If you thinking about becoming an IT contractor, you need to ensure that you are the type of person who will thrive outside the world of permanent employment. Here we look at the main differences between contract and permanent work.
Contracting vs. Permanent
As a permanent employee, your work is provided to you, and you are rewarded with a fixed salary and typically a number of ‘perks’. Your job will often be reasonably secure, especially when the number of IT professionals in the UK is at an all time high according to e-skills UK.
As a contractor, you must source your own contract work, and you only get paid when you work. Whilst in contract, you can earn multiples of what you did per hour as a permanent worker, however there are no ‘perks’ to speak of, aside from those you decide to pay for yourself.
As well as the ability to adapt to new environments quickly, contractors also need to learn negotiation skills (to deal with recruitment agents), become familiar with running a company (if going down the limited route), and marketing yourself – both ‘on paper’ and in person.
The financial rewards of contracting
Life as an IT professional has never been so good. In 2011, almost 1.1m people were working in IT, and the number of advertised roles exceeded the number of candidates (e-skills UK data).
The average permanent IT salary at the time the study was conducted was £38,500, compared to the average UK salary of £28,000.
According to JobsAdsWatch, which correlates data from online IT job boards, the demand for both permanent and contract workers has rebounded strongly following the credit crunch downturn; up 4.9% and 6.6% respectively between Q4 2011 and Q1 2012.
The average contract rate is between £35 and £40 per hour according to a range of sources, however rates can vary enormously according to location and skills.
As an example, according to TheITJobBoard’s salary monitor, the average permanent salary for a developer in London £57,500 p.a. compared to a daily rate of £450 for an IT contractor. However, in other regions, average salaries and rates can be significantly lower.
Are you suited for the contracting life?
For those who decide to become contractors, the personal and financial freedom such a move can offer can be truly liberating, and most never regret the decision to leave the permanent world behind.
However, the uncertainty and demands of contracting life do not suit everyone, so you need to be true to yourself and work out if you are temperamentally suited to becoming a contractor.
The worst case scenario should things not work out is that you return to permanent work, and remove any mention of your brief taste of contracting from your CV.
Whatever happens, make sure you leave your permanent job on good terms, as many contractors return to places they have previously worked to provide contract services.
Read our next article which outlines the steps you need to take to become an IT contractor.
- ClearSky Accounting - specialist support for contractors
- Visit Hiscox for Professional Indemnity and Business Liability Insurance
- Contractor Finance - up to £30,000, when you need it
- InTouch Contractor Accountants - Personal Online Accounting
- Join PCG - Free impartial start-up advice for contractors.
- Visit Qdos Consulting for tax investigation cover and IR35 insurance.
- 90% Pay Retention for Contractors - Helix Management Ltd