Knowledge Centre for recruitment

Why Become A Contractor?

There has been a growth of 14% in freelance staff since 1998, putting the current number in the UK at 1.4 million.  For some this is a change driven by the economy and the loss of a ‘permanent job' but for an increasing number this is about making a choice to join this sector of the employment market.

Being a contractor is, however, very different from being employed in the traditional sense. Even if you fall into contracting for negative reasons - namely you lose your job - you should think seriously about whether this is the correct career path for you. Contracting for some individuals is ideal but for some the loss of financial security and social continuity does not suit others.  Professional contracting or freelancing is not the same as temping.  Temping, as the word itself suggests, is about doing short term work whilst looking for something better.  Professional contracting is about choosing to remain a temp.

There are many benefits of being a contractor.  To name a few:

·    In good market conditions, if your skills justify a decent day rate and you can secure long term employment you can probably earn about twice what you would in a permanent job.

·    Alternatively you can maintain a more balanced approach, working less and using the time for other interests. 

·    With good professional advice you can reduce your tax

·    You are more in control of what you do and how much time you spend working - so greater job flexibility and choice

·    You can avoid the downsides of working - office politics, worrying about promotion and stuff like that,  Thus you can just focus on doing your job

·    You get more variety - if not in the work itself then certainly in the company, people, location and so on

·    You pick up new skills, techniques and ways of working from different companies

·    You have greater control over the development of your skill set and the direction of your career

There are, however, some conditions for success and some downsides of contracting:

·    Inevitably your income is less secure since nobody is obliged to pay you.  Even in tough economic climates being made redundant carries some additional security - notice, redundancy pay, mortgage protection insurance etc

·    You do have to manage your own finances.  Even if you only work via agencies there is more to be done than as a regular employee.  This need not be onerous but does require diligence

·    You need to go to work to work.  The balance to the fact that you do not have to get embroiled in office politics is that you also should not get embroiled in office down time.  Clearly you should be pleasant and appropriately sociable but really you also need to work.  If you are being paid a day rate you need to earn that day rate each day. 

·    You also need to schedule and pay for your own development.  If you are to continue to justify your fees you need to remain at the top of your game and keep up with new technology, business practices, and professional knowledge.

You also have to make some clear decisions about your route to market.  You can to some extent operate a mixed approach but this need to be thought through else you will be less effective and get the worst of both.  The two main channels are direct to the client and via job agencies.  Each has pros and cons.

Direct tends to yield a higher day rate (since you are not sharing the fee with the agency) but can be harder to find work.  Also most companies expect to pay a bit less for a direct than via the agency since they share in the savings.  Going for direct contracts requires time (and some money) spend on marketing, networking and contract/business development.  You also need to have yourself properly set up in terms of business and ensure that you do not fall foul of the IR35 regulations.  There are many ways to do this and it is not necessarily hard but it must be done to avoid a serious mess.  Unless you are lucky, or highly skilled, you will tend to get less days of work but this is offset by a higher day rate.  Your non contracted days are not holidays but days spent on business development.

Relying on agencies is a bit safer if you are less comfortable with the business development side.  Many people start off here and use the experience to build their own network and thus increase the amount of direct work they get.  This can be an effective strategy but agencies do not find you work on their own - you need to manage and invest in the agency relationship.  Key to your success is finding a few good agencies and building both an effective relationship and strong reputation.  This way you will get more work.  Another benefit of using agencies is that the good ones can give you advice and help which can be beneficial especially if you are new to contracting.  The downside is the fee share.  Having said this, you are paying them to find work for you and provided they do, they are earning their money.  Resenting their fees is not productive.  Once again, it comes down to choice - if you chose to use agencies then you are choosing to pay agencies fees.

In fact contracting is all about choice and being totally in charge of your own career and success.  Fabulous and frightening at the same time.

Site Sponsors