Leaving Perm for Flex  

By Joseph DeSetto
Feature Author

Leaving the comfortable, routine world of permanent employment is not an easy decision for experienced professionals.  Moving on to the greener pastures of contract employment can have several advantages, but is it for you?
 
Contract work carries a certain stigma from not so long ago, when people retired after 30 years with a single employer and went to Florida with a gold watch and golf clubs in hand.  In an era where company loyalty was highly valued and skills were developed, rather than hired, contractors were called hired guns, mercenaries, or other less flattering names.  Needless to say, times have changed.  Accordingly, so has contract employment.

Contract Types

Following are contract types identified by their Internal Revenue Service forms used to report annual income:

• 1099 Contract 
  In this traditional arrangement, you report your income as an independent business, including taxes, retirement accounts and insurance.  In addition to marketing yourself as a business, you must retain an attorney and accountant for the many issues arising with clients, other contractors, the IRS and other interested parties.
  
  W-2, Employee Leasing or Flex Employment
  
  The second type of contracting is known as W-2, employee leasing or flexible (flex) employment, and is the focus of this article.  Under this arrangement, you work for an agency that pays a specified rate, usually per hour, that is billed to a client.  The agency handles the administrative nuisances involved in 1099 employment and assigns you to its clients for terms as short as a few days or as long as several years, depending on the project.  Flex employment has both advantages and pitfalls, involving such issues as training, work consistency, pay rates and quality of life.
  
  
• Training 
  This is a major consideration for any new opportunity in the IT field, whether you are a contractor or full-time employee.  However, in flex employment, it is critical to update your skills in order to stay in high demand.
  
  First, inventory your current skill set and determine if it is easily transferable to contract employment.  You will find the more specific and deep your skills are, the better suited you may be to contracting.  If you spent the last three years as an ASP developer and want to contract as one, your skills are obviously transferable.  However, if you work in a small shop and use only basic knowledge of 10 different software packages, you may not find the contract world to your liking unless you can demonstrate a strong proficiency in at least one IT field.  Although flex opportunities for generalists are certainly in demand, many IT managers use contractors to fill specific needs for skills lacking within the company.
  
  Once you've viewed your current skills and talked them over with several agencies, find out how they keep their contract employees up to date.  Some firms may send you to class between client assignments, while others reimburse you for CBTs or books.  Make sure their plan matches your needs.
  
  If you've just worked for a government agency that has a training session in house every month, studying on weekends may be an adjustment.  On the other hand, if your current employer has been reluctant to pay for a book or training since the days of DOS, access to any type of training could be very enticing.
  
  
• Work Consistency 
  Along with training and skill issues, work consistency and assignment length are major factors for prospective contractors.  If you are a 19-year-old Cisco wizard, three weeks off between assignments could be just the amount of time you need to go snowboarding in Telluride.  However, if you have a family, mortgage or other obligations to consider, make sure you aren't putting yourself into an uncomfortable situation.  Look for long-term projects.  Talk with other contractors who work for the client to get a feel for whether a three-year project will be cancelled after the first milestone.  You should be comfortable with your recruiter and expect them to have other opportunities if your current contract doesn't work out.
  
  
• Pay Rates
  The promise of higher pay is a big lure for many people to try contracting.  Flex employees do generally make more, at least per hour, than their full-time, permanent counterparts.  This can bring added pressure.  Remember that you are expensive to the client and should be prepared to perform as such.
  
  
• Quality of Life
  Because you are paid on an hourly basis, some clients do not want you to work more than 40 hours per week without approval and just cause.  Others have project deadlines they want to accomplish at any cost (they may even buy you a sleeping bag and a pair of fuzzy slippers).  Make sure your client's expectations match your ambition and schedule. 

Before you choose to work as an independent contractor or a staffing agency's flex employee, seek the advice of tax and financial planning professionals. 
 
This is a quick overview of topics you should discuss at length with any prospective agency, recruiter and client.  Everyone in IT may soon have a billable rate, so consider developing your comfort zone with flex employment.  You may wonder why you ever worked in house at all.

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