Anybody here a Software Contractor?

krinpit

Hi,

I'm a Sofware developer in a financial company (2.5 years exp, VB.NET), and at some stage in the future, I'd like to become a contractor.

Has anybody here worked as a contractor?
What are the disadvantages that you encountered?
How does it work out tax-wise and is it difficult to keep track of this kind of thing?
Would you recommend it (I'm currently 24 with no mortgage or dependents)?

As I say, It's not something I'm considering in the short term, but I'd like to get opinions, so that I can plan for the future.

Thanks.

yop

Worked as contractor about 3 years ago, rates have from what I have been told reduced considerably, does not seem to be as many contracts out there but I really have not been looking so could not confirm this.
You can make great money from it but then again you do not get the benefits of sick pay, holiday pay, pension etc

Hobbes

try the work forum. I'm pretty sure this has been gone into great detail there.

Merrion

Has anybody here worked as a contractor?

Yes - currently

What are the disadvantages that you encountered?

Insercurity of income. Having to deal with agents.

How does it work out tax-wise and is it difficult to keep track of this kind of thing?

Not very difficult - you can pay PAYE and VAT by dirtect debit and pretty much everything else can be done online. You will need an accountant though if you go the ltd company route as you have to file audited accounts.

Would you recommend it (I'm currently 24 with no mortgage or dependents)?

Yes - if you like programming. The chief gain is that you escape the "Peters prinicipal" that is endemic in Irish IT.

Hobbes

Whats peters principal then?

Evil Phil

Ditto for Peters Principal ...

Merrion

The Peters principal is the observed phenomenon whereby people in (usually larger) heirarchical companies tend to get promoted to one level beyond their competence.

For example, employee x is a talented new programmer. They know their stuff and learn the business pretty well. So we make them an analyst programmer. They have some business competence so get on OK there, so we make them a project manager. They have then reached above their competence and their career stalls there.

This happens because companies fear losing good employees so want to increase their wages. To increase their wages they need to promote them (or the not so good employees get hacked off). They then promote them out of whatever they are good at in the first place and the company loses out anyway.

Contracting frees the company (and the employee) from this because the contractor has signed a contract to remain in the employment for a known term and their rate is based (partly) on their competence rather than their position in the company heirarchy.

Hobbes

Merrion wrote:

For example, employee x is a talented new programmer. They know their stuff and learn the business pretty well. So we make them an analyst programmer. They have some business competence so get on OK there, so we make them a project manager. They have then reached above their competence and their career stalls there.

First I heard of the name for that. Also while such an instance may be true say 10 years ago it is generally not the case now (unless the company sucks to begin with).

A person moving into a new job is generally required to train/study for that position. I am sure some companies just make up positions but I wouldn't say it is the norm.

Thier career can stall before that position. The company can blankly say they don't have the skills to extend and have reached thier market cap for the current level. Its up to either the developer to upskill or leave. Generally if they are promoted the company would give them the required training for thier job. If they don't then its easy enough to let them leave and hire in grads for peanuts.

Contracting frees the company...*snip*

Don't believe the proproganda. Both situations are two edged swords. Yes you can make lots of money but you can also starve if you are capable of those kinds of jobs. You have none of the benefits that a full time job offers. To some that is fine, to others it isn't.

An example. I'm full time employee. I am moving to a new position in work. I will get over three weeks of training in areas we both felt I am weak in. Any further training required will be given as needed. They are also helping pick career paths in what exams to sit for certifications and pay for all that.

I would have to do this myself if I was a contracter. That time would take away from personal time or money made.

On the other hand contracters (good ones) can make serious money. But I have met/worked with people who are gods in development but wouldn't last 5 minutes in contracting due to social skills.

bonkey

google for Peters Principle for more information.

Merrion

unless the company sucks to begin with

Companies generally do. One or two may buck the trend, but not so that you'd notice.

Hobbes

bonkey wrote:

google for Peters Principle for more information.

I did. Nothing came up.

Companies generally do. One or two may buck the trend, but not so that you'd notice.

Hardly. I have friends who work in other companies. Just because I am not a contracter doesn't mean I don't hear about what goes on in the industry. But it is normal for contracters to brag about 'how incompetent companies are and how I saved the day for them'.

scojones

http://en.wikipedia.org/wiki/Peter%27s_Principle

Merrion

This is no reflection on whether contractors save the day and are all heroes (I certainly am not) but more the underlying cause of there being a contracting industry and a non financial reason to want to be a contractor.

The fact of contracting today is that there isn't much more money in it than there is in permanent employment.

A person moving into a new job is generally required to train/study for that position.

Outside of the blue tops, I haven't heard of anyone being given genuine training when being moved from analyst programmer to team lead to programme manager. Technical training is sometimes (but not often enough) given but management training isn't and for an employee to ask after such a thing would be seen as a sign of weakness.


blue tops : Microsoft and DELL...

yop

On the other hand contracters (good ones) can make serious money. But I have met/worked with people who are gods in development but wouldn't last 5 minutes in contracting due to social skills.

Social skills is a major player in getting contract work, on the all the contracts I worked on I had to liase closely with management and developers, of course technical knowledge was a big then but a factor that you find is that a permanent member of staff who you are dealing with, especially programmers can sometimes feel intimidated, there is this ora that contracts know it all, so you have to be able to have the crack with them and if they don't know what you are on about it, have the ability to explain it.

Outside of the blue tops, I haven't heard of anyone being given genuine training when being moved from analyst programmer to team lead to programme manager. Technical training is sometimes (but not often enough) given but management training isn't and for an employee to ask after such a thing would be seen as a sign of weakness.

Don't agree there at all, I was given team lead training in 2 companies. As for asking for training and showing sign of weakness again this is a bit of a daft statement, if your manager makes you feel this way then he is wrong

pollyantic

Been contracting for a fair few years now.
Can't say it is any different than when i was in full-time apart from i earn more money and pay less tax.

Its a lifestyle that is scary when you start out but you get used to and would not have it any other way after a while.

I've been in long term contracts in 3 companies now which had staff culls and lets go a huge amount of perm staff and kept the contractors. I gathered it was to do with HR budgets etc.

Rates are very high compared to full-time. There are tax perks that will greatly increase your salary too. You have a fixed term contract so must go when you're told.
More often than no though they will ask you to stay.
And when you do leave its easy to get another contract.

Lack of Sick pay is irrelevant. You wont be sick too many days when you lose a few hundred for the pleasure of feeling miserable in bed.

Its very hard to arrange holidays, so you just book your holiday for the end of your contract and if the company wants you to stay then they have to allow for your holiday and you'll be back after that.
You dont get paid for holidays but you earn more than enough to cover them.

Accounting is easy. Pay a good accountant. The fee is tax deductable.

When i finish a contract i have a policy of taking time off. What i do is not look for work. Agencies call all the time anyway so you just go to interviews when they call you about them. Most i've been off between contracts in the last 5 years is 1 month and that was to get married. Usually its lass than 3 weeks before i get a job and sometimes i dont even want one at that stage, so put up my rates and wait for the calls, but generally i make hay while the sun shines.

There is nothing to be afraid of when going contracting at all. Its generally the fear of the unknown that stops people going contracting in the first place. And that is a very big fear to overcome. Towards the end of a contract used to ALWAYS get worried in case i never worked again. Just in the head though, because it always turns out better than the last time.

Hope this has calmed some of your fears.

krinpit

Thanks for the feedback. Seems like a healthy mix of positive and negative opinions.

I can see it will be scary starting out

What channels would you use to source contracts? Would it be the dreaded recruitment agencies such as CPL, Adecco etc..., or would it be more from websites like irishjobs and monster?

Hobbes

Contracter will probably tell you better, but if I was to guess I would say you would have to go with a recruitment agency until you have a couple of contracts under your belt.

pollyantic

Agencies are the only way to go for contracts.
Most of your jobs will be short notice. ie they need someone to start within the week.

Here is an agency for London jobs
http://www.jobserve.co.uk/

One option i have used in the past but am sick of now is to go to london Monday to Friday.
Fantastic money there. You fly out Monday morning and back Friday night, or you can stay if you want. All of your expenses (hotels flights) are taken care of via your own expenses and tax refunds.

A 6 month contract in London will make you twice as much as a year in a similar full time job in Dublin (after all you're expenses tax perks etc are taken into account) , if you can stand it over there. Great if you're single but not so if you're married or have kids.

Brouhaha

Pollyantic,

What kind of tax perks do you utilise (if you don't mind me asking)? Phone, books, professional subscriptions, broadband and the like are obviously legit. expenses. Mileage is trickier as far as I can tell. Mileage to interviews would be fine - but day-to-day only if you're working two or more contracts at a time I would think. Same for subsistance? There are grey areas where you can be "creative" but it is not straight-forward as far as I can tell. Would be interested in hearing another contractor's experience of this.

pollyantic

You can claim 1.08 cent a mile up to 4 thousand miles and it drops after that. I think its increased for this year.



Ways to get mileage:
1) Work from home several days a month.
2) Only do contracts of 3 months.

Option 1 is obviously the best option here.

The main thing here is that your office is your place of work and you go out to work on sites when necessary. It may even be necessary every day. You just need to be able to argue that your main place of work is your home.

Parking is deductable. If you buy anything that is used for work. (PC, laptop, pens , pencils, books, desks, chairs, disks, cds, dvds , digital camera, digital video camera, Hard disks, Memory cards, scanners etc (the list is endless) you get the vat back plus you dont pay tax on the money you buy them with.

eg €1000 PC

- 21 % vat leaves it costing you about €886

If you were to earn the money to buy this you would have had to earn about €2000 gross to end up with €1000 after tax and PRSI.

So you've saved yourself more than half there.

If you stay away from home. Say London, you pay yourself £STG180 (London price, its different for each city) per day expenses. This money is not taxed.

The list is endless. This is why you need a good accountant.

There are other grey areas that your accountant will help you with, but make sure you get an accountant thats fussy about what you claim. That way you wont get carried away like some people i know do. If they ever get audited they're screwed.

Brouhaha

Further to what you said the cost of any hardware would be further decreased as you depreciate it in your accounts over the following few years.

I was not aware that contracts under 3 months could allow mileage to be charged.

pollyantic

I think the idea is that you are using your home as a base to set yourself up with short term contracts and train yourself during downtime etc.
In practive it doesnt work out because almost always you renew your contract so i didnt go into that too much with the accountant.
I generally negotiate that i work from home for a few days a month, half day at home a few days a month, or do work in the evening at home in liu of a day off when i get a contract. I've never had a contract where i wasn't allowed to have one or more of these options.

Faltermyer

What attitude do banks/building societies take to this as an occupation if, for example, you are looking for a mortgage, or even on a smaller scale - a personal loan?

I presume you need a certain minimum experience in your field to do anyway decently out of contracting??
On average, how much experience might be necessary?

Are there any areas in which contracting is easier/more popular for companies? I.e. Particular programming languages, Networking, etc. ?

pollyantic

The banks love you because you earn a lot.
I thought they'd be a bit iffy when applying for mortgages etc but no problems.
Show them your last 2 years accounts and you're away.

You can contract in any skill, but VB Net, VB6, SQL Server, Access are the main ones. There are some C++ contracts but not a whole lot.

I would advise at least 4-5 years experience in your chosen field as the under skilled guys are weeded out fairly fast.

Easiest way is to submit your CV to an agency and see what happens.

Evil Phil

It would seem that a lot of companies were choosing vb.net over C# but contractors are choosing C# over VB.Net. At least that was the case last October. I have my theories why but that's another discussion.

.Net is the way forward I reckon, at least until all those legacy VB6 apps stop working in years to come

Faltermyer

Cheers, Ill let you know how I get on in 2009 then, Im only finishing my degree in May!

By the time Im ready for contract work I reckon ill either be in some form of GSM/3G Telecomm's or Computer Networks.
I did a CCNA last year, and by time I go looking for full time work(September/October) ill have 10-11months part-time experience in GSM Telecom Tech Support so ill probably go for something GSM/3G Operations Engineering related, and do that for a couple of years while I try do a CCNP.

Anyone know what sort of demand there is currently for contracters in either Telecomms Engineering or Cisco qualified fields?

damnyanks

Cisco is generally in demand to some extent Not sure exactly...

But in 2009 god knows GSM will probably be gone

Brouhaha

Hi polyantic,

I've considered before contracting in London (for the rates primarily of course). Have wondered how best to find a contract there - I was thinking about going to London for a couple of weeks, buying a mobile phone there to have a UK number and applying to the contracts on jobserve or phoning the agencies. I would think this would be a better approach than sending a cv from Ireland with an Irish number as the agencies would prefer to deal with local candidates. How did you find applying for contracts there?

Cheers,
BHH

pollyantic

Brouhaha wrote:

Hi polyantic,

I've considered before contracting in London (for the rates primarily of course). Have wondered how best to find a contract there - I was thinking about going to London for a couple of weeks, buying a mobile phone there to have a UK number and applying to the contracts on jobserve or phoning the agencies. I would think this would be a better approach than sending a cv from Ireland with an Irish number as the agencies would prefer to deal with local candidates. How did you find applying for contracts there?

Cheers,
BHH

I found the agencies were more than willing to deal on my Irish mobile. Even arranged phone interviews for me as i was in Dublin. Some will even offer you the corporate apartment as part of your contract nad they are very nice apartments.
If you wanted though you can make out that you live in the UK, but are in Ireland on a contract and they dont know the difference between you and a local person.
Once you're over on your first job you can get yourself a sim card for £20. A vodafone one works in an irish vodafone phone. Dont know about the others though.
If you want an address there there are companies that give you a virtual office with real address for around £10 per month.
All they do is forward your mail anyway.

asantoso

Hi all,

Do you have to register officially with the government to become a software contractor?
I live in Canada.

Regards,
Agus.

Evil Phil

Yes you'll have to register a business in Ireland to be a contractor.

tiptap

Evil Phil wrote: »

Yes you'll have to register a business in Ireland to be a contractor.

You don't "have" to. Alot of companies are using an umbrella type scheme so you don't need to go through the hassle of company registration, vat registration etc. It's handy for a short term contracting but if you're planning on doing it for any significant amount of time, you're better of setting up your own company.