, but this works perfectly well for me, I'm coming up to the end of my 5th company year, and I've had just over a month between contracts in that time (in total).
I can't imagine that I'd ever feel the need to accept some sort of part time/on demand work from a client, they either hire me for 5 days/week for a minimum of 3 months or I go somewhere else, it could be that the somewhere else is further away, but that's one of the cons of contracting.
Is this the mildest piece Dominic has ever written? Are you ok Dominic? No cursing, nothing remotely abusive... It's even supportive. Are you having a good day then, or did you not have enough coffee to give you the right edge to write a piece for ElReg this morning. :-)
I do hope there is a good reason and it is mellow. The alternative is that I am reading this with battle weary eyes, and just happen to take no offense and agree totally with the advice. Oh lord, please let this not be the case...
George I am a freelance writer AKA a contractor, I do what I am paid to do, the fragrant Register leadership says "be vicious", I'm vicious, "be supportive", likewise.
You bastard.
Happy now ?
Actually the joy of writing for the Reg is that they almost never tell me what to write beyond "N words on IT disasters in the finance sector".
Oops, that really should have been a "woman" contractor. Yes it really has taken me this long to notice. To explain.
Nature had played a little trick on her.
By nature she was a small, mousy haired rather timid character.
Hidden inside a tall, rather statuesque blonde.
Looks like you got mentioned:
http://forums.contractoruk.com/general/89103-register-guide-contracting.html#post1746841
As a former contractor whose work has included teaching logic to bankers (yes, really and it paid well), I will put it to you that the biggest collection of Daily Mail reading wankers must necessarily be the Daily Mail readership, their comments have better grammar than yours though, a point I also must make since my freelance work includes writing.
I agree, JG. If a firm is cutting salaries and staff, the project might be spiraling down the bog. Take a few days holiday and look for the next contract is my advice (now). If the project needs you back, you can add to your take.
I just recently made the mistake. I took a temporary pay cut after a dismal holiday season at a firm and when I asked when I was going back up to my previous pay, I got a load of waffle and complaint. My bluff was called and I logged out of that gig. In the mean time, I used up too much cushion making up the difference and I'm having to scramble a bit now. It was pretty good work, added to my skills and was nice and flexible so I thought that taking a bit of a cut for a short term to help the company recover would stand me in good grace. Again, I let it go too long and should have been out finding other opportunities. As I didn't have any participation in the company that would pay me back if the company did well, I shouldn't have shouldered any of the bad times. Live and learn.
Dunno about you, but I've frittered it all away on mortgages and school fees.
The best contracting year is the first. Suddenly your income is hugely more than what you're used to. By year two you're getting used to it, and by year three your "essential" expenses have expanded effortlessly to match your income. That's life, I suppose.
No. That's when you tell them to terminate your contract and carry on as usual. Unless you sign a new contract they have to continue paying you the same rate. IMO it's better to be terminated than walk out. You get a couple of weeks more pay and time to plan a new job IF it becomes necessary. Most of the time, if you're in a place with a few contractors they are just testing the waters to see who will pack their bags and walk and you've just volunteered thereby saving your fellow contractors' jobs, very altruistic of you.
Not unless you are seriously retarded or retiring.
Not unless or until you have something else lined up.
This is business, not some episode of The Apprentice, you do what suits you, also they may realise the stupidity of their actions and ask you to stay, much easier to get more money if you've got other options ready.
Sometimes I wonder why I bother writing this fucking pieces if shitbrains can't be bothered to read them properly, do you work for Capita ?
"Do whatever is best for *you*" should be the mantra that contractors live by.
If the market is reasonable though, then saying "go ahead then" and calling their bluff might be the best response. If the market is slow then taking the cut and immediately hitting jobserve would be the alternative.
What Dominic forgot to mention is that although contractors get a higher headline rate than permies, they don't get any of the usual permie benefits such as pensions and health insurance. Don't forget to factor those into your calculations.
As far as job security goes, it seems to be a complete lottery. As a contractor at one large company I survived three rounds of permanent redundancies not only because of my superior technical skills, but also because contractors were paid out of a different pot of money so the beancounters could claim greater savings by sacking the permies.
I was going to mention health insurance, but I assume that's less of an issue in the UK, and this seemed like a pretty thoroughly UK-centric article. It can be a major obstacle to going freelance in the US, unless you have a spouse with a steady job with good health insurance.
Pensions aren't really an issue in the US, in that no one gets them anymore, anyway, except civil servants.
On the plus side, tax law here is a lot simpler -- although probably only because we've only had a couple hundred years to muddy it up. ;)
For permie as well as contractor, I think it's fine to say you decided you wanted to travel for six months. It helps if you've actually been to a few places if caught out. For example, I now know certain parts of the world very well, so can cope easily if the interviewer happens to have lived in one of these places. I've known people do some none IT related work between software jobs.
For example, one ended up working a six month stint as an airport baggage handler to keep up the mortgage repayments during a downturn. His solution? He said on his CV he'd been travelling. When asked in detail about this in an interview for a job he actually wanted, he said he'd been in Japan with friends with six months. Of course, it helped that the he'd once spent the best part of a year in various bits of the place (usual thing, starting with a routine two week site trip on a job that goes pear shaped).
Having been a contractor now for 15 years in both hands on technical delivery and latterly ERP programme management, my view of some of the above comments are:
1. There is absolutely nothing wrong with putting your date of birth on your CV.
2. There is absolutely nothing wrong in putting in a short line about what your personal interests are - just don't turn it into an essay. On numerous occasions I have sat in front of CIOs, directors and hiring managers and discussed mutual shipwrecks we may have dived or similar. You are human - not a machine.
3. Go with an umbrella initially - Contractor Umbrella are the best out there. If you want to set up as "Ltd" go with SJD. I am not paid by either - but have benefitted by way of excellent service and advice from both over the last 8 years.
4. Not all agencies are scumbags. Some of them are bastard idiot scumbags. The bigger they are the easier they are to deal with.
5. Agencies are not taking a cut of YOUR money by charging a margin on daily rate. They are taking a cut of the hiring companies charge rate. The agency offer the role at a daily rate to you AFTER applying that deduction. If you don't like it - negiotiate, or walk away. It's YOUR choice.
6. Most "IT Recruitment consultancies" do not do anything even slightly resembling consultancy. Most are usually staffed by either failed IT workers, or people who perhaps should have tried harder at... well, something.
7. Go contracting. Feel the fear and go with it. Plan your finances like a general planning a war and you'll never regret it.
I don't expect upvotes for this, in fact I can scarcely believe I'm doing it, but I'm going to defend agents.
Many of the agents who call me are wasting their time and mine by following up an inappropriate match. Few of them are people whose company and conversation I'd naturally choose. Some of them are unscrupulous.
But would I want to do their job? Not in a million years. Is the service they provide valuable to me? Of course it is - that's where my income comes from.
I started contracting in the late eighties. IT contracting is finished now. As a business model it has been shafted for at least ten years. Not just in terms of the poor UK rates but also the risk posed by HMRC and government policies.
The reasons there aren't many girls in IT contracting are two fold; The job itself is absolutely shite, having to work with mentally ill people and idiots. The other reason is that the money and kudos is much better in marketing, finance and HR and women don't tend to gravitate in stupid directions.
> poor UK rates but also the risk posed by HMRC and government policies.
Don't claim for anything that isn't completely legit and you're sorted. I use an umbrella who take care of all my paperwork (I sign contracts then submit timesheets online — that's it), and take a cut from me which is made up for in having my subsistence and travel taxes negated. Tax is a pain (depending on how much you resent public services), but that's a universal truth. In terms of pay I am on about 80% more than standard permanent rates for my seniority and specialism. That's a lot.
The work is great because I get to do more valuable stuff in short bursts — very few companies need someone to be as good as I am at my best on a permanent basis, but loads would be much happier getting me in to build them something awesome over a couple of months. I get to work in all sorts of industries, encounter different working practices, new technologies, and my portfolio and CV just gets more impressive.
Maybe there's a class thing going on here, but I honestly don't get it when people say £400/day is piss poor. You people must have friends who aren't self-employed senior IT workers?
"Back in the heady days of 1984, working on the development of Microsoft Unix (yes, that was a real product, AKA Xenix)"
Just to qualify that ... "MS-Xenix" was actually re-badged Bell Labs UNIX source code. Bell allowed MS to sell licenses for the code, but "jealously guarded"[1] the "UNIX" name. For some odd reason, Bell had no interest in selling the best non-telephone related product that they ever invented. MS never actually wrote any code, they just licensed Bell's source to third parties, who ported it to their hardware platform of choice.
[1] Legal term. Look it up.
If you want to go the consulting route, get an MBA after your more traditional computer/network/engineering degrees. (If you get it before, your mind will be totally fucked up and useless.) I got mine in about 18 months. Easiest class I ever slept through.
Secondly, become a licensed contractor. Why pay another guy for something that easy?
Sometimes, when bidding on Fortune 500 contracts, I'll list myself as "jake, MBA, CSLB#elided", and not even bother to include my doctorates in my qualifications ... Corporate bean-counters are funny that way. Sad, but true.
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