Why Do People Want to Become a Contractor?
I assume you are reading this book because you are thinking about making the jump to contracting.
Therefore, I would imagine that you are in a state of permanent employment, and you are unhappy with one or several aspects of it.
Poor Job Satisfaction
This could be caused by internal politics where you are spending more time ‘playing games’ than doing your job.
Poor Work–Life Balance
You are working long hours and do not have enough time off.
You are unhappy with your remuneration. For example poor salary, no pay raises or having benefits being cut.
People Being Promoted above You
Maybe you have seen your fill of people being promoted above you even though they are not as talented as you.
The work itself is dull or not motivating
No Career Progression
There is no real prospect of intellectual growth or career progression.
Being Promoted Away from Your Job
People sometimes get promoted away from their preferred job.
For example, as a top accountant or good software programmer, you may be good at your job and enjoy it. However, because you are good at your job, you tend to get promoted up the management chain which means you move away from what you are doing.
Therefore your job satisfaction drops and you become unhappy.
Being Made Redundant from Permanent Work
With the increased number of redundancies over the past decade, there are a growing number of people going contracting because they either do not want to go back to permanent work or they are actually struggling to find permanent work.
No doubt there are several other reasons which I have not listed.
However if you answered “Yes” to any of the reasons above then I would strongly recommend that you investigate whether contracting is suitable for you.
Why Do Firms Want Contractors?
Despite what one reads in the media, contractors are very much in demand.
Firms will recruit contractors because they have a skill gap and also because they can be recruited and removed much easier and quicker than permanent staff.
Contractors will be used in a variety of situations. A few are listed below:
To provide specialist skills that the firm does not have or only needs for short period of time. Such as tax accountancy, specific training or skills in a specific technology
To provide interim management skills. For example a manager has left and a contractor is brought in to bridge the gap while a permanent replacement is recruited.
To provide specific skills to support a project or change programme. For example project management, business analysis or technology skills.
To support a company expansion. For example a firm is expanding but is worried about the financial risk of recruiting permanent staff. Therefore contractors are brought in initially because they can be recruited and removed at short notice.
To support a company downsizing. For example a firm is downsizing and contractors are brought into ‘plug’ skill gaps due to downsizing. Contractors can be recruited and removed at short notice.
Who Would Be Your Competition?
Competition would come from several areas.
The most obvious would be other contractors who would be after the same roles. Therefore your competitive advantage would be driven by your skillset, rate, availability and as well as your ability to sell yourself through your CV and any interview process. (This is discussed further on in this book).
Larger Consultancy Firms
The other area of competition is from larger consultancy firms who are brought in to complete a project or piece of work.
These firms tender to go for the bigger pieces of work because they can bring a team of people onsite to complete work. Also it is sometimes easier for a client to ‘outsource’ the work to a single firm as opposed to recruiting and managing several individual contractors.
However it is not uncommon for contractors to actually be recruited to work for the larger consultancy firms to ‘plug’ any skill gaps they have. With the exception of the larger firms, most consultancies have a small set of permanent employees (say the owners, subject matter experts and administration staff). They then use contractors (or associates to use the correct term) to ‘pad’ out their teams for client projects. The advantage for the client is that they get a good team. The advantage for the consultancy firm is that they obtain decent staff that can be added or removed quickly. The advantage to us contractors is that we get some interesting work and normally at a decent rate of pay.
Permanent Staff at Client Sites
The final area of competition is the permanent members of staff at the client where we are working. It is not uncommon for existing permanent staff to hold some bitterness against contractors because they perceive them to be getting the more interesting work and being paid better. Therefore it is important that you build relationships with the permanent staff through doing a good job, working hard, delivering and being tactful
Changing Nature of Employment
As a side note, it is worthwhile to consider the changing nature of employment.
When I started working in 1980s, the focus was on getting a good permanent job. Because I lived near London, I was told to get a job with a bank or some large financial services organization. If you did well and kept your hand ‘out of the till’ then you could have a job for life.
However, as people know, things have changed since then. The world is more volatile and unstable. For example, the financial crisis in the late 2000s and Brexit in the EU and the UK
Therefore, firms do not want to employ vast amounts of staff as they did previously. This is because these are fixed costs which are hard to manage against a variable and unreliable external market.
Therefore this means there is an increased demand for contractors.
Millennials and Looking Forward
In additional the millennial generation has a different attitude towards work than older generations.
Millennials are very much more focused on a work–life balance. They are more than happy to move jobs more frequently. They would like much more flexibility, either in working from home or taking career breaks.
Therefore this means the structure of employment is actually moving toward a more freelance or contractor basis.
This means many people will probably move into freelancing or contracting even if they had no previous plans to do so.