IT Contract Work FAQ

IT Contract Work FAQ

Technology professionals often work contract jobs, essentially spending several months on a project with one organization and then moving on to a new assignment elsewhere. Sometimes this work arrangement is by choice; other times it's a way for techies to earn a living between full-time jobs.

Even if techies learn the ins and outs of contract employment over the course of their careers, they still have lots of questions about it. So if techies have questions, we've got answers.

What's the difference between being a contract employee and an independent consultant?

Contract employees are hired by consulting or staffing agencies and then placed in assignments at businesses that need help on projects. Independent consultants typically market their own services to businesses and bill them for those services. The term "consultant" is often used to refer to both situations. This article refers to contract employees.

Who pays me as a contractor?

The staffing agency. At the end of the year, you'll receive a W-2 from the agency. Independent consultants, on the other hand, get 1099s from their clients and must pay self-employment taxes and quarterly income taxes.

Will I make more through contract employment?

About 30 percent more is typical, says Larry Bruce, a vice president at Sapphire Technologies, a staffing service that places permanent and contract IT professionals. That monetary advantage may disappear, though, once you take benefits into consideration.

Will I receive benefits?

"Fringe benefits vary widely," says Joshua Feinberg, cofounder of Computer Consulting 101, a training firm for IT consultants. The staffing agency may offer -- or allow you to buy into -- group health and retirement plans, but you may not get paid vacation or sick time. Depending on the firm, you may be able to negotiate benefits.

Is there a common duration for assignments?

A typical IT assignment might last about six months, says Jim Lanzalotto, a vice president at staffing firm Yoh. Three-month or year-long assignments are also common.

What are the key parts of the contract I sign?

The agreement between you and the staffing firm will likely spell out the pay rate, the contract duration, your job role and your hours. Some contracts may include other details specific to the company, such as the dress code, Bruce says.

What does contract-to-hire mean?

In these arrangements, the staffing agency agrees with the company that after a certain period -- six months, for instance -- the company will have the option to hire you as a permanent employee. You have no obligation to accept that offer, and the company has no obligation to extend one.

What does being "on the bench" mean?

Some staffing companies retain their consultants even if they have no work for them. That means you would be paid without having to report to an assignment.

What if I leave an assignment before the contract's end date?

The agency will expect you to give ample notice before leaving. Agencies prefer that you do not leave in the middle of a contract, but it happens. Just don't make a habit of it. "If you're constantly backing out of assignments, that catches up with you," Bruce says.

Will contracting give me more flexibility?

In theory, yes. As a contract employee, you can take a six-month assignment, say, and then take a few months off to travel or pursue a personal interest.

Will I need to travel for assignments?

Not always, but if you have a very specialized skill, travel may help your prospects. "You definitely help your position in the marketplace if you're willing to travel," says Terry Phillips, the regional manager at Robert Half Technology in Akron.

Will I keep learning?

"Consulting does allow you more freedom to develop your skill set," Phillips says. "When you work for Company X, Y or Z, you are limited to the technologies within those organizations." Bruce says that contracting requires a different mentality about learning. You need to realize that you're building your skill set for yourself, typically by gaining exposure to new companies, new challenges and new technologies with each assignment. That means you should seek assignments that fit with your overall career goals.

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