Although much of the actual work you undertake may be the same, many other aspects of your life will change or need adjustment when you join the contracting world.
This article covers some of the situations and people you are likely to encounter as a first time contractor.
Many first time contractors find their first contract roles via recruitment agencies, either as a result of a direct CV submission or via ad postings on the leading IT job boards, such as Jobserve or Technojobs.
Agents play an essential role in connecting their clients with suitable contractors, and unless you have found a role working directly with an end-client, then you will need to get used to the way agencies work.
Most contractors have a horror story to tell about their dealings with agents. In reality, contractors need agents, and agents need contractors. It’s a mutually beneficial relationship.
A client will typically provide an agent with a list of roles they need to fill, and the budget they are prepared to pay. The recruitment agent will then contact prospective contractors based on the skills and experience required by the client.
Agents make their money by taking a percentage cut of the gross contract rate paid by the client. Typically this will range from 10% to 25%.
Most clients will only recruit contractors via recruiters, for a number of reasons, and therefore, you should view agents as a necessary cog in the recruitment chain.
Many agents try to source new work indirectly by using the eyes and ears of contractors they already have on assignment. Some typical methods include; “What’s your project manager called again?” (where the agent never knew this information in the first place – they’re trying to gain new leads), and “The client’s only willing to pay £40 per hour, maximum” (when, in fact, there’s a fair amount of room for negotiation).
Always be professional in your dealings with agents, and keep in touch. Recruitment is very much a people business, not merely a numbers game. If you stand out in an agent’s mind as a good person to deal with, they are more likely to consider you when future contract work is available.
Never miss a trick with our Contractor’s Guide
Find out how to maximise your take-home pay and become a successful contractor in our free guide. Also covered in our guide is:
- Getting started – discover which business structure is best for you and how to get started.
- Your tax and financial obligations – all you need to know about your paying tax, filing accounts and what costs you offset.
- Making your business a success – learn how to grow your business, how to market yourself and to forecast for the future.
The Contractor Accountant
You’ll soon find out that your accountant is your most important ally as a contractor.
Accounting-related admin has come a long way. The older methods typically had to be conducted by post, entailing stuffing all your receipts, timesheets and official looking paperwork into a large envelope and sending it off, hoping for the best each month.
The majority of contractors rate the quality of service they receive as being the most important factor when choosing an accountant, more so than price.
You should try and choose an accountancy firm who has no entry or exit fee’s. Knowing you can leave without any worries – plus the recommendation from an existing contractor – someone you trust – is also priceless.
Your First Contract
When you are hired as a contractor, you will be expected to settle in fairly quickly, and start work right away.
You may have been assigned a specific task (such as migrating code from a legacy system to a web-based platform), or receive a more general remit (such as analysing the current working practices in a unit of a large corporation).
You may be the sole contractor on a project (although this is rare), or in a large team – mainly made up of contractors, with a permanent manager, or even a contract team or project leader.
You can acquire a great deal of new industry and technical experience in a contract role. You’ll learn a great deal about team dynamics, and how important it is to get on with your colleagues – whether they are permanent staff or fellow contractors.
Being able to communicate is an essential part of being a contractor – both to gain the trust of your colleagues, and when demonstrating your ability to complete a task.
Although you may have taken a contract based on a vague description of the task you have been asked to undertake, you should always ask for a clear outline of what is expected from you.
You may find that your remit changes fairly soon after you arrive, without your contract description changed to reflect the reality of the situation. Flexibility is a key characteristic you need to possess as a career contractor, and dealing with changing requirements is something you need to expect on any project.
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Your initial contract will typically be for 3 or 6 months, and in many cases, you may be offered a renewal. You should approach contract negotiations with an open mind and a sense of reality.
If the economic climate is challenging, for example, you’d be wise to secure a contract extension until more opportunities come your way. It may also be prudent not to be too pushy when it comes to increasing your current rate.
Conversely, if you feel that your position is strong, and you have made yourself indispensable to your team, you have more room to manoeuvre on the contract rate front.
Contract work was abundant in the late 1990s and early 2000s, and there were fewer contractors competing for the same roles, so the ‘opportunity cost’ of leaving a role in the expectation of a higher rate elsewhere was fairly low.
These days, there are far more contractors fighting for the same work, and average rates are not far off what they were a decade ago. New contractors should think carefully when offered the chance to extend their first contracts, as the old phrase ‘the grass is always greener’ is not necessarily true.
You may have heard that some employees are not so keen on contractors – mainly because you may be earning twice as much as they do. Others may dream about becoming contractors themselves but have been unable to take the leap.
In some cases, departments have cut down on permanent hires, and replaced them with contractors, to lower the official headcount.
The age-old advice is not to stand out when you start a new contract. Try to fit in, and don’t boast about your contract rate.
Typically speaking, the banter between contractors and most permanent staff is good-natured on the whole. Provided you keep your contract rate to yourself, and don’t show off, you can only be judged on your performance.
Perhaps the best advice to receive about life as a first-time contractor is to treat your first contract as a valuable learning opportunity. As well as the practical ‘on the job’ experience you will gain on your first contract, you can learn a great deal from veteran contractors, who have seen it all before, and can typically provide some amusing anecdotes as well as practical advice on living as an IT contractor.
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