Is it time to go contracting?
The market for IT contractors has improved significantly and we are currently running more contractors than ever before, demand has increased to the point where it almost outstrips supply and when that happens rates rise and new entrants are drawn to the market. Contracting is an exciting and dynamic way to work giving you exposure to many times more people and projects than you would in a permanent role however, before you decide if contracting is for you there are a number of things you need to consider...
Summer is supposed to be quiet in the recruitment market and a glance out into our car park shows how many people are away enjoying their holidays which traditionally meant that recruitment went on the back burner and consultants like us could take a well-earned breather. Not so this summer, we have seen that the appetite to hire technical staff is stronger than ever in the Ipswich, Bury St. Edmunds and Colchester area and it’s only our own holidays and the arrival of a baby each (two are already here, one is pending) that has prevented us taking on even more work. As well as the permanent market we have seen our contractor population expand significantly over the last quarter and we are setting new highs for the number of contractors working through Bristow Holland. Our investment in advanced timesheet solutions and efficient back office have made coping with this increased demand much easier and the feedback we receive tells us that our contractors are very happy. Long may that continue but in the meantime those readers who are IT professionals who may be thinking of going contracting might want to start thinking about what that will mean for them, their families and their lifestyle and decide if now is the time to take the plunge.
So let’s cover off the basics and for anyone thinking about contracting there are some fundamental questions to be asked:
Why do I want to contract?
There are no right or wrong answers here but it pays to understand your motives which could be anything from more money; boredom and the quest for more stimulating work; lifestyle changes enforced through redundancy or personal life and the list goes on
Do I have an in demand skill set?
Key areas for contractors are software development, projects and change management, business analysis, senior infrastructure and interim management. However, how far you have to travel to find those contracts and your experience as a contractor will have a bearing on how in-demand you feel. For example, a highly skilled C# developer with a strong background of contracting will probably be able to base themselves full time at home and be able to find regular contracts within commuting distance whereas it’s highly likely that an interim manager or project/change specialist will have to travel at some stage, whether that’s into London or staying away during the week.
Whichever background you come from, to compete and thrive in the contract market you have to be highly skilled and have a clear understanding of your role as a contractor which is to deliver top quality work quickly, efficiently with minimum distraction and maximum impact.
Am I cut out for it?
Do you value the many benefits of contracting more than the certainty that comes with a regular work location, pay packet, employment rights and holiday allowance? Would you prefer not to pay an accountant or run a limited company? Can you handle and hold your nerve after 3 months without work and maintain your rates? Do you have the appetite to negotiate your rates every 3-6 months? Do you understand how you will be taxed? Do you prefer to be an integral part of a team rather than a contracted resource? Can your family life handle the constant change? You are effectively setting up your own business and while lots of people say it’s the best thing they have ever done, equally many decide that it’s just not worth the hassle.
The ultimate test as to whether you are ready is handing your notice in to your permanent employer with nothing to go to. I’m sure that sometimes people are lucky and they can find a contract that will wait for them but I’ve never experienced it, the market is fast moving and rewards those who can act quickly and that means making yourself available. This is a daunting prospect and from a risk perspective I would want to ensure that I could meet living expenses for at least three months before going for it on the understanding that I might soon find myself back in a permanent role having blown a significant amount of savings.
As long time contract specialists we can offer advice on all stages of the contracting journey, from hiring specialised resources into your business for short term support, to setting yourself up as a limited company with all that entails, feel free to get in touch with Paul, Matt or myself to discuss any aspect of this post and best of luck whatever you decide to do.
A couple of footnotes to this article:
- From April 2016, the favourable tax environment for contractors will be significantly curtailed by the Chancellor. In an element of the budget that was largely ignored in the media small businesses and personal service companies were subject to a major change that will generate significant revenue for the Government. It remains to be seen whether rates will rise to reflect this but there is no doubt that it reduces the financial incentive to become a contractor – what knock on effects will that have in the market?
- From a recruitment company and hirers perspective, a contractor with continuing short term stints will ring alarm bells, we would expect to see evidence of several extensions to initial contracts as a self-evident indication of quality
- Contractors shouldn’t have to wait unduly to be paid once your timesheet has been submitted. I’ve heard of recruitment businesses insisting that their contractors wait until the end client has paid. Never accept this