Tell me about your experiences with contracting in IT

In My Humble Opinion
1

My wife and I are hoping to move to Tennessee in the next month or so and so I am looking for a job down there. I have interiewed with a contracting firm and the company they are working with and they have offered me a job. The only problem is that they do not offer benefits and it would be quite expensive for my wife and I to buy medical insurance.

I am interested in people’s experiences, but I also have a couple of questions. First, my wife thinks that the contracting firm will hire me at $x/hour and be paid $x + $y/hour from the company I will be working for, is that how it works? Second, is it unethical to start working for a company and they leave in a month or 6 weeks when I find a better direct hire job? Third, what kind of benefits would you expect from a contract firm?

I have spoken to a couple of my colleagues who have done contract work and they have had varied experiences with this situation.

I am a little torn about taking the job, mainly because of the lack of benefits, but I wanted to hear some other people’s perspectives on it.

Thanks in advance for any anecdotes etc.

2

IT Contracting is my reason for feeling like I work in “hell”. I work for a shyte company, doing shyte work that they have laid off people from doing who are hired back as Contractors for less money and no benefits.

There are some good companies out there, but talk to their “employees”, see if they are pleased with payment, treatment, etc… The company you “Contract through” makes a HUGE difference. Don’t get stuck in “hell” with me…

:smack:

3

I have had good and bad experiences doing IT contracting. I guess it’s just like anything else, there are good companies and there are bad companies. Generally, the contractor contacts I had were sleazy car salesmen types, but that varies too.

Yes, the contract firm makes money at your expense. Do you think they get you these jobs just to be nice guys? It varies wildly what they get paid and what you get paid. It’s really hard to tell when you first start out with a company exactly how much they are charging the client, unless you know someone on the inside, or someone that already works for them. But for THEM to get up to 50 percent of what they collected was not unusual. Eventually I got better at negotiation and better at knowing what they are charging the client and I could get up around 80% of the take.

I have been out of the loop for a couple years, I’m sure the rates have gone down, and of course you get different rates for different kinds of work, or working in different areas of the country.

As far as leaving “early”, that really depends on several things. Of course the contract house is going to want you to slave for them for as long as you will tolerate it, and once you get into a company for a couple months they probably won’t be real happy about you leaving because of the ramp up in training. But hey it’s a dog eat dog world out there, as long as you don’t need either of them for references, go for your best offer. Usually when I did contract work I was constantly looking for my next job, and I was always well organized and documented my work well so someone else could step in and take it over. I would always train someone else in what I was doing before I left, whether I was told to or not.

As far as benefits, ALL companies are cutting back on benefits, not just contract firms. There were usually 3 options for me when I worked for a contract house, 1) be their employee, get paid less, but eventually have some benefits, 2) work as a W-2 temporary employee, no benefits, but a little better pay, 3) work as a 1099 contractor, no benefits, but much better pay. It got to the point where you had to incorporate to work as a 1099 contractor in Illinois, but that was then, I don’t know how things are working these days.

I would take the position for now, things are pretty tight out there. But I would also keep my head up and my eyes open at all times. If you like the company they place you at, you may end up there as an employee. I forgot to mention, there was a fourth option they sometimes offer: contract to hire, which means after a few months the company they place you at has an option to hire you. Meaning you will probably take a cut in pay, but be offered benefits.

Good luck.

4

Speaking from my experience:

Generally, the agency that you go through will negotiate a daily rate for you, a portion of which you get. For instance, my agency bills the company about 33% over my daily rate. So if I make $100.00 a day, the agency gets $33 a day profit on me.

I have two views on this: if it’s a very short term job - like 3 months, then I feel it’s only right to finish out the 3 months, instead of leaving after 2 months and leaving them to have to find someone to finish out the last month. However, it it is a long term gig, like a year, and two months down the line I get a permanent offer that works for me, I’m definitely going to take it. There’s ethical, and there’s shooting yourself in the foot. Consultants are a dime a dozen, and there will always be someone to fill your spot. Don’t stick your neck out for an agency or a client - they’re not likely to do the same for you.

It varies, but my general assumption is that there won’t be any. Sometimes you’ll get lucky and find one that does offer them. My current agency only offers a 401K. I’ve been with them over a year. Luckily, I’ll be going permanent with the client soon, so I’m not too worried about it.

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Consulting can be more lucrative, if you can find the right job. If your wife will also be working and can get benefits, it’s that much more feasible. At the very worst, it’s something to hold you over until you find a permanent position. However, if you are the only income-earner in the family, then I definitely recommend getting a permanent position as soon as it comes along. I am solely responsible for my income; if I were to lose this job, I’d be hosed. It’s not a great situation to be in, but I’m grateful to be working at all, and looking forward to the payoff of a permanent position.

5

I teamed up with a couple of my software engineer buddies to avoid the typical negative aspects of IT contracting. We banded together and incorporated and function independent of the large contract houses. This way we get to keep the full hourly amount charged to our clients and, therefore, we have enough to pay ourselves nice salaries while still affording benefits like health insurance, disability, 401-k, etc. I know this might not necesarily work for everyone, but it is great if you can pull it off.

To answer one of your questions, the company is definitely making money off of you. That is their job, to make as much money as possible. I would say that a low end mark up would be 25%. It could be much higher, depending on the circumstances. That mark-up is what allows us to charge what seems to be very high rates to most contractors who work through agencies, but still seems like a bargain to the client.

Good luck with your search. We love the contracting/consulting path. For us, it is much more interesting/rewarding than the big corporate world. Things change a lot and you get to meet a lot of new people. I hope it works out for you.

Jammer