Here at Ergo we speak to lots of IT professionals every day – both jobseekers and employers – and we are often asked about the benefits (and potential pitfalls) of IT Contracting.
From a candidate perspective contracting promises the freedom to work on exciting projects while learning and developing with new clients in disparate environments from one contract to the next. It’s no secret that contracting usually results in higher salary too.
Hiring contractors also provides a level of flexibility for employers which enables them to hire teams of specialists to quickly implement new projects rather than trying to upskill internal staff into roles for which they are unsuited.
We have seen considerable growth in the Contract Market here in Ireland and a recent survey from Bullhorn states that 61% of Recruitment professionals expect to see this trend continue (compared with just 3% who are forecasting a reduction[1]).
So if you are considering becoming an IT Contractor you may find some of your concerns addressed below.
What are the benefits of IT Contracting?
- Higher Take Home Pay: Contracting tends to pay 15% – 20% more than the equivalent permanent / employee role.
- Flexibility and Variety: Contract work tends to be project-based and contractors can move between different sectors / cultures / environments which gives them some flexibility and variety in their work. Many take their skills overseas and experience new cultures while working.
- Enhanced Skill set: Regularly working in different environments gives greater exposure to a varied technology stack and IT Contractors tend to have a broad knowledge-base when compared with a candidate who has spent years in the same company.
- Reduced Taxes: Many business expenses are tax deductible including phone, internet bills, travel etc.
- Quick Interview Process: Contractors are often used to cover immediate requirements, so employers are motivated to conduct a relatively short interview.
- Increased Employability: IT Contractors tend to have big networks and often find their next role by “word of mouth”.
- First step on the career ladder: Many junior positions are offered as contracts including hardware deployments and OS migrations. Inexperienced candidates may find it easier to secure their first role in IT as a short-term contract.
What are the negatives of IT Contracting?
- No employee benefits: IT Contractors do not receive standard benefits such as pension contribution or health insurance. Annual Leave, Sick Days and Holidays are taken at their own expense and Bank Holidays are unpaid too
- Lack of Job Security: The lack of a permanent job can seem overwhelming to some
- It can be difficult to return to a permanent role after spending time as a contractor due to the above reasons
Do I have to manage / calculate my taxes?
No. There are many accountancy firms with specialised IT Contracting services who will do this for you.
Do I have to set up my own Company?
Yes but your accountant can do this in a matter of hours. They will also manage your taxes, facilitate your payments, process your expenses and provide advice on everything from mortgages to tax incentives available to contractors.
Can I get a mortgage as an IT Contractor?
Yes. There are a number of mortgage brokers who specialise in this area. You will need a strong employment history with minimum breaks in employment, full set of accounts and demonstratable savings.
How do I calculate my daily rate / salary?
In general we multiply the daily rate by 232 – which is the number of work days in a year less weekends, bank holidays and 20 days Annual Leave (as you will not be paid for these).
Let’s take €300 as an example; if we multiply 300 X 232 we get €69,000. This will be your Gross Income per year.
We engage with candidates to help them find the IT job that is right for them; one that will bring challenge and satisfaction, as well as career progression.
The IT market is highly competitive right now, but we can help you cement your position there. So if you are considering work as an IT Contractor feel free to contact Ergo today for more information on this growing area and an open discussion on our active contract roles. Check out our open roles here.
