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Life as an IT contractor

Life as an IT contractor

Independence, job variability, earning potential, skills development. But is it worth it?

The upside of life as an IT contractor is alluring. You get to be your own boss, accept only the jobs you want, and work flexible hours. With each assignment comes the opportunity to learn new skills and gain exposure to different environments.

But there are obvious sacrifices – job security and paid vacations, for starters. As an IT contractor, you’re also often responsible for your own benefits (healthcare, retirement), paying taxes, and marketing yourself for the next gig.

Tech pros who successfully balance the pros and cons of contracting play an important role in the IT world. They provide manpower when workloads spike and can bring key expertise or niche skills to a team. In recent years, companies have increasingly relied on a contingent workforce to augment their full-time staff. According to new survey data from IT staffing and services firm TEKsystems, 26% of IT hiring managers expect to increase headcount for contingent workers in the second half of 2017 (another 46% report that headcount will remain the same for temporary workers, and 13% say it will decrease).

“The current environment for IT workers is one of opportunity, as unemployment remains low and demand continues to rise,” says Jason Hayman, market research manager at TEKsystems. Across every industry, it’s a job seeker’s market, Hayman says. “IT talent for the most part is in the driver’s seat, so tapping into contingent talent is a great way to fill gaps and find potential long-term talent solutions.”

On the jobs front, contingent workers make up a significant percentage of open positions. As of mid-2017, there are roughly 30,000 contract positions posted on IT careers site Dice.com, representing more than one-third of the total available tech jobs. The average contract rate for a tech professional in the U.S. is $69 per hour, according to the annual Dice Salary Survey. In Silicon Valley, that rate jumps to $78 on average.

“There’s been a real shift over time among employers to provide a more flexible environment to full-time workers, including the ability to work remotely, and alter schedules based on traffic in congested cities around Silicon Valley, Washington, D.C. and New York. Now, employers are becoming more flexible in the talent they hire too, relying more frequently on contractors to deploy necessary projects,” says Bob Melk, president of Dice.

“There’s value in companies hiring contract tech talent. The company will get a highly skilled, highly in-demand tech pro to work on and complete a project, and the tech pro who wants to add to their skillset and have flexibility gets to broaden their network and work on challenging projects. It’s a win/win.”

We asked IT pros and staffing experts to talk about life as an IT contractor and share tips about the skills and habits that can lead to success.

“I like the freedom and flexibility to set my own schedule,” said Ken Rubin of High Road Data, which provides IT consulting, web design, and programming services in Orange County, Calif. “When I worked for enterprises, I couldn't do any banking or go to the post office. Everything I needed to do personally seemed to fall in the business hours I was at work. Plus, I've been able to walk my kids to school and spend time with them in the mornings. That’s priceless.”

Jerry McKune, an independent IT contractor based in the St. Louis area, said he appreciates the variability of IT contracting and the opportunity to keep learning new skills. “I love variety. I cannot stand to do the same thing over and over and over again. There’s a lot of variety in the contract world.”

The challenge of variety, however, is that each new assignment means a new learning curve. “Education takes time,” McKune said. “If you’re on a six-month contract, and there’s a four- to five-month learning curve, there’s only going to be a short period of time at the end of it where you really know what you’re doing and you’re capable of performing the tasks assigned to you without help from somebody else.”

Learning to rely on other people and not being afraid to say you don’t know something are essential traits. “There are going to be a lot of situations as a contractor where you don’t know the answer. Do not tap dance. Just simply say, ‘I don’t know. But I’ll find out and I’ll get back to you within 24 hours,’” McKune said. “That’s a very powerful response.”

Employers and contract workers value flexibility

Contingent workers can be a good fit at companies that are looking to build lean, agile IT departments that can adapt to changing business requirements. With temporary workers, companies can bring on skilled IT talent to handle specific projects and scale back if demand falls.

“We’re seeing a more blended workforce today, of a smaller W-2 [full-time] workforce and a growing variable workforce,” said Peter Cannone, former CEO of OnForce, which operates an online marketplace for finding and hiring independent IT workers. The platform connects companies that need IT help for short-term assignments with IT freelancers who've been vetted by OnForce (OnForce is an independent business unit of Adecco Group).

Part of the appeal for contractors is the opportunity to build their own businesses, Cannone said. “Once you get a taste of being your own boss, and running your own business, I think it’s hard to go the other way.”

Contractors agree -- being the boss is appealing.

“I still make mistakes, but they are my mistakes. I own them and it is my responsibility to fix them. I am my own, pointy-haired boss,” said Fred Granville, who has been working as an independent networking consultant in the Kansas City, Mo., area since 2000.

Hiring managers, too, appreciate the be-your-own-boss qualities of contractors.

“We’re always looking for people who have the ability to work on different projects, keep themselves on track, set their own times, be their own boss,” said Vik Nath, former director of recruitment in the Washington, D.C., office of IT staffing services provider Mondo. “If you’re hiring a contractor, and you’re hiring them for a specific project, you’d like to just let them run with it. You need to find that skill set, find that person who doesn't need to be micromanaged.”

Access to new or different technology is another perk that resonates with contractors.

“I like being able to get hands-on with equipment that I would never get anywhere near otherwise,” said Jodi Minshall, an IT analyst in the San Francisco Bay area. Minshall recently completed an assignment at Juniper Networks and got to work with the vendor’s extremely large core routers for the ISP market. “At any other company these devices would be in a locked room with a select few employees tasked with managing them, and I might be able to see them through a window if I were lucky.”

Getting busy – and staying busy

IT contractors are frank about the challenges of contingent work. In particular, lining up the next job is an inescapable part of the lifestyle.

“The hardest part about being a contractor is finding work. When you work for yourself, you must fill the roles of executive, business administration, AR/AP, sales, engineering, delivery, and probably a few others,” said Mike Drabicky, who has worked as a consultant more than 15 years. “I like doing the work. All the rest of that stuff is overhead that, while necessary, doesn't produce anything useful.”

Marketing can be a challenge. “As with most technical folks, it doesn't come naturally,” said Rubin of High Road Data. “I am a member of [business networking group] BNI and make extra effort every week to get together with other business owners and professionals to meet and learn how we can help refer each other. Since I’m not trained in marketing, I find this an invaluable tool to get myself out there and make sure I’m constantly marketing.”

Getting paid is another potential hurdle. “If you’re not working with a company that farms you out and does the billing and collections for you, then you have to do this yourself,” Rubin said. “You need to manage a positive relationship with your clients and at the same time make sure they pay on time, every time.”

Jodie Bass finds much of his work through the OnForce freelance platform. OnForce work orders are backed by reserved funds, so payment is transferred directly to the contractor once work is completed. For Bass, the elimination of invoicing and payment collection is a huge draw.

“I hate talking about money,” said Bass, who’s based in the Portland, Ore., area. “I’m not a salesman. I can get people excited about technology. I can teach them how to use it and support it later. But when it comes time for me to say, ‘OK, write me a check,’ I’m terrible about it.” OnForce takes a percentage of the job funds as payment, but that’s fine with Bass. “I look at it this way: I don’t pay for advertising, I don’t pay for collections. Both of those are covered. The fee is worth it.”

Loss of job security is a lingering concern

Minshall misses the benefits that full-time employees enjoy, such as sick time, holiday pay, training and retirement benefits. But the biggest loss is job security.

“The hardest part is not having the security of a real two-way bond with your employer/customer,” Minshall said. “As a contractor you can be replaced at the drop of a hat with no explanation or recourse. ‘Here today and gone tomorrow’ has a whole new meaning for a contractor.”

Sometimes, that insecurity can be viewed as an advantage: “It keeps me honest as an employee,” said Nancy Silverthorn, an IT contractor based in Charlotte, N.C. “You stay at the top of your game knowing that at any time they could sever that connection. It’s a lot easier to sever a contract connection” than a full-time connection.

Minshall stresses the importance of self-discipline. “You have to be very proactive about securing your own future with savings and self-educating to get ready for your next employment search. Living paycheck to paycheck is not an option for a contractor; you have to be financially prepared for the worst.”

Otherwise, life can be pretty grim in between assignments. “Starve to death, scrounge up spare money selling bottles and cans from the garbage, [beg] former co-workers for insight and opportunities,” said Joe Holcomb of his activities when he’s in between contracts.

The stress of being unemployed in between assignments is the hardest part for Holcomb, who also cites the “inconsistency of income” and “low-ballers that want to hire you for less than they would pay an employee,” among his dislikes. “New work, unique business environments” are the pluses of contracting life for Holcomb.

Independent contractors also have to get used to not having paid vacations.

“In the last seven years (other than days like Thanksgiving and Christmas), I have taken four days off,” Drabicky said. “When you do consulting, you don’t have weekdays or weekends; rather, you have days that you work, and days that you don’t work. If you want a day off, you can certainly do so but they are without pay. It would be nice to have some time to decompress and still have some pay coming in.”

Drabicky also misses being part of a team. “I find it loads of fun to be part of a quality team, of people who want to excel, want to make a difference. The best times I've had working are when we had a good team where folks were willing to do whatever it took to benefit the team,” Drabicky said. “You can sometimes get that as a consultant. Most times, everyone knows you’re only on board for a limited time. This makes forming lasting relationships difficult to impossible.”

Still, there are valuable relationships that can come from contracting assignments.

“The opportunity to meet people, to make additional contacts, and have your name passed on to somebody else is a huge benefit. In my view, maybe the best of all the benefits,” McKune said.

It’s not something he takes for granted, however: “Networking is a lot more work than people believe it is,” McKune said. “From my perspective, it requires quite a bit of work to maintain those relationships and keep those networking contacts going.”

For Minshall, any gap between assignments is an opportunity to sharpen IT skills.

“I like to spend a few days offloading accumulated stress and catching up on household chores. After a few days of that, I start researching new IT trends and trying to polish up my rusty skills,” Minshall said. “Every job emphasizes one set of skills more than others, so you tend to get out of practice with the unused portion of your skills set. I like to brush up on my skills to stay current.”

Longtime independent consultant Granville finds some challenges for contractors are no different from those faced by full-time IT employees.

“Early on, the peaks and valleys of activity were disconcerting. Now I just get frustrated during those times when I am unable to respond quickly to my customers,” Granville said. “Occasionally the hours can be long, but I think that is true for any job. Balancing family life and work life is probably difficult for all IT workers.”

On the plus side, Granville cites a number of other things he likes about the IT contract life: being able to do what he thinks is the right thing for his customers; working with customers he likes; the chance to define his own target market; and a flexible schedule. His ideal assignments are those that allow him to architect and build new network designs.

Temp-to-perm temptations

In some cases, contingent work can lead to a permanent position. A short-term assignment can be viewed as a trial period for both parties. Hiring managers can use the assignment time to evaluate how a temporary contractor might fit in as full-time employee, and the contractor can evaluate if a company is one he or she would like to join full-time.

Contract-to-hire has become a popular option for IT departments, said Jack Cullen, president of IT staffing and recruiting firm Modis. “The option of evaluating talent over a longer period of time has proven beneficial for many companies,” Cullen said. “Companies that take this creative hiring route benefit by maintaining their project deadlines while evaluating a potential employee over a period of time rather than taking a gamble on a person over the course of the interview process.”

For IT workers, contracting is “a good route to go if you’re trying to test out a new area or field of expertise,” Nath agrees. “It’s a good way to test the waters.”

For techies who are curious, entrepreneurial and enjoy variability, the push to acquire new skills comes naturally. “I love difficult jobs, jobs that are really technically complex. I love a good challenge. That’s just my nature,” Bass said.

Editor’s note: This story has been updated to include current data from staffing firms related to the 2017 job market for IT contractors, including corporate hiring plans, the number of available jobs, and average contract rates. Statements from IT contractors have not been altered from the original version of this story, published in 2014.

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