Contracting vs Full Time Employment.

Hello All!

So, through the maybe thousand of articles I've probably come across the in the last few years, some have mentioned the shift in the IT World to contracting/consulting becoming more of the norm do to the economic plights of the last couple of years. With the economy recovering there is more opportunity to find full-time employment, but I am wondering and would like to ask you all, do you feel that the benefits of having full-time work still come out ahead of contracting?

I understand that the biggest pro's that Full-Time Employment has is Benefits/Stability. But I am wondering how people feel about the freedom of doing contracts- and having the ability to constantly pick and choose their next advancement step... versus hoping that the place you are with will keep up with your progression and reward you for it in turn ...(Salary-benefits-perks-responsibility?)

I know a few people who have been contracting for the last 8 years... and have done just fine. Is it just as viable to adopt a shorter term contracting stance then oh say one that is driven out of finding a full-time gig that is suppose to last a major chunk of your working life? Each side has risk... and I am wondering if taking longer term contracts.. those that last more than 6+ months mitigate that to you all?

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Comments

MSP-IT

This is a great question, one that I have been pondering myself. Ideally, I would like to jump between contracts and education in order to receive multiple graduate degrees, and maybe toss in a mix of travel. Do contracts offer higher pay than a comparable FT position due to the lack of benefits?

razar

In the UK anyway contracts pay is much better because of the lack of benefits, but from what i've seen lately over here anyway there aren't that many jobs. And the ones that do come up you need to be a guru in the field.

Personally I wish I started contracting instead of permanent when I first started working.

coreyb80

Personally, I only prefer the contract to hire type situations. I couldn't see myself contracting more than a year. A year without holiday pay, PTO, benefits, etc is no bueno for me.

Mike-Mike

personally I have no qualms with contract work, but all the jobs I see are contract to hire or direct hire. The only things that are contract only seem to be like one week or two week jobs, or weekend work, upgrading to win 7 or deploying new pc's... and the money usually isnt' worth it

shodown

Contracting for me. You can be flexible with you hours a lot of times, and you can even arrange to have more than 1 project going at a time so you can really get paid for the time you put in.

TCainnn

I have my first position now as a contractor at NASA. I like being a contractor only because I am still young and don't have many bills to pay. I also like the fact that once my position is done I can move to another corporation and try something else. The only thing about contracting that I don't like is the salary/benefits. Once I get enough experience/certifications I will focus more of my attention on finding permanent placement.

jibbajabba

razar wrote: »

In the UK anyway contracts pay is much better because of the lack of benefits, but from what i've seen lately over here anyway there aren't that many jobs. And the ones that do come up you need to be a guru in the field.

Personally I wish I started contracting instead of permanent when I first started working.

^^ That ... on all counts... I finally wanted to go for contracts but the lack of jobs is shocking ... It might pick up again at some point but yes, I wish I would have had the guts to do that before. Especially since they pay SO much better.

If you are senior admin of some sort and you manage to get a contract in London with a financial company (brokerages are easier to get into than investment banking), you can expect to get an average of £350-450 per day.

At an average of 75% "take home pay" - you'd be going home with approx. £6.8k (Minimum wage, corporate tax, dividents and so on). It takes £135k / annum of a permanent wage to get approx. £6800 after tax. Benefits aside, as a contractor you might be on a massive salary, but yes, you will need to pay your own pension and so forth. But that is still better than a permanent role.

One important thing when contracting in the UK : Do yourself a favour and read up / learn the ins and outs of contracting based on running your own limited company. Especially whilst you are in a permanent role - makes the transition a lot easier when you are ready to pull the trigger.

ANd forget about Umbrella companies - they are all thiefs

Basically you are working as a contractor but you get PAYE as you are employed by them. Do your own thing - it is easy enough. Most contracts run for 6-9 months with most of them able to renew if you are good enough.

Having said that - you may not want a renewal due to IR35 (which means you might hit a trap where HMRC would consider you permanent employee even though you are contractor. Usually happens when contractors get benefits like perm staff, long term contracts and so on. Always change contracts at renewal, like different title / role, different company name even).

One other major reason for me to prefer contracting (even though I haven't yet) : I am getting bored in no time. So changing jobs is a lot better for me .. in a strange way

razar

jibbajabba wrote: »

^^ That ... on all counts... I finally wanted to go for contracts but the lack of jobs is shocking ... It might pick up again at some point but yes, I wish I would have had the guts to do that before. Especially since they pay SO much better.

If you are senior admin of some sort and you manage to get a contract in London with a financial company (brokerages are easier to get into than investment banking), you can expect to get an average of £350-450 per day.

At an average of 75% "take home pay" - you'd be going home with approx. £6.8k (Minimum wage, corporate tax, dividents and so on). It takes £135k / annum of a permanent wage to get approx. £6800 after tax. Benefits aside, as a contractor you might be on a massive salary, but yes, you will need to pay your own pension and so forth. But that is still better than a permanent role.

One important thing when contracting in the UK : Do yourself a favour and read up / learn the ins and outs of contracting based on running your own limited company. Especially whilst you are in a permanent role - makes the transition a lot easier when you are ready to pull the trigger.

ANd forget about Umbrella companies - they are all thiefs Basically you are working as a contractor but you get PAYE as you are employed by them. Do your own thing - it is easy enough. Most contracts run for 6-9 months with most of them able to renew if you are good enough.

Having said that - you may not want a renewal due to IR35 (which means you might hit a trap where HMRC would consider you permanent employee even though you are contractor. Usually happens when contractors get benefits like perm staff, long term contracts and so on. Always change contracts at renewal, like different title / role, different company name even).

One other major reason for me to prefer contracting (even though I haven't yet) : I am getting bored in no time. So changing jobs is a lot better for me .. in a strange way

Agree, working on the same network (in my case) or server environment for 2-3 years will not give you the same experience as working on 3 or 4 different networks during the same time period. I've been at my current company about a year now and am already feeling like I need a new challenge. But due to being in a permanent position I know it won't look good if I leave now. So going to wait another year and hopefully complete my ccnp in that time and then have a look to see what's out there.

But definitely agree about the take home pay, my salary now is just over £40k a year, which is a daily rate of about £150 before tax and £115 after all deductions. And I'm in a systems engineer/2nd line role.

You can find quite a few entry level helpdesk contracts starting at £150 a day, never mind server/network support roles. The problem is at the moment the amount of jobs isn't huge, although there seems to be more demand for server/vmware jobs than networking currently.

Would love to get into contracting but having a family/house etc makes it difficult and risky to leave a perm role for contract. Hopefully one day though!

jibbajabba

razar wrote: »

although there seems to be more demand for server/vmware jobs than networking currently.

I wish ... Been looking for one for ages. A LOT of contractor jobs at the moment need security clearance .. Whilst I don't mind getting that - most contractor positions require you to start immediately. They usually do say that you just have to be eligable for the time being, the reality is, you won't have a chance as the clearance takes 3-6 months to complete (SC anyway, DV maybe even longer).

But yea - your calculation is bang on... £40k gives you about £2.5k whereas £150 / daily nets you about £2.5k based on a 19-day / month contract. But you still have to pay your own pension / benefits etc.

razar

What area are you looking in jibbajabba? Are you in a perm role at the moment?

And yes a lot of jobs require some sort of sec clearance but it seems that it's not straight forward to get that? It has been a while since I read up on that though.

jibbajabba

Permanent role, yes. I just signed a new contract and start next week. Contract positions didn't work out so I had to go permanent for now (hate my current job - also perm.).

Mainly I'd love to work in VMware related roles but that is usually not gonna happen ... I once got offered, well offered, suggested a P2V contract (1500 P2Vs at £400 / day) - that would have been nice (but very likely a fake as I never heard anything back but the advert kept getting refreshed / renewed).

New permanent role is project based so I will be doing mostly design / implementation (vmware / exchange etc.)...

I might even enjoy it haha, but I think in the long run I will attempt contracting again ...

razar

Sounds good, project based work might have more variation.

Also very annoying when you get called about a job but then don't hear anything back but you keep seeing the job being advertised as new day after day.

eansdad

Contracting positions usually pay more if there aren't any benefits. Some firms will have different tiers of pay based on if you take health care and/or PTO. The last contract I worked I got a $5k bump for not taking health benefits and would have gotten another $5k if I didn't take PTO and holiday pay (they paid double time on holidays if you work - 12 of them).

Neither FTE or contract work is stable work in a right to work state. If you mean length of term (as stable) then a lot of contracts I've seen might have a short term but are actually renewable contracts. The only short term ones I've seen are deployments and can usually be weeded out based on the verbiage of the description.

Nyblizzard

This topic is very relevant to my current situation

jibbajabba

razar wrote: »

Sounds good, project based work might have more variation.

Also very annoying when you get called about a job but then don't hear anything back but you keep seeing the job being advertised as new day after day.

I think even worse are jobs advertised which don't exist. It seems to have gotten a lot worse over the last couple months / years. I used to be able to look for a job, apply, usually fetch an interview. Granted, I not always been successful but that is my fault / skill set.

Sometimes you just know you (and your CV / Resume) fits the bill and when you don't even get a reply / response either via phone or mail, with the same job popping up for months (which apparently is "urgent") - you know its just fishing for details to build up their database. At the end of the day they are just sales people (recruitment agencies that is), so they have to place people or walk out ... So they clearly fish for CVs for "rainy days".

eansdad wrote:

-snip-

Its not just the benefits. Here in the UK, an employee costs almost twice as much to the company than you earn.

For example, you earn 50k .. it will cost the company about 86,505.23 to employ you. It includes your salary, tax contribution, pension, social welfare and not to forget - which is important to consider as well - sick pay, holiday, bank holidays.

Depending on the benefits, the 86k can easily reach 100k - which is why they say, you cost almost twice as much ...

This is one main reason why a lot of banks / brokerage companies here in the UK nowadays prefer contractor. They still get the same amount of work out of you, you probably cost the same amount yet they don't have the responsibilities of a company employing you but can basically show you the door any day of the week ...

razar

jibbajabba wrote: »

I think even worse are jobs advertised which don't exist. It seems to have gotten a lot worse over the last couple months / years. I used to be able to look for a job, apply, usually fetch an interview. Granted, I not always been successful but that is my fault / skill set.

Sometimes you just know you (and your CV / Resume) fits the bill and when you don't even get a reply / response either via phone or mail, with the same job popping up for months (which apparently is "urgent") - you know its just fishing for details to build up their database. At the end of the day they are just sales people (recruitment agencies that is), so they have to place people or walk out ... So they clearly fish for CVs for "rainy days".

..

Definitely, sometimes your cv matches the job spec exactly, you seem like a perfect match and you get nothing. And the evidence that the fishing for details is rife, long after I've stopped looking for a job. I will get random e-mails from agencies having "found my details on file" about jobs that they are now actually recruiting for.