This guide is based on many years of experience working as a contractor. The guide's purpose is to give you a snapshot of contracting work specifics and practical guidance. It does not cover financial, tax, business, and limited or umbrella contracting aspects. There are plenty of websites that you can find all the information you need.
If you are considering making a change from full-time job to contracting work you may find it useful. If you are a recruiter, dealing or managing contractors - you may find some observations interesting.
Who am I to tell you this?
I have 14 years of IT work experience under my belt and the last 6 years I have been doing short to medium term contracts in Australia, UK and Qatar for various organizations - large and small, private and public. My specialty is eLearning and that may include, instructional design, visual design, web and multimedia development and so on. I've tried to keep this guide neutral, but of course I can only talk about my specific professional field and the places I've lived and worked.
Contracting vs permanent job
So you are ready to quit your job, leave your psycho boss and whingeing colleagues to become your own boss? Congratulations! The decision is actually hard to make and if you've jumped the ship or just considering it - you are halfway there. Personally, my contracting experience has been positive. It took a while to get to the point, where I can come in the middle of the project, work my way through it and successfully complete it. Let's not forget that to have fun and make lasting professional connections is also very important.
This does not come straight away. At the beginning I was more stressed and worried. Sometimes it seemed that I was spending more time talking and negotiating rather than actually doing a job I was contracting to do. When I was working full-time there was no need to face clients, search for compromises and deal with financial aspects - life was pretty simple. Contracting gives you more freedom but this freedom comes with more responsibility. When you stuff up - it means you stuffed it up. You cannot hide behind your boss, your managers or blame your colleagues. And you have to learn to admit it, fix it or leave it.
Some believe that contractors earn millions, work less and spend most their time on the beach and retire in their 30's. Maybe there are people like that, but I haven't met them. Majority of people earn good money leading normal life styles, supporting their families and paying off their mortgages. So why would you quit full time and do short-term gigs with no health benefits, paid holidays and sick day leave?
Personally, I did it because I have outgrown my full time position realising that I can do a lot more and do it differently. I continue to do it, because it suits my lifestyle. I support my family and I also want to be with my family - that means spending more time at home than in the office. Some people like to be told what to do, do one thing, finish at 5.30 pm go home and forget it. If you are this person - contracting may not suit you.
Ultimately both, permanent full-time and contracting work, has pluses and minuses. To paraphrase N. Chomsky - if you are working to earn a wage, you can be classified as a wage labourer. You must think of your time – which is your life – as a thing that you own and can sell. That's because your time and your life, is not your property while you're at work.
Because I can choose when and where to work, take holidays and which contract to do and in which country - it feels like I am more in control making my own decisions.
Why do they need contractors?
The simple answer - they need to solve a problem.
The problem could be related to staffing, project, timing, resources, budget, technical, etc. Depending on your experience contract work is mostly suited for people with advanced skills in their field. Why? Because they hire an expert to solve some sort of problem. They need it fast and they need it yesterday. And they prepared to part with the substantial sum of money to achieve a certain goal/result.
Evaluating your experience and to understand and define your skillset is quite hard to do. I am not talking about bullet listing all the stuff you've done in your CV. At the beginning you may feel that you know and can or want do everything and anything (or other way around). To get a challenging contract that expands your skills and experience is actually pretty hard. Basically, no one wants to pay for you to learn on the job. There are other job types for that.
Depending on your experience contract work is mostly suited for people with advanced or specific skills in their field. Why? Because they expect you to start working on the project and hit the ground running and show progress right away. You are not there to learn how to do it and they are not going to show you how it's done.
To put it differently, everyone can take pictures, but not everyone is a professional photographer. Yes, you know how to write, but are you a technical writer? Sure, you are .NET guru, but can you really manage the project? Sure, you are easy going and funny, but does that mean you are good at dealing with clients? To avoid nasty surprises there are key questions you will need to ask to clarify the requirements and be really upfront. We will cover them later.
Mandatory and complementary skills scenario: IT contract job description stipulated that you need to be an expert in doing tasks 1 and 2 (70%) as well as have some knowledge or skills in performing tasks 3 or 4 (30%). If you have some knowledge/experience to do tasks 3 and 4, you may get through the interview and even get the contract, but you may be in for a shock to find out that first 3 weeks or even the bulk of the contract you will be required to do tasks 3 and 4.
Tip. Be truthful and know what you are good at. Understand which skills are mandatory and which skills are complementary. Ask questions and be truthful in your answers of your capabilities. Don't try to bluff your way through the interview.
Contract types and considerations
There are varieties of different contract types out there for you to choose. Mostly contract work is done onsite but some can be home based. There are part-time and full-time contracts. Some contracts are short-term full-time salary paid work; for example covering 6 to 9 month Maternity Cover. These are generally not paid well compared to the usual daily/hourly contract rate. However, if you admire the company or if they offer challenging work or an opportunity to advance your knowledge and skills - it is worth considering it.
Every contract and every organisation is different and to explain the contract style of work, I tend classify them into three major types:
- Filler - when someone goes on holidays or maternity leave you are in to fill someone else's shoes! Sometimes this means that the work has to be done "same way they were doing it".
- Assistant (a cog in a wheel). You may be working on a large scale project surrounded by many contractors just like you. Generally, you will be given one or two specific tasks that are assigned to you by your Project Manager.
- Expert/Consultant. You are pretty much relied upon as an expert or part of small expert team in the company or department to complete a project. You can have lots of freedom, input and steer the ship in the direction you choose.
They all have good and not so good angles - but remember - they all require YOUR expertise. Also most contract work is very dynamic and 'fillers' can easily transform to 'experts' while it is possible for 'experts' to become 'assistants'. Other important factors to consider are:
How much are you worth?
We live in the economic systems based on wage labour. One the most important aspect of contracting is the daily rate it offers. Generally, the higher rate indicates the complexity of the project or a skill shortage. The rate can also define you as an expert in your field. Don't be modest thinking that this is too much, but don't be too choosy, as a lower rate sometimes gives you more options. Would you do 4 week contract paying £450 daily or take 3 month contract paying £200 daily? It is your choice and you will have to weigh all the options. You can find IT contract market rates online to keep track of the contractor markets ups and downs.
Generally contract duration can be classified as short (1 to 3 months), medium (3-6 months) and long (6 to 12 months) term. Some contracts start as short term, but could go on long term renewed on a monthly basis. It is important to understand what you are signing up for, how long is the contract so you can plan ahead. Duration is important factor in determining two things. First is the obvious - the time you will be engaged as a contractor. The second is more complex - it tells the time the company assumes it needs to complete a project. It may also indicate the company's budget or how serious they are about the project. In other words - is the problem a big one or a small one?
Location and accommodation
It is also important to be realistic about the area where you will be based. At the beginning it may seem quite OK to travel daily to another city, state or even a country. After a month you may feel very differently about it. Consider the time in transit and expenses. For example, living in major city and travelling daily 40 km by train will eat around 4 hours and some considerable travel expenses. Is it worth it? Suddenly the daily rate does not seem as attractive as it was at the beginning.
Sometimes the solution is getting local hotel room or short term an apartment. These are refundable tax expenses - talk to your accountant or umbrella adviser. Other options are sharing or private room lease arrangements. Again, consider all options do some number crunching and ask around.
That's it for the Part I. I would like to expand further and include:
- Preparations for the contract hunt
- CV and Introduction letters
- Finding contract vacancies
- Streamlining and interpreting job ads
- Application process
- Dealing with recruitment agents and agencies
- Interview with the agent
- Interview with the client
- On the job - tips for your first days of contracting
- Dealing with managers
- Dealing with other contractors
- Dealing with full-time 'permies'
- Problem solving and conflict resolution
I hope you find this guide useful. Please share your thoughts and experiences. How many years you have been contracting? What is the most challenging aspect of being a contractor? Do you miss working full time?