Top tips on contracting in the tech sector

In a market where demand for digital skills is outstripping supply, contracting can be a logical progression for highly-accomplished technical...

Andy Bristow
Andy Bristow
6 min read Reading Time
30 May 2019 Date Created

In a market where demand for digital skills is outstripping supply, contracting can be a logical progression for highly-accomplished technical professionals, provided they can achieve the right rates and are able to fit seamlessly within a project team. For employers, meanwhile, taking on skilled contractors can relieve the pressure on permanent staff while ensuring projects are delivered on time and to the highest possible standard.

However, while contracting may sound like a “win-win” for both candidates and employers, there is still plenty to consider for both parties. Here, I explore some of the key considerations that tech professionals and organisations in the East of England should be making when it comes to contract work.

Top Tips for Employers

Don’t Let Cost Perceptions Put You Off

Despite the headline high costs that are regularly attached to contracting, in reality there often isn’t much difference between a senior permanent developer and flexible contractor resource.

Such is the competition for permanent staff, ever more attractive benefits packages mean that by the time you add in employer’s national insurance, generous pension contributions, annual bonuses and training costs, as well as sick pay and holiday, the gap between permanent and contract isn’t quite as large as originally imagined.

Think About Your Permanent Staff

The above being said, it’s important that employers get comfortable with the idea that contractors may come with a slightly higher price tag. Clients that regularly use contractors tend to pitch their rates at the right level, but we occasionally speak to employers who are taken aback by the numbers required to attract the best candidates. This is why I think there’s a bit of a reluctance to use contractors – or why there has been over the past few years.

Essentially though, when it comes to crunch time and you need things delivered, how are you going to do that? If you’re going to ask your permanent team to put in lots of extra hours – whether paid or unpaid – eventually they’re going to leave. And that just makes your problem even more acute. The cost of replacing them will be very high, and you simply can’t afford that as an employer, especially in today’s market.

Assess Your Company’s Skills Gaps

We are in a market where finding good developers is very difficult. With the supply of permanent candidates tightening up, the demand for contractors has naturally started to increase. This is actually self-fulfilling because as more senior permanent developers see there’s more demand for contracting, it makes the demand on permanent even more acute. As an employer trying to get skills in as cheaply as possible, this arguably isn’t the most desirable situation.

On the flipside, however, it may give your company access to a load of skills that you don’t currently have access to, unless you’ve been very lucky. The market can be a positive thing in that respect, but of course you do have to pay for it. The underlying revenues of your business have to be strong enough for you to support contractors in addition to your permanent staff.

Top Tips for Candidates

Consider How Far You Are Willing to Travel

In my experience, established contractors in East Anglia are generally moving from local contract to local contract. Let’s just say you’re not going to be short of opportunities if you’re a senior developer in this part of the country.

That being said, there’s always a chance that you could mistime your entrance to the contractor market, meaning there aren’t as many local opportunities as you’d first envisaged. In this case, you may be looking at a three to six-month stint in another part of the country, whether it’s London, Birmingham or further afield. Therefore, you need to consider whether that is a lifestyle change you’d be willing – or indeed able – to make, especially if you have a family. It also places a lot more importance on the rate being offered, as you’ll potentially be covering the cost of hotels and eating out, on top of your everyday living costs back home.

Although it is likely you could spend the next three to four years contracting in East Anglia (especially if you’re an experienced developer), you still need to be prepared for a shortage of local work once you’ve reached the end of a contract.

Don’t Assume You’ll Earn More

Despite the perception that contractors are much better paid than their permanent counterparts, the gap sometimes isn’t as large as it appears to be at face value. This can largely be down to a lack of holiday or sickness pay, no health insurance, pension contributions, or life insurance.

From an earnings perspective, the main benefit of contracting is that you don’t pay employer’s national insurance on the earnings. Outside of that, however, you have to be able to justify a certain rate to make it worthwhile. In this region, a typical day rate tends to range between £350 and £450 depending on the needs of the project and the seniority of the candidate.

Given the above, it is also imperative as a contracted worker to ensure you are knowledgeable on a range of administrative tasks, in particular maintaining your pension or health insurance, plus any similar benefits that are often automatically arranged for you as a permanent employee.

Remember There Are No Guarantees

Getting comfortable with the idea that you could be asked to leave at any time is crucial, and it’s important not to take it personally should it happen to you. You may also need to budget and make arrangements for periods of time that can be slow for recruitment, such as Christmas and summer holidays. This lack of guarantee can sometimes put candidates off of contracted work, just due to the insecurity that this brings with it.

However, when organised and supported correctly and effectively, contracted workers will find that natural lulls provide opportunity for research and skill development, and that in spite of the potential quieter periods, there is a growing demand for contract workers within the IT and tech sectors in East Anglia.

What’s Next?

Getting your name in front of the relevant organisations and businesses in your area is so important, more so now than ever, and there are many employers on the lookout for talented individuals to really make an impact on their business or project.

For further information on how Bristow Holland can support you in obtaining contracted work, please don’t hesitate to get in contact with our group of specialists today.