What Is IT Contracting?
Information technology contracting is when an IT specialist works as their own company to provide their skills to clients on a business-to-business contract basis. IT contract work generally covers a fixed term. A contract may cover a specific period of time such as 6 months or be for the duration of a specific project.
So how does contracting work? The IT contractor may work directly for the end client or find assignments through agencies as an IT subcontractor. Contractors will work for a specified IT contracting rate during the term of the contract. In many cases, contracts have an option for renewal so it is possible that the IT specialist will remain at the same company for an extended period of time. Unlike regular employees, IT contractors for hire don’t receive benefits from the company they are working for and are responsible for their own taxes.
Working as an IT contractor has a lot of advantages. Some of the benefits of being an IT contractor include:
- Bigger income: information technology contractors can earn substantially more than the IT worker salary for regular permanent employees. While it varies depending on the area the pay for contractors is almost always a good deal more than regular employees pay.
- More control: working as a contract employee gives you more freedom. You can set your own schedule, take time off when you want and select the clients you want to work for.
- Gain different skills: working as a contractor allows you to pick up new skills quickly which in turn will create a bigger demand for your services.
- Variety: you can take on different types of projects and work in different industries as a contractor.
- Additional opportunities: working as a contractor can lead to other opportunities and potential ventures.
There are also some downsides when working as a software engineer contractor:
- No benefits: benefits that full-time employees receive such as health insurance, paid vacation, paid sick days and more aren’t available for contractors.
- Less security: contractors only have a job for the duration of the contract. Once a job is completed they have to get out and find more work if they want an income.
- Fluctuating income: a contractor may go through periods where they have a high income, while a few months later it can drop to almost nothing. This can be stressful if you have a mortgage, car payment and other financial obligations.
- Company outsider: contractors are often overlooked when it comes to company meetings and strategy discussions. It is easy to feel segregated from regular full-time employees.
IT Contracting FAQ
Q1. How long do contract jobs last?
The length of contract jobs can vary depending on your role and the business you are working for. Typically jobs can last from 3 months to 12 months and it isn’t unusual for a contract to be renewed. Some IT contractors may end up working for the same client for several years.
Q2. Where can you find a job as an IT contractor?
IT contractor can find work through a variety of sources. Plenty of job boards are available online, many of them which specialize in IT positions. Networking sites like LinkedIn are another option and even social networks like Facebook meet up groups can be a job source. You can also contact recruiters at IT contracting companies. A tech contractor agency will recruit IT specialists to work as subcontractors or temp hires for their clients.
Q3. What should you watch out for when taking a contract job?
Some of the questions to ask before you accept a contract position include:
- Am I going to be hired as a W-2 employee or as a1099 contractor?
When you work as a W-2 employee the staffing agency pays you an hourly rate and takes taxes from your check. Getting hired as a 1099 contractor means no taxes are taken out but you will be responsible for paying them at the end of the year. Taxes as a 1099 contractor will be higher but you can also deduct multiple expenses
- How long is the contract?
It is important to know how long the contract is for so you will have an idea when you need to start looking for the next job.
- What happens when the contract ends?
You will want to know what your options are once the contract is finished. Will the company/agency have other independent IT contractor opportunities for you or will you need to seek elsewhere
- Is this a remote position?
Some remote tech companies expect contractors to want to work remotely and may even prefer it.
Q4. Does a contract role provide benefits?
It will depend on the company or staffing agency as to whether or not a contract job offers benefits. In general, even when contract work does provide benefits they are never of the same level that you would receive as a full-time employee. The lack of benefits is somewhat compensated for by the fact that the rate of pay for contract work is typically higher.
Q5. What happens when your contract as an IT professional ends?
At the end of a contract period there are several possible scenarios that could play out. The contract could be extended or renewed if it is mutually agreeable between you and the employer. You may transition to a full-time position if it was a temp to perm position. It is also possible that you move on to the next client. Try to find out what happens at the end of the contract before you accept the job so that you can plan accordingly.
Q6. Is IT contracting hard? What are some tips on how to make remote work successful for IT contractors?
Being an IT contractor offers a lot of challenges and it can be difficult. You have to find new clients and deal with scheduling conflicts between existing clients. Then there are the challenges of taking on new projects, meeting customer deadlines and developing new skills to stay relevant.
Here are a few tips on how to improve remote work for IT contractors.
- Develop a network. Have you ever asked yourself why is it so hard to find a good contractor position for IT specialists? Depending on job boards and freelancing sites probably won’t find you the best work. Develop a network of contacts and relationships in the industry. A lot of the best work for many contractors comes through referrals. Work on making new contacts and keeping up with your existing ones. Over time this will lead to more and better contracts.
- Communicate. Good communication is a key to managing virtual teams, both for IT contractors and their clients. In contract situations it’s easy to get overlooked and not receive updates and other relevant information you need to move ahead with projects. A lot of communication issues boil down to slow responses or no response to requests for feedback, approval or resources you need to progress. Consider including a clause in your contract that the client will respond to requests within a certain amount of time. Also make sure you have more than one contact at the company in the event your main contact is avoiding you.
- Don’t misrepresent your capabilities. It’s important that you be honest about your skills and qualifications. If a contract you are really interested in calls for skills you don’t possess it can be tempting to do some quick studying using online sources and represent yourself as a specialist in an area you aren’t that familiar with. Doing so is a good way to fail the project, lose the contract and damage your reputation. Job descriptions include qualifications and requirements because they are necessary for the project. Be honest with clients about your qualifications to avoid a lot of headaches down the road. You should always be able to deliver on what you say you can do.
- Clarify all the details. Make sure to get all the important details of the job in writing including total compensation, duration of the project and how many hours per week will be needed. You need all the details of the job in order to provide an accurate estimate. Knowing all the details going in well help avoid issues later.
- Get a signed contract. A signed contract that contains details of financial compensation, length of the contract, your primary duties and what is expected is essential before taking on a job. Having the details in an email or memo isn’t enough. You need a signed contract for your protection and to avoid misunderstandings.
Q7. Is it better to be an employee or an independent contractor?
The following table is a side-by-side comparison of working as an IT contractor to working as a regular employee.
| IT Independent Contractor | IT Employee | |
| Rates | As an independent contractor, you have the opportunity to earn significantly more than regular employees | Although a regular IT employee can earn a good salary, a contractor will usually earn more |
| When paid | IT contractors are only paid for the work they do | A regular employee will receive the same salary even during slower periods when they aren’t putting in as much work |
| Taxes | Contractors are responsible for paying their own taxes and taxes will be higher than for regular employees. However, contractors can deduct expenses to reduce their tax rates | Employers deduct taxes directly from employees paychecks so they don’t have to worry about a big tax bill at the end of the year |
| Benefits | In many cases, contractors receive no benefits from companies they work for and when they do they are generally less than a regular employee will receive | Regular employees receive benefits such as health insurance, paid vacation, paid sick days, savings plans and more that bolsters their overall pay package |
| Job security level | There is generally less security as a contractor. You have to be constantly on the lookout for your next job | A regular employee usually has better job security |
| Flexibility and freedom | IT contractors have more flexibility and freedom than regular employees. They are their own boss and can choose who they work for, where they work and when they work | Regular IT employees will work the schedule set by the company. Vacations and days off must be approved by their employer |
| Job opportunities | An independent contractor has more opportunities to take different types of projects and pick up new skills | Employees work on the projects they are assigned. However, employers are often willing to pay the expense of training for new skills |
So, is being a contractor worth it? Being an IT contractor has some definite advantages as does working as a regular employee. It really boils down to the mindset of the individual and what their priorities are. If having the additional freedom being a contractor brings outweighs the security that comes with a permanent position it will likely be worth it to you.