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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.
Find out how to maximise your take-home pay and become a successful contractor in our free guide. Also covered in our guide is:
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.
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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Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.