IT Contracting - Good idea in current climate?

dowlinj

Hi,

I've recently started thinking about giving up a permanent software development role to go contracting. I have over 5 years commercial experience (with the same company), with the last 3.5 years developing in .Net (VB.Net, ASP.Net and Web Services). Previous couple of years were VB 6.0 and ASP. Also proficient in SQL Server & DB2. I'd consider myself to be a very capable programmer and don't think I'd have any issues holding down a position.

So, given the current climate of doom and gloom, do people think it's a good idea to give up a solid permanent job for a not-so-solid contracting role? Contrary to the current economic climate, it appears that job opportunities in the software development sector are very good at the moment, particularly for .Net roles?

DublinWriter

Contracting is not for everybody.

First off, just be aware that you'll need to register as a Ltd company, register for VAT, as an employer, blah blah blah and I can't stress enough the importance of getting your own private pension plan together. You will find yourself doing a lot more paperwork running your own Ltd. company than when you were just collecting a salary every month.

As with everything, contracting is all about supply and demand. ASP .Net and VB.Net / C# command lower daily rates because a lot of people work in that area. Niche skills such as PeopleSoft, SAP, Oracle Apps can command silly money, especially aboard.

I say this also because whatever you end up doing when you switch from Perm work to Contract work will determine the type of work that you do in your contract career. As a contract employee you will taken on to do a specific task for a fixed period of time, your client will have little or no interest in developing your skill-set, and rightly so.

As for giving up what you call a 'solid-permanent job', unless you're talking about working in the Civil Service, then there is no such beast.

I've also found that in periods of recession, companies are more eager to take on contract staff as it doesn't add to head-count and funding usually comes from a separate project budget.

Done and dusted

well I may not be the most experienced person so my advice may be flawd but here are my 2c's anyway.. hope its of some use to u.

I'm currently working as a test / dev and there seems to be a good view contractors floating about in my place.

Some of the other guys work full time with me but also do contract roles for other companies on the fly. Would that be a valid option for you?

I think though with regards to the down turn that we're expecting / having. I would say (and my manager agrees) that companies would rather higher contractors than take on full time guys, because with full time guys theres always going to be periods of inactivity (delay stating a project, waiting period between projects etc) so there essentially throwing the money away. Whereas with a contractor you get paid for that project end of.

If i was you I would perhaps starting doing contract work on the weekends / on the fly and see if theres a market for it and if you think you could survive on that income (food, bills etc). If so hell why not. And as you said there's a lot of .Net posistions out there and if my predictions are right, will be for quite sometime (recently release figures say that students applying for computers are at all time low...got this info from my college).

In either case best of luck I hope it all works out. Do let us know...so I can get the F*ck out of my job

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Edit

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I just seen DublinWriter's post, good points I must say. You could always just get an account on www.rentacoder.com and make some cash that way while staying in ur perm job.

dowlinj

DublinWriter wrote: »

Contracting is not for everybody.

First off, just be aware that you'll need to register as a Ltd company, register for VAT, as an employer, blah blah blah and I can't stress enough the importance of getting your own private pension plan together. You will find yourself doing a lot more paperwork running your own Ltd. company than when you were just collecting a salary every month.

Thanks for your comments. Yeah, aware of all the Ltd. Co. stuff etc. Sorting out a pension would be high on my list of priorities.

DublinWriter wrote: »

As with everything, contracting is all about supply and demand. ASP .Net and VB.Net / C# command lower daily rates because a lot of people work in that area. Niche skills such as PeopleSoft, SAP, Oracle Apps can command silly money, especially aboard.

Good point, one of the contractors I work with also made this point to me. I have done some niche type work (FileNet) so perhaps I should concentrate on looking in this area, though I'd imagine opportunities would be limited enough in Ireland for this (don't intend moving abroad).

DublinWriter wrote: »

As for giving up what you call a 'solid-permanent job', unless you're talking about working in the Civil Service, then there is no such beast.

No, I don't work in the civil service but with regards to job security it's not a million miles away to be honest. Even contractors in my current job have been working there, in some situations for 10+ years!

DublinWriter wrote: »

I've also found that in periods of recession, companies are more eager to take on contract staff as it doesn't add to head-count and funding usually comes from a separate project budget.

True, I've definitely seen this in my own job. They seem to be able to bill different areas of the business for contractor work as opposed to it going under general IT spend.

MOH

DublinWriter wrote: »

First off, just be aware that you'll need to register as a Ltd company, register for VAT, as an employer, blah blah blah and I can't stress enough the importance of getting your own private pension plan together. You will find yourself doing a lot more paperwork running your own Ltd. company than when you were just collecting a salary every month.

Don't think you need to register as an employer?
+1 on the pension plan.
Accountant will look after most of the paperwork.

Aside from not get any skills training (although a lot of permanent jobs don't give you that either) you may find that some places will give you the crappy mundane stuff that nobody wants to do, since that way at least the permanent staff won't be unhappy doing it.

Be prepared too for periods out of work if you reach the end of a contract at a bad time. I'm in a fairly specialised area, and while the money was good, in the 5 years I was contracting I only worked 3. OK, I spent 6 months travelling around Oz, but there were other times where I was sitting around for a few months looking for work. Been permanent now for the last 5 years, so that was a while ago.

dowlinj

MOH wrote: »

Be prepared too for periods out of work if you reach the end of a contract at a bad time. I'm in a fairly specialised area, and while the money was good, in the 5 years I was contracting I only worked 3. OK, I spent 6 months travelling around Oz, but there were other times where I was sitting around for a few months looking for work. Been permanent now for the last 5 years, so that was a while ago.

This is what really concerns me. I don't like the idea of being out of work for too long. Not much point in making extra cash contracting if you're going to be out of work for a few months after a contract. While being able to take a nice long holiday is great, sitting on my ass for no good reason doesn't appeal in the slightest. So do people think a situation could arise where a .Net contract role would be hard to find in a few months time, if I was to say take up a 6 month role now?

WebExpert

DublinWriter wrote: »

As for giving up what you call a 'solid-permanent job', unless you're talking about working in the Civil Service, then there is no such beast.

Thats a true statement but the civil service is not full proof either.

Id hold onto that job until near the end of the resession (probably 15 years?)

245

You can work through an umbrella company for 6 months or so to test the water before setting up a Ltd company.

This is one such company. I'm not recommending them (or saying anything against them) but it'll give you an idea of the alternatives

http://www.360-group.com/3_sixty/welcome

What's your motivation? Money?

dowlinj

245 wrote: »

What's your motivation? Money?

Need a change of scenery to be honest. In the same job since I left college. The extra cash will help too but it's not the main driver.

Bluefrog

I think above anything else contracting requires a mindset. You need to be flexible and if, as was stated above, you get given the grunt work and you can do it with a smile or at least without a grimmace then contracting could be for you - next role in that company might be more challenging and engaging and what do you care if the work is boring, you're well paid and its not permanent.

Contractors will always do ok if only because they spend their time shifting round which brings out some of the ducker and diver in your personality if it is there and contrary to some of what was written above I think it can for periods be a great way to expand your skillset if you keep your eyes open and take a broader interest in the company you work for than just your narrow bounded task.

Depending on how you do it there will be varying amounts of extra admin on your end but becoming an LTD is definitely not the only way to go. You can be a sole trader.

Depending on your clients you may require professional insurance but your rate should reflect that if so.

I think the idea of doing some nixers in your free time is a good way to dip your toe in the water before commiting to any big change. You could throw your C.V. to some of the recruitment agencies and see what the response is like too.

DublinWriter

Bluefrog wrote: »

Depending on how you do it there will be varying amounts of extra admin on your end but becoming an LTD is definitely not the only way to go. You can be a sole trader.

You can be a Sole Trader, but no agency will touch you because of the exposure to them if you go AWOL without paying your PAYE/PRSI.

Bluefrog wrote: »

Depending on your clients you may require professional insurance but your rate should reflect that if so.

A waste of money. You'd be better off getting income protection insurance in case of long-term illness.

cousin_borat

I would say that if you are thinking of going into contracting I would be looking at moving into Solutions/Enterprise Architect role if you're going to stay in the .NET development world. I don't think there is enough of an incentive to be a developer contractor if that makes sense.

booooonzo

Is the money not way better??

From what i can see its twice that of a perm job.

Feelgood

I would encourage you to try contracting for a while. Its very rewarding. At first its a bit daunting thinking about entering a job thats not really secure, but believe me you will always find work and if not sure feck it you can always go back to a perm job if the worst comes to worst.

Setting up a limited company with an accountant takes about 2 days and the accountant will charge you approximately 100 - 125 to manage everything for you, annual returns, PAYE, PRSI etc etc so its really not as much hassle as people make it out to be.

If I was you I would be looking at working 8-9 months a year and just take the rest of it off!. Think about it, roughly 3-350 a day x 9 months = €63k gross. Your tax will only come to around 10k with all the tax breaks and expenses so essentially you will be getting around 48 to 53k for 9 months work.

Thats more than most people make in a year, so there is no reason why you couldn't just take the rest of the year off and go traveling or just chill. Thats the best part, contracting is flexible to how you want to work.

The other thing is that by some chance you are out of work for a couple of months due to contract completion, you will have made more than enough money to tide you over till a new contract comes up anyway.

Go for it, you have nothing to lose. Have been contracting now for four years myself and I seriously can't envisage going back to a permanent role ever.

dowlinj

cousin_borat wrote: »

I would say that if you are thinking of going into contracting I would be looking at moving into Solutions/Enterprise Architect role if you're going to stay in the .NET development world. I don't think there is enough of an incentive to be a developer contractor if that makes sense.

To be honest I design all the software I write in my current role. Personally I think titles like "Enterprise Architect" are just buzz terms that companies use these days to give their senior developers an ego boost. I'd imagine as a contractor I'd be largely responsible for the design of most of the code I write anyway (depending on the size of the project of course).

dowlinj

Feelgood wrote: »

I would encourage you to try contracting for a while. Its very rewarding. At first its a bit daunting thinking about entering a job thats not really secure, but believe me you will always find work and if not sure feck it you can always go back to a perm job if the worst comes to worst.

Setting up a limited company with an accountant takes about 2 days and the accountant will charge you approximately 100 - 125 to manage everything for you, annual returns, PAYE, PRSI etc etc so its really not as much hassle as people make it out to be.

If I was you I would be looking at working 8-9 months a year and just take the rest of it off!. Think about it, roughly 3-350 a day x 9 months = €63k gross. Your tax will only come to around 10k with all the tax breaks and expenses so essentially you will be getting around 48 to 53k for 9 months work.

Thats more than most people make in a year, so there is no reason why you couldn't just take the rest of the year off and go traveling or just chill. Thats the best part, contracting is flexible to how you want to work.

The other thing is that by some chance you are out of work for a couple of months due to contract completion, you will have made more than enough money to tide you over till a new contract comes up anyway.

Go for it, you have nothing to lose. Have been contracting now for four years myself and I seriously can't envisage going back to a permanent role ever.

Thanks, sounds like some solid advise. I'm not too concerned about the admin side of things. I can handle some paper work given the added tax/cash benefits. Bottom line, it's worth a shot. I can always go back to being a permy if things go pear shaped down the line. I can hear the world of contract programming calling me to its shores!:D

kayos

dowlinj wrote: »

To be honest I design all the software I write in my current role. Personally I think titles like "Enterprise Architect" are just buzz terms that companies use these days to give their senior developers an ego boost. I'd imagine as a contractor I'd be largely responsible for the design of most of the code I write anyway (depending on the size of the project of course).

Developer and Architect are two different roles to be fair. Contracting basicly means if your hired as a grunt you do grunt work, dont go giving your achitecture services at the cost of development services.

Rates are all based on your field, skills and exp along with the location of the work. Seeing 300-350 quoted as a day rate above would be low for some contracts high for others.

@booooonzo Day rates are one thing but when you come down to it thats not all going in the contractors back pocket. PAYE/PRSI, VAT, accountancy fee's, any insurance costs all come out of that. Then you have the other little factors like no payed holidays. As a perm employee you love bank holidays, as a contractor they are a day you dont get paid for. You get sick and you are not earning etc etc. So yes while the rate is high there are a lot of other factors that come into the net money the contractor will get at the end of the year.

Bluefrog

DublinWriter wrote: »

You can be a Sole Trader, but no agency will touch you because of the exposure to them if you go AWOL without paying your PAYE/PRSI.

A waste of money. You'd be better off getting income protection insurance in case of long-term illness.

I am a sole trader and have done agency work - mind you, I have an established track record and references up the wazoo! I am also constantly approached by people like Elan for projects and my business status is very clear to them.

And actually I wasn't talking about insurance to cover myself in case of illness or mishap. I have heard of stories out there where companies asked for professional insurance to protect THEM. Haven't come across it myself though - at least, not yet but as I said above, my response will be "happy to have it if the rate reflects it".

DublinWriter

Bluefrog wrote: »

I am a sole trader and have done agency work - mind you, I have an established track record and references up the wazoo! I am also constantly approached by people like Elan for projects and my business status is very clear to them.

I find that companies, especially in the UK are very reluctant to give written references to contractors as it exposes them legally in the situation where a future client of the contractor finds that the contractor doesn't live up to his reference.

Most agencies won't touch a sole-trader, so you must be pretty good!

Bluefrog wrote: »

And actually I wasn't talking about insurance to cover myself in case of illness or mishap. I have heard of stories out there where companies asked for professional insurance to protect THEM. Haven't come across it myself though - at least, not yet but as I said above, my response will be "happy to have it if the rate reflects it".

I wasn't either. Professional insurance is a waste of money for a one-man-band. As I said, you'd be better off paying for income insurance in case of serious illness.

Eoin

Feelgood wrote: »

I would encourage you to try contracting for a while. Its very rewarding. At first its a bit daunting thinking about entering a job thats not really secure, but believe me you will always find work and if not sure feck it you can always go back to a perm job if the worst comes to worst.

Setting up a limited company with an accountant takes about 2 days and the accountant will charge you approximately 100 - 125 to manage everything for you, annual returns, PAYE, PRSI etc etc so its really not as much hassle as people make it out to be.

If I was you I would be looking at working 8-9 months a year and just take the rest of it off!. Think about it, roughly 3-350 a day x 9 months = €63k gross. Your tax will only come to around 10k with all the tax breaks and expenses so essentially you will be getting around 48 to 53k for 9 months work.

Thats more than most people make in a year, so there is no reason why you couldn't just take the rest of the year off and go traveling or just chill. Thats the best part, contracting is flexible to how you want to work.

The other thing is that by some chance you are out of work for a couple of months due to contract completion, you will have made more than enough money to tide you over till a new contract comes up anyway.

Go for it, you have nothing to lose. Have been contracting now for four years myself and I seriously can't envisage going back to a permanent role ever.

I really wish I had the nerve to do it!

To answer the original question - contracting work can often become more available as the economy goes south, as companies have hiring freezes for permanent staff, so getting a fixed term contractor in is a better option for them.

kayos

Bluefrog wrote: »

And actually I wasn't talking about insurance to cover myself in case of illness or mishap. I have heard of stories out there where companies asked for professional insurance to protect THEM. Haven't come across it myself though - at least, not yet but as I said above, my response will be "happy to have it if the rate reflects it".

I just started a new contract, UK agency, and it had a requirement of Professional Indemnity insurance. Quick phone call later the agent said dont worry about it as it was only a UK requirment as it is worthless legally in Ireland, please note thats what he said in relation to Software Consultancy do not take it as completely correct.

As for Sole Trader Vs Ltd..... I would be so saying go Ltd if your in the game for any length of time. Sole Trader leaves your personnal assets exposed in any legal case. At least with Ltd your personnal assets are safe and sound and you do get to claim more back via a Ltd. If audits are putting you off the Ltd route you can always put in for an audit exemption.

cousin_borat

dowlinj wrote: »

To be honest I design all the software I write in my current role. Personally I think titles like "Enterprise Architect" are just buzz terms that companies use these days to give their senior developers an ego boost. I'd imagine as a contractor I'd be largely responsible for the design of most of the code I write anyway (depending on the size of the project of course).

An enterprise architect does not design software. My idea of an EI is that their role is that IT projects align with the business objectives, lead evaluation of new software/development projects to see that they fulfil a business need, be up to date in regulation such as iso 27001/Sarbanes Oxley that affect IT projects and also be au fait with the latest technologies to name a few. Generally Enterprise Architects should follow a framework such as TOGAF or Zachman (if you don't know look it up)

DublinWriter

cousin_borat wrote: »

An enterprise architect does not design software. My idea of an EI is that their role is that IT projects align with the business objectives, lead evaluation of new software/development projects to see that they fulfil a business need, be up to date in regulation such as iso 27001/Sarbanes Oxley that affect IT projects...

I'd be about 50% with you on that definition. My understanding of an EA role is that it looks at I.T./I.S. on a holistic organisational level, especially in relation to information flow throughout the company, e.g. is the CRM system integrating with the Accounts system, etc, etc.

I wouldn't be too sure about the regulation areas you mention, larger companies tend to have dedicated I.T. compliance managers in place for suchlike.

Bluefrog

DublinWriter wrote: »

Most agencies won't touch a sole-trader, so you must be pretty good!

I think what helps in my case is a good body of work and a substantial list of longterm clients I obtained myself. It was agencies that came to me, not the other way round - not so egotistical to think that it was my brilliance that attracted them. Probably more to do with the fact that my skill-set is broad, I don't demand ridiculous rates and also some roles have been very hard to fill over the past few years.

DublinWriter wrote: »

I wasn't either. Professional insurance is a waste of money for a one-man-band. As I said, you'd be better off paying for income insurance in case of serious illness.

As I said, I have heard a couple of stories of employers asking for it and illness is definitely something you want to provision for in some way.

dowlinj

cousin_borat wrote: »

An enterprise architect does not design software. My idea of an EI is that their role is that IT projects align with the business objectives, lead evaluation of new software/development projects to see that they fulfil a business need, be up to date in regulation such as iso 27001/Sarbanes Oxley that affect IT projects and also be au fait with the latest technologies to name a few. Generally Enterprise Architects should follow a framework such as TOGAF or Zachman (if you don't know look it up)

Ok, I stand corrected on the architect definition (to a degree), though I think it's untrue to say they don't design software. Obviously their role is at a higher level than a developer. However, it does depend on how their role is defined within the particular organisation. Oh yeah, I won't be looking up TOGAF or Zachman, though I'm sure it's compelling stuff! Sarbanes Oxley is enough for me to deal with from day to day!

yop

Personally down here in "deep West" there seems to be very little contracts, I have only seen 2 in the last year which is a bit mental, maybe if you are in the contracting environment then they are more visible to you. But I could be wrong on this.

kayos

yop wrote: »

Personally down here in "deep West" there seems to be very little contracts, I have only seen 2 in the last year which is a bit mental, maybe if you are in the contracting environment then they are more visible to you. But I could be wrong on this.

The west has gone a bit quiet on the contracting front but thats recently, I've seen more than 2 in Galway/Mayo in the past month. All depends on what contracts your looking for and how low your willing to drop your rate.

If you dont look for contracts you wont see them

yop

kayos wrote: »

The west has gone a bit quiet on the contracting front but thats recently, I've seen more than 2 in Galway/Mayo in the past month. All depends on what contracts your looking for and how low your willing to drop your rate.

If you dont look for contracts you wont see them

that is true, skimmed the job sites over the last few months and it seems to be the same contracts the whole time. 1 was actually put on hold, the other doesnt even respond :rolleyes:

kayos

yop wrote: »

that is true, skimmed the job sites over the last few months and it seems to be the same contracts the whole time. 1 was actually put on hold, the other doesnt even respond :rolleyes:

Yup, yop. Plenty of the contracts on the sites have been there for months, to put it simply they are just farming CV's. There is no contract really or its on hold. Either take it off the site or at least reply and say "sorry its on hold bla bla bla"

The worst agencies are the ones that put your contract out without your permission, I've seen one agency do that. The agency sent his CV, without his permission, to the place he was currently contracted to.

yop

kayos wrote: »

Yup, yop. Plenty of the contracts on the sites have been there for months, to put it simply they are just farming CV's. There is no contract really or its on hold. Either take it off the site or at least reply and say "sorry its on hold bla bla bla"

The worst agencies are the ones that put your contract out without your permission, I've seen one agency do that. The agency sent his CV, without his permission, to the place he was currently contracted to.

The little sh***Gers, not surprised.

Did you get yourself back to Galway again? Insurance software or someit was it the last time I was talking to you, about 5 years ago

Evil Phil

I've known of agencies (as I'm sure you all have) who put out false job adverts just so they can ask where you c.v. has already been sent to. This is usually under the guise of not wanting to send it to the same place twice.