Your Ultimate Pros and Cons List for Contract Roles
As technology continues to advance we have seen a demand for contract roles in the world of business. Companies who are implementing new technologies and strategies to grow their businesses, such as BI and Analytics, Artificial Intelligence and Adobe Experience Manager are bringing on contractors to work on both short term and long term projects. Most companies are tapping into the benefits of utilizing full-time talent without taking on the liabilities or responsibilities of having someone on their W-2.
According to an article published by NPR, "A new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce.”
The way of work is changing and it’s touching all industries and the tech scene is no different. Previously, people would stay at a company for 10 plus years, cash in on all company benefits, and plan for retirement. Now that is becoming obsolete as the younger generations are entering the workforce and are more open to contract positions because they change jobs so often.
So what are the options and what are the differences?
In today’s workforce, you have many options but two of them are, working as a permanent employee or working as an independent contractor. For many, a contract role has never been a consideration or they didn’t even know it was an option. In today’s blog, we are shedding light on how contracting works and the pros and cons of choosing it as a career option.
How It Works
There are a few different ways an individual can work on a contract for an organization.
(W-2) - Work on the W-2 of a staffing agency/recruitment company who would be paying you by the hour
(Corp to Corp) Working for your own LLC on a contract for another organization. In this case, the individual would be an independent business owner providing a service for another company.
(1099) The candidate would be an independent contractor contracting for another company. (very similar to corp to corp but the individual is working as an individual, not an entity.
When it comes to working as a contractor, especially if you have no prior experience with it, you may feel a whirlwind of emotions. One of the most common feelings associated is fear. Fear of no guarantees of a job/project, work not being steady or the fear of not having company benefits. These are just a few reasons why people dismiss considering a contract position. But don’t let those fears stop you if you're interested in switching to a contract, there are many benefits and reasons why you should consider the contract opportunity.
Contractors are typically paid much more than someone who is working full-time. This increase in compensation is to make up for the lack of benefits and the notion of instability. If you are making 130k a year the typical rate for a contract would be closer to $85 hourly. This increase helps to cover the benefits that you would now have to pay for yourself and for the potential of going a short period of time without work.
As a contractor, the choice is yours. You get to pick and choose the contract terms and company you want to work for. This comes with many benefits. Whether you have a family or enjoy traveling you can pick what is best for you and plan your commitments around each contract you work. Each contract varies as far as length, so you can choose to take on a 6-month project or year-long project. Often times an initial contract will even extend if the scope of work continues. You can even take off in between contracts to travel, spend time with family or expand your skills sets and take a certification. There is even the opportunity to take on multiple projects if the hours allow it.
3. Shape Your Career
With working contract, you gain exposure to various tools, teams/companies, and projects. This gives you a well diverse resume that you wouldn’t get with a permanent position. By taking on jobs that best fit your goal, you have the opportunity to control your career. If you want a challenge you can find a contract that will expand your skill set. If you want to start from the ground up, you can find a startup to work for. Contract work is a great opportunity to become a well-rounded candidate that companies are constantly looking to hire.
As with everything, there are always things to consider when looking into contract work.
1. Travel time or Relocation
Contract work can fall into three categories working onsite at the companies location, remote work, or travel. The travel can vary depending on what the companies requirements are. Often times onsite is needed during the ramp-up period and can last 4-6 weeks. Other times the company will need you on site during the length of your contract due to the nature of the work or even data/policies. Lastly, you can be fully remote.
2. More Responsibility
When you work as a contractor you are responsible for fending for yourself in terms of benefits and government contributions. This can be a bit of a hassle but it is doable and can be learned.
There is always a risk when it comes to working as a contract. As mentioned before, you are in control of your schedule and the amount of work you do. If a contract is coming to an end and you want to keep working, it's up to you to secure your next contract. If you market your work, skills and build a network then work can come to you as you build your reputation.
At the end of the day when making a decision if a contract would be the right fit for you, you need to ask yourself what is important to you? What are your goals and career aspirations? There is always a risk even with full-time employment you have to decide what is your risk appetite!