If you work in the Tech industry, you may be wondering whether it is better to accept a contract job and be paid hourly, or accept a salary position. Should you look into applying to developer contract jobs or should you look for a full-time salary role directly with a company?
Personally, I’ve worked both contract and salary positions. Though, I hadn’t worked a contract role until this year (2018). At first, I was a little hesitant to accept the job. I was under the impression that I would have horrible benefits through the staffing agency and wouldn’t receive any paid time off. On top of that, I was told during the interview that contractors don’t have access to use the on-site gym.
After some serious consideration, I decided to accept the job. Why? Well, the pay certainly helped. Sure, my decision was also motivated by wanting a big-name company on my resume and going the contract route opened my options up in that regard. Ultimately, the hourly rate was too high for me to pass up. Much higher than what any salary positions came to.
Disadvantages of Developer Contract Jobs:
Healthcare benefits are a major disadvantage of working as a contractor. Typically, you will end up paying more either on your own or through a staffing agency then you would if you were working as a direct employee of the company. I calculated that my benefits on contract come to over $800 per month. That’s double what I was paying at my last salary job where I was a permanent employee.
In addition to expense benefits, 401k is another factor to consider before contracting. Does your current company have a 401k profit-sharing plan? If so, do they match? If you’re a contractor, then you will not be offered 401k unless it is through a staffing firm. Even then, the firm probably won’t match. My previous employer matched up to 4%, so it was a huge difference going from that to have nothing matched. If you currently have a 401k where you are working, and they are matching your contributions, this is something to keep in mind.
Typically you don’t get paid time off as a contractor. I was able to negotiate that when I started to get an additional five vacation days as well as paid holidays. Don’t forget to negotiate this before accepting an offer. In addition to holidays and vacation, most states now have sick time laws in place that require contractors to be paid mandated sick leave. For example, employees working in the city of Philadelphia receive 40 hours of sick time per year. They begin accruing time as soon as they start working and are eligible to use hours accrued after they’ve been working for 90 days.
An obvious disadvantage to developer contract jobs is job security. Although a lot of contract jobs are just structured as a “trial period” by employers to make sure an employee is a fit, it’s still nerve-wracking. I know that my first couple of weeks as a contractor I felt like I was walking on eggshells. You don’t usually get a lot of “formal” training as a contractor. There were several times I would beat myself up over not knowing the answer to something. Now I’ve learned it’s better to just ask.
Often, if you read your employment contract there is a clause stating that your employment with the client can terminate at any time. If there’s a recession or a company isn’t doing well, the contractors are usually the first to go.
Overall, job security is a huge factor when it comes to developer contract jobs, but that doesn’t always mean that your job is safer working as a direct employee.
Salary Decrease When You Go Perm
One of the questions that my recruiter asked me prior to my contract position was what the lowest rate would be I would accept if I were to go perm. This question is harder than it sounds. I didn’t want to throw out a number that was too high and risk my chance of them ever considering taking me on board. At the same time, I also didn’t want to give him a number that I wasn’t happy with.
You’re going to have to accept that if the company you’ve been contracting with decides to take you on perm, you’re going to take a pay cut. This could even be up to 20% of what you were making as a contractor. If this isn’t something that you’re willing to accept, then I highly recommend that you start interviewing with other companies throughout the duration of your contract and especially towards the end.
Advantages of Contract Jobs:
Higher Pay Rate
The prime advantage of developer contract jobs is money. I’ve made more as a contractor than I did as a salary employee doing less work. Why? The company doesn’t have to pay for your benefits, workers compensation insurance, etc.
According to an article by Recode, the average annual salary for a contract Full Stack Engineer was $197,600 in September 2017. This number was calculated based off the assumption that the contractor was working 40 hours per week throughout the year. To give you one more example, according to ZipRecruiter, the average SQL Developer contract salary is $102,205 per year. Not too shabby.
Most of the software positions that I’ve been contacted about that are directly with a company offer much less.
This goes to show that developer contract jobs equal out to a much higher income than salary jobs. That being said, it doesn’t mean that you still shouldn’t negotiate before accepting an offer. For more information, read my article on how to get a higher salary as a software developer.
Contract Jobs Are Easier To Get
I know based on my experiences that it’s always usually easier to get a contract job than a permanent job directly with a company. This can be beneficial for several different reasons. For starters, if you’re a recent college grad and need an entry-level job then a contract is a great way to gain experience. An example would be if you are currently unemployed and need a full-time job other than freelance work. If this is the case then looking into contractor developer jobs would be beneficial.
Experience On Your Resume
One of the main reasons that I accepted a contract role is because I want to have experience working for this company I’m at. Maybe you feel like you need experience, or even if you just want a big-name corporation on your resume? If so, contracting is an effective way of achieving this in a short amount of time.
Recruiting firms such as TekSystems will even help tailor your resume for the specific job that you’re applying for. In addition, they can add skills that you have gained through other contracts with them on to your resume. All of the updating is taken care of!
So, yes. It can be nerve wracking being a contractor and not having the “full time” commitment from the company. But there’s a flip side to that as well…
Let’s say you start a contract and you hate it. You’re not doing enough technical work, the environment and culture are off, the commute is too long, etc.
You’re not locked down to the position! After six months or whatever your contract is, you can peace out and go your own way. I’ve worked with so many people that prefer contracts for this very reason. It’s exciting getting to work for a variety of companies on tons of different projects, instead of being stuck doing the same thing for years.
When you’re interviewing for another job and the hiring manager sees on your resume that you were only at your previous contract for 6 months, there won’t be any strikes against you. Nobody views you as jumpy. There’s a clear understanding that you were simply working contracts.
If you like change, then you should definitely look into developer contract jobs.
Overall, you are almost always going to make more money as a contractor. So, if that’s a big motivator for you, why wouldn’t you give it a try? That being said, whether or not you accept a contract position over a full time position really depends on your long term career goals. Also looking into whether developer contract jobs are right for you depends on where you are in your life.
Take all of those factors in to consideration and decide what’s best for you. IT jobs are only increasing. So, if you like change then being open to contract positions might be a good option for you. At the very least take a good hard look and truly consider if contracting is for you because you never know… it might be just what you need.