Is Contracting worth it? - What do you thinK?

[Fungus]

If you want to be stuck in a rut for year after year seeing people coming in getting promoted through nepotism, with no bonus, little or no pay increases, grade 'C' (in with the rest of the animals medical insurance), crap pension that will be worthless when u are an old fart at 50, masses of politics, endless boring de-skilling meetings and general abuse from an arsey IT manager and no training then you stay in your permie job.

On the otherhand if you want a true incentive based career in IT where you will push yourself to suceed, deliver and learn then go contracting.

Amen to that.

Humiliation and abuse, both verbal and physical, are the norm for permie jobs. Respect and high pay are the norm for contracting. As a contractor you are a valuable resource, so they treat you well. You are no threat to them, as you will leave. And they would not have employed you had it been easy to get your skillset, so they treat you well.

Fungus

[Francko]

Amen to that.

Humiliation and abuse, both verbal and physical, are the norm for permie jobs. Respect and high pay are the norm for contracting. As a contractor you are a valuable resource, so they treat you well. You are no threat to them, as you will leave. And they would not have employed you had it been easy to get your skillset, so they treat you well.

I agree that the average contractor is more skilled than the average permie. But the thing about respect and good treatment I would dare to say it's not always true. In many cases you are a threat to the IT managers who will have their guns pointed at you, moreover you cannot count on support from anybody, while as a permie a few times you can count. Have you all been so lucky in your contracts or I have been the only unlucky one to find the same crap everywhere? My best job was a contract one (perhaps because it was not in the UK :-)) but I had good and bad contracts and good and bad permie jobs.

[Francko]

Franco you are quite sexy when you get agitated like that (I had to read your piece with an Italian accent.... whooooo) but you are wrong.

The point is not that we may or may not be victim of nepotism / nationality preference. This can happen. However, this is par for the course for contractors: we might get removed for reasons that are nothing to do with our contribution to the project. We know that. All we ever rely on is what's on our contract, and do not extrapolate further. My current extension ends at the end of October, and I am not expecting anything after that, even if I know that an extnesion is likely - I am not taking it for granted and if it doesn't happen, I won't throw my toys out of the pram or become upset that they are getting rid of me because I am a girl / not good enough / not english / don't wear enough short skirts / don't fit in / am lazy / spend too much time on this board / charge too much / am not black / whatever.

From a project point of view, we distance ourselves from the 'why' to simply focus on the 'how much'. That's enough.

And btw, how much is usually more than 3 times the permie rate. Maybe not when you start contracting, but after a few years, no problem.

Hi Becca. What you say doesn't necessarily apply to only contractors. I have spent half of my career as a contractor and half as a permie. The reason why I got a permie job now is mainly because I didn't want to stay in Holland for the rest of my life (comparing the environment at work now with the one I had I am kind of regretting it now - but that doesn't depend on the fact that it's a permie job or contract). I don't expect a job for life either and if I am made redundant tomorrow I won't make a big deal either. I think of building my cv and not licking my manager azz (perhaps that's a mistake) and yes, most of the permies do that but you don't have too. You can't deny that promotions can lead you to a very high salary and I can see that the people who get promoted generally are not the best but only the ones who staid longer.

How much is usually 3 times? Well, considering that you give up management experience and opportunities I would expect a premium to the net monthly income. Assuming you are doing everything regularly and you are caught by IR35 the taxes you will pay are substantially more than what a permie pays. A rate of 400-500 a day will give you on a longer term a gross of 80-100k a year which will net you something like 40-50k a year after you pay all expenses and taxes. Is that so much more than a good permie salary of say between 60 to 80k plus bonus plus benefits? No, indeed in my opinion is less. Don't take exceptional circumstances like favourable tax schemes, working weekends or other unrepeatable events, because they don't work for everybody and you cannot count on them. In my opinion contracting should pay more than what is the average current rate, and hopefully it's increasing recently to what it's really deserved.

[voron]

As I see it, the two advantages of contracting are money and flexibility. Despite a low rate, contracting still provides me with more money than I could expect as a permie, and it has enabled me to leap up the career ladder. I realistically expect my rate to improve with the strengthening of my CV, and I see no reason why I can’t pitch for £1,500 p/d in the future (I might even be able to afford a house when that happens!).
As a contractor I enjoy greater flexibility. I know that if I dislike a client (for whatever reason) I can either leave immediately or simply not renew. And if a contract goes disastrously wrong (fortunately never had this yet) I can easily airbrush it from my CV (ditto references).

I am not so sure about the increased respect and lack of office politics that goes with contracting. I think this largely depends on the client. My current client does not understand what a contractor is and refers to us as ‘agency staff’. In the mind of the client we are probably glorified temps. Certainly they do not comprehend that contractors should be hired to provide external advice (gained from experience) and specialist skills. Rather a contractor, in their eyes, is an additional body to do their bidding. However, I have worked with clients who have great respect for contractors and truly understand the role they can play.
As for politics, I think this depends on the contract role. As a consultant there is no way to avoid office politics. As a techie it is possible, although I can’t think of a technical engagement I’ve had in which politics didn’t rear its ugly head. Perhaps I’ve just been unlucky.

[Rebecca Loos]

Francko, you are right insofar as there are thousands of different working environments, some of which are very good for permies (my first job was also my only permie job and I was quite happy there really).

We are talking about average here, about the typical contracting experience vs the typical permie experience.

At equivalent skill, it is generally agreed that

Let's say you have a good developer job at a City bank / insurance / telecom company, paying around £60,000 a year, you get bonuses with that that gets you to £70,000. Not uncommon after 7 years + good development experience if you're any good and you've taken care of building a decent profile.

If you had been contracting during that time, you could expect a good £500 a day, no additional bonuses (contractors don't get bonuses). However, you say that working weekends and overtime are marginal gains, I do not agree - there is always the possibility of overtime work, and if you have taken care of it in your contract, then it can be a very good money spinner indeed. And even though the end client knows you are only working hard for the extra money, in my experience, when you work extra hours, you look as good as a permie working extra hours for the increased profile / career progression / but no money.
So £500 a day, let's say over 42 weeks in the year (10 weeks holidays, not bad, even including bank holidays) -> 210 days. Before you say this is unrealistic, I have averaged 241 days a year (having added my overtime) in the last 4 years I have been contracting. So 210 is very conservative. Still, that's 210 * 500 = £105,000. So before you've added some overtime, and with 10 weeks holidays a year.

Hard to quantify overtime, as it depends a lot on the arrangement with the end client, but I would say you can easily get £10,000 more (that would be the equivalent of 10 days overtime at double rate in the year).

£115,000 vs £70,000. Quite a bit more. And then your tax situation is more advantageous as a contractor, even caught with IR35, you usually have a few expenses to deduct (permies don't have that luxury, even if they incur similar expenses).

As a permie, £75,000 translates roughly as £47,500 net. AS acontractor, £115,000 would translate (assuming 80% return) as £92,000 net.

So you are better off, almost twice as much. OK, I was wrong to say 3 times as much, that was based too much on my particular circumstances (my permie salary wasn't anywhere near £60,000).

Then it comes down to non-monetary matters, like permie training vs contractor lack of politics, sickness pay vs take holidays when you like etc etc.

Please note, these figures are hypothetical and past performance is not necessarily an indicator of future performance etc etc

[Francko]

[...]
As a permie, £75,000 translates roughly as £47,500 net. AS acontractor, £115,000 would translate (assuming 80% return) as £92,000 net.

That's where we disagree. You have to consider a normal tax position with high chances of IR35. 115k will not give you 92k net but more like 50 something.

Besides, you know that 500 p a day is not a common rate nowadays, not even in the city.

Please note, these figures are hypothetical and past performance is not necessarily an indicator of future performance etc etc

Oh, well, that applies to life. Even the stallion with all this big 5 stress is constantly performing substandard. However..... hope a recovery is coming

p.s. I was in the same situation on a contract (working sat+sun overtime double rate, made lots of money for 6 months until the manager got told off that he cannot afford that and weekend work disappeared)

[Rebecca Loos]

115k give you 50k!!!!? Not even 50%? Where? How? Why? Do we live in the same country? In France maybe! But here even with Gordon taxing everything that moves (actually, even if it doesn't), surely not!

[voron]

So £500 a day, let's say over 42 weeks in the year (10 weeks holidays, not bad, even including bank holidays) -> 210 days. Before you say this is unrealistic, I have averaged 241 days a year (having added my overtime) in the last 4 years I have been contracting. So 210 is very conservative. Still, that's 210 * 500 = £105,000. So before you've added some overtime, and with 10 weeks holidays a year.

God, I hate you all

[The Late, Great JC]

God, I hate you all

Steady Voron, you're interrupting the Rebecca Loos <---> Francko Love In.

It's the only chance Francko has of "talking" to the opposite sex.

[voron]

Steady Voron, you're interrupting the Rebecca Loos <---> Francko Love In.

I'd prefer the RL <-> Cojak love in.