Rise of the IT Contractor


Remote Contract WorkerThe days of a thirty-year career at a single company are dead.  That trend went by the wayside along with pet rocks and leisure suites.  According to the US Bureau of Labor Statistics, the average tenure for workers has dropped to just 4.1 years.  And, according to a recent article at Investopedia, it follows that less than 18% of private sector workers have access to pension plans.

In today’s cutthroat business world, companies are chewing up and spitting out employees at a phenomenal rate.  Companies are demanding more productivity and unrelenting dedication and company loyalty, without rewarding workers for it.  All of these changes have had a big impact for the contract worker, especially in the Information Technology sector.

Modern companies like the concept of temporary workers.  The theory is contingent workers can come and go to fit business needs.  Companies pay a small premium but avoid being saddled with long-term costs for permanent salaried employees.  Contracts can be canceled with little notice and minimal penalties, essentially shedding temp workers on a whim.  Some sources, like this article from MBO Partners, predict this trend will result in as many as one in every two American workers spending time in an independent career within the next ten years!

Based on the data, we can all agree that contracting and gig work are on the rise while long-term company loyalty is dropping.  But what does it mean for the average technology worker and how can she or he capitalize on this trend?

First, don’t be afraid to take a contract assignment.  The technical experience is generally on par with that of permanent employees.  In many cases, the work is side by side with employees in similar roles.  In some extreme cases, temp IT workers even fill roles that require specialized skills employers aren’t willing to pay permanent workers to obtain for fear they will get hired away.

The experience can be rewarding, but don’t jump on the first assignment from a random recruiter on LinkedIn.  Instead, look for a contract firm offering reasonable benefits with a good reputation from past and current employees.  Benefits should include paid time off as well as healthcare and retirement or allotments for each.  Life insurance, disability and other ancillary benefits are an added bonus.


Now, look closely at how the firm offers these benefits.  Are they part of the offer package or are they subtracted from the hourly rate?  A good benefits package can encompass as much as thirty to fifty percent or more of total compensation and can dramatically reduce the pay rate.  If the firm doesn’t offer benefits, or if they are paid entirely out of wages, plan your rate demands accordingly to avoid costly surprises before signing on.

After navigating the rate vs. benefits minefield, consider the type of working arrangement.  Is it a straight contract or contract to hire opportunity?  How long is the initial contract? Does the firm discourage clients from hiring employees directly or charge ridiculous fees?  Does the company offer a bench policy for employees that are between clients?  Many firms look at these items as opportunities to raise margin.  Watch out for firms that are difficult to work with or have punitive hiring policies for the client.  In short, if it feels shady, it probably is.  Look elsewhere for a more trustworthy firm.

Now consider that some aspects of a contract can be influenced by the worker directly.  If a client feels they are getting a skilled worker at a reasonable rate, this often translates into contract extensions.  Contract extensions avoid bench time and help the contractor to bankroll savings for the next “rainy day” when one contract ends and before another starts.  Higher priced workers tend to have shorter contracts, which can get terminated early if skills are less than expected or advertised.

Piggy BankFinally, contract workers often make a small premium due to the temporary nature of contingent work.  Regular paychecks can sometimes be elusive as clients come and go.  This is especially true in a down economy.  A wise contractor will save that extra money to cover unexpected bench time and gaps between contracts.   Contracting is not a business for a worker to live paycheck to paycheck.

This might seem like a lot to take in.  But most contract workers quickly adapt.  These axioms become second nature after only a few assignments.  Many workers have started to like contract opportunities, with some even planning extended vacations or family time into the expected gap between contracts. 

Armed with data and a few tips for a more enjoyable experience, are you willing to give contracting a try?