Survival Strategies for IT Contractors

To be successful, IT contractors have to conquer all sorts of challenges.

Don Willmott | August 2007

Are IT contractors treated unfairly? Ask around and you’ll hear all
sorts of horror stories about job listings that range from the
misleading to the downright phony, broken deals and on-the-job
ostracism. Is this any way to make a living?

If you
haven’t worked as a independent contractor, it’s important to
understand the dynamics of the labor market and how it can work against
you – unless you’re smart enough to turn it to your own advantage.
Anyone who’s worked with a recruiter has learned hard lessons about the
laws of supply and demand. You’re in a large group of eager workers
caught between the proverbial rock (employers who want to get you at
the lowest possible rate) and hard place (recruiters who make their
money by taking as big a slice of your deal as they can).

To get through this maze, you’ll need some strategies.

Watch Out for Bogus Ads

20 years working in the San Diego IT arena, Brian David Smith, a
software engineer and Ph.D. candidate, is an expert in the labor
dynamics of cities with large pools of independent contract workers.
"Have you ever noticed that some recruiters post the exact same ads
every week?" he asks. "Sometimes those jobs aren’t real. Recruiters
need to keep their databases full, so they’ll dangle opportunities to
get you to come in and interview, even though the advertised job
doesn’t really exist."

The solution? Check your favorite newspaper or online job boards on a regular basis. You’ll find such ads are easy to spot.

Lock Down the Pay Rate

real job offers do exist, Smith says, the per-hour pay rate can drop as
the hiring procedure moves along. Squawk too much about that and you’ll
be shown the door. There are other people out there who will take the
gig at the lower rate. So try to lock in the rate early and tread
cautiously. "It’s simple," Smith says. "The agency has a deal to fill
the job for a fixed fee, so if they fill it with a lower-cost worker,
they’ll make more profit."

Get It in Writing

is an advocate of clear and irrefutable written contracts whether you
get hired directly by an employer or by a recruiter. He’s found success
by negotiating not only an hourly wage, but also a cap on the
employer’s total outlay and overall benchmarks for the project he’ll be
working on. That’s important, he says, otherwise the project’s actual
end point may not be clear.

Beware the Non-Compete Agreement

fair for recruiters to ask for a non-compete agreement, so the company
you’ll work for doesn’t hire you down the road and cut them out of
future business. Such agreements usually last for six months to a year.
However, sometimes you might not find out about an exceedingly
stringent non-compete until you show up for work. The theory is that no
matter how tough and restrictive it is, you won’t want to walk away at
that point – and so you’ll sign. The moral: Always ask about any
non-competes up front.

Learn to Live with Ostracism

knows first-hand what it feels like to arrive at an office and face
resentment from full-time workers. "I know what they’re thinking," he
says. "Why are the bosses bringing someone in? Aren’t we doing the
work? Is he here to take my job?"

Smith has learned to
work around such reactions. His strategy: "I never tell anybody to do
anything. I just ask a lot of questions and draw out information. In
fact, when I see the problem and know the fix, I keep asking questions
until the full-timers discover the problem and the fix for themselves."
By doing this, Smith positions himself as a friendly advisor as opposed
to a pushy interloper.

Get Organized

recruiters act as traditional middlemen – who add cost to the
employment transaction – it’s interesting to wonder if the Internet
could remove them from the equation. This has been the case in many
other industries, where online communication has connected buyers and
sellers more directly. To a certain extent, it already happens with job
sites (like Dice), but Smith wonders if some sort of online
clearinghouse of IT contracts, set up and maintained by large IT
employers, would ultimately be useful.

Sara Horowitz, founder of Freelancers Union,
says that 40 percent of her members are in tech careers, and the
biggest benefit they see – other than health insurance, which the union
offers in 30 states – is the network of people who can share employment
information. Like Smith, she believes "the Internet is enabling people
on both sides of the equation to find each other at lower cost." In the
future, she thinks, recruiters will lose interest in lower-end tech
workers to focus instead on high-value, highly skilled positions, where
the most vetting is needed.

If that’s the case, then it’s
likely there will continue to be recruiters in your future. So be sure
to strategize for success.

Don Willmott is a New York City-based journalist who focuses on Internet and technology trends.