IT contracting

[Deleted User]

I work in IT in london, and I've been thinking of moving from my current place of work. I've a permenant contract but I just found a few adverts for contracting jobs paying 300 - 350 a day.. that works out to £80 - 90K a year!
They want people experiences in a certain medical message format.. I teach a class in it at work! It seems too good to be true

Am I going crazy, or are those values real? I don't earn anything near that now, the prospect of that kind of money is very tempting but i don't know anything about contracting. I've got a mortgage to pay.. ect, I'm cautious also!

Any tips/ experience?

LindseyM

A guy I work with used to work for our company and he left to do contracting - he came back to us 6 months later as a contractor and is getting around £300 a day - 3 times what he was getting on salary.

He asked me if i'd take a job up in Scotland for the same rate but i couldn't move - if it had been closer i'd have been there like a shot! I know a few people who are contractors and they're very happy, have mortgages etc as well - I think you should search around on the job sites - send ya CV to a few agencies and see what the take up is - ask what the likely length of contracts is etc - no harm in shopping about before you take the leap

Good luck whatever you decide - sorry to ramble on

A_Nice_Englishman

ringo_24601 wrote: »

I work in IT in london, and I've been thinking of moving from my current place of work. I've a permenant contract but I just found a few adverts for contracting jobs paying 300 - 350 a day.. that works out to £80 - 90K a year!
They want people experiences in a certain medical message format.. I teach a class in it at work! It seems too good to be true

Am I going crazy, or are those values real? I don't earn anything near that now, the prospect of that kind of money is very tempting but i don't know anything about contracting. I've got a mortgage to pay.. ect, I'm cautious also!

Any tips/ experience?

It will only be £90K in years that you work 259 days, remember.

Companies tend to use contractors when they have a short term need for a skill and it is not worth training up an employee to do the job. You seem to be in an excellent position at the moment with an in-demand specialist skill but you will need to keep up to date and acquire new skills if you want to stay in demand and earn these sort of rates. You will need to pay for the training yourself and do it in your own time,of course.

If you are comfortabke with this and disciplined enough to save for the lean times while the going is good then go for it.

ManAtHome

Doesn't quite work out to 5*52.. You need to allow for holidays, sick, training, employers NI (as well as employees), accountancy fees, and th extra few hours for "doing the books". If you ABSOLUTELY MUST work in a specific location, probably not a good idea unless you have a wide range of skills.

Having said that, I've been working freelance in IT for nearly 30 years and wouldn't have swapped it even though I'm sure I could have earned as much (or more) by being a permie (I'd have been a form-filler instead of a techie for a number of boring years...).

tomsolomon

Ive been building and maintaining machines for seven years. Currently doing A+ repair maintenance and A+ networking, Part time mature student doing this to break into the IT industry, looking for a gateway to serious earnings. Any suggestions for a route into contracting. With my current experience and expected qualifications. I wouldnt mind earning £300 a day. Who would'nt?

olly300

http://www.pcg.org.uk/cms/index.php

Look for the "guide to freelancing" further down the page.

golly99

I've done permie IT jobs for the majority of the time, but also done a bit of contracting. Depends on your personality and the specific role you are doing. Personally I prefer the security of a permie job and knowing I'm only a relatively short commute from home, with x amount of holidays etc. Why don't you do your cv and speak to a few agencies and get a feel for it? It will help if you have up to date qualifications and if you are willing to be uk mobile.

[Deleted User]

Its funny, i was looking to get out of IT and do more consultancy style work (my current work borders on technical consulting).. I think i'd miss the chance to get into management if I went into contracting, plus I'm a likely to worry too much about my mortgage and stuff..

Hmm, shame i can't just do 6 months of it then walk back into my old job

pusscat

I have been an IT contractor for quite a few years now so maybe can offer a bit of advice.....

The money is good, but you need to consider the following costs or potential costs

No paid holidays - so work on a 48 week year (4 weeks holiday)
Not paid for Bank Holidays - depends where you are but remove about another 10 days of pay
no paid sick leave - need to have insurance or savings to cover you, both short and long term planning.
No pension contributions - need to make your own arrangements
Need to run your own company (or use an umbrella one) so either company/accoutancy costs or a % to the umbrella company
Possible higher charges for things like mortgages and loans - depends on your employment status.
Short term contracts - 3 months is normal, so you need to be brave!
No employment rights, no union protection - moan and you are out.....
No job security
Dentists appointments, Doctors appointments, kids being sick, Hospital appointments - your employer is not interested, you will not get paid, and some employers will not renew you if they see you taking too many.
You pay for your own training which you need to keep up to date to be marketable.(Professional exams/training costs me about £2k a year) and you don't get paid whilst you are on training courses so a double hit!

You need to be sure that contracting is right for you....the money is very attractive but consider the following as ground rules

you need to be VERY financially disciplined - saving for a rainy day (or when you have no contract)
Don't become a cotnractor to get out of a financial mess - if you are already in a mess then sort it out first, contracting is high risk and needs stability.
Running a company takes time and you need to be on top of it - no invoivces mean you don't get paid. The VAT man does not do "late payments"
Work on the premise of having contracts 3 years out of 4 - most people can sustain this level long term.
You need to be good at your job - this may sound obvious, but you are paid to deliver, if you don't deliver you will not be renewed - there are no second chances, the client wants results.

Rough figures to play with....

at £350 a day - x5(days a week) x 48 (weeks a year) you would turn over a max of £84k. Another 15 days for bank hols and sickness would be 45 weeks a year or - £78k.

If you ran via an umbrella company then it would cost you a sum to use them - it used to cost me £60 per payroll run, so if you want your money weekly that is £2800 a year.

So you would actually look at more like £75K a year. Then you have to pay Employers and Employees national insurance and PAYE. I can't remember the exact percentage figures but it would be in the region of £400 per week on that kind of rate. So you can deduct another £18k leaving you closer to £57k take home.

If you have to live away from home then you would pay your own expenses - they are tax deductable, but 4 nights a week in a hotel will set you back another £300 per week. You can't always get a contract where you can go home every night, and "perks" like working from home for contractors are pretty rare. Your permie colleagues may "WFH" on Monday and Friday but you will need to be at your desk for 9am on a Monday and still be there at 5pm on a Friday to get your money.

If you work on average 3 years out of 4 so you would actually take home (assuming you don't need to stay away) about £43k - or £3.5k a month. Out of this you probably need to pay your own pension, medical insurance, professional fes and liability insurances, private healthcare (if you are sick you can't earn!) and anything else you need.

If you are a director of your own limited company then if you are IR35 compliant then you can look to take about 60-75% of your earinings as take home pay (depends on expenses etc) but it you are not compliant then it is going to be lower than that.

Contracting is a great lifestyle if you can manage the risk, are financially disciplined, are good at your job and enjoy new challenges, but it needs careful consideration as it is a BIG change.

It is tempting to look at the "daily rate" and think WOW, but I reckon long term that I earn about 15% more contracting than I would do as a permie, but I have a better lifestyle, I choose when I work, where I and I choose what my money goes on (so I choose my pension, my private healthcare provider, etc) I don't have to beg to be sent on courses (but I do pay for them!)

You also have a whole new way of working - some companies you are treated the same as the permies, some you are like a leper - you may not be invited to social events or company events, you may be expected to pay for yourself on team nights out, you may be expected to buy rounds in the pub as you are a contractor "earning loads" and you may also find you are actively disliked for being a contractor - you can be discriminated against, but complain and you are out - companies will always take a permies word over a contractors. Your new boss may hate you - especially if you earn more than them, you have to walk a fine line and you have to develop a thick skin. On the plus side, you can stay out of office politics, you have no promotion prospects to protect about and you can often just get on with "delivering" without worrying about all the other rubbish that goes on.

Hope this gives you something to think about

Puss
xx

A_Nice_Englishman

An anecdote I sometimes tell....

A company got a new managing director. One of his first acts was to look at the payroll and sack every contractor who charged* more than than his salary.

* Note: charged. Not made a profit after all the expenses pusscat lists above.

System

One thing missed out on the pros & cons of contracting:-

You normally have to hit the ground running when you start a contract. You get given very little (if any) time to learn the ropes. They are paying you a lot more than a permie so want results ASAP.