Ask HN: From contractor to permanent | Hacker News Reader

Ask HN: From contractor to permanent

12 pointsanpr23 comments

I currently work at a Fortune 500 software company in the UK doing a lot of greenfield software development.

Lately I have been considering leaving my permanent role and moving into contracting, mainly due to substantially higher net salaries.

My concern however is; should I do this for a few years, and then wish to move back into a permanent role at companies such as MS/GOOGL/FB - would it be frown upon? In other words, do companies prefer to hire people that have been working steadily in a code base for prolonged periods of time?

Thanks!

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I've been back and forth as an FTE and contractor for the past five years, and it's been nothing but beneficial. I use the contracting to gain a variety of experiences with different companies and screen them over time to evaluate whether I want to work with them full time.

The variety of experience is key as you'll hone your problem solving skills in a more valuable way than in your F500 gig. You're forced to get scrappier and deliver consistently in a tighter timelines. It just forces you to be better.

And as a programmer the world is your oyster these days. Do the work to zero in on your specific skillset and language/product focus so you can better target you outreach.

Starting with an agency can be easy, but they'll take 20-30% and limit your opportunity for a direct relationship with that client. You could ease into this with a few months of side work while you keep the safe F500 job. Build a couple clients in your portfolio and break out when your personal pipeline equals, or beats your current salary.

I think you'll find your instincts on this one are a bit off. These days, companies seem to value some variety over stagnating at one company or on one project. Hiring managers like to see people with a variety of accomplishments, and that can be pretty easy to demonstrate if your contracting projects are interesting and give you the ability to see the task all the way through.

When you are comparing money from contract to permanent, keep in mind there may be lots of hidden costs. I can't speak for the UK, but in the US contractors need to be thoughtful of taxes (and the cost of having your returns done if you can't do them yourself), health insurance, PTO (contractors are only paid for the hours they work), insurance, retirement/401k, etc.

Be sure to do the math.

Thanks, that makes perfect sense. I guess my worries came from the fact that in my current company I don't know of any of the 100s permanent devs that came from a contracting background, so I sort of raised flags for me. That could possibly be because contractors dont often go back to permanent roles, rather than them being undesirable for a permanent position.

Really good point on the Math's side of the business. I am based in the UK, hence things like Health and Dental and very good and free, therefore no need for costly private insurance. Pensions, the same, although I would make arrangements myself to contribute to it privately also. Taxes and other deductions, I plan to hire a good accountant that can both ensure I have all my affairs in order as well as look after my financial interests. PTO/Instability is the only true financial downside I can see, however, for the latter (at least in UK) even if you are a contractor they need to give you 1-2weeks pay should they wish to terminate the contract early - which should keep me afloat while finding new work.

All that being said, I think the main difference between US and UK when it comes to permanent salaries is that the US has much higher base in average rates than when compared to the UK. Not to mention the buying power of that salary is order of magnitudes higher than over here. Therefore in a way, it seems more unlikely (if I were to be over there) to do contracting when balancing the pro's and con's of both options.

Thanks again for your words, and advice.

The reality is that it depends on the narrative, teh story that you have. It's very easy to explain why you chose consulting (other than money), and have a narrative that resonates. I've found that consulting actually results in exposure to more varied problems, technologies, and solutions - so I'm not nearly as pigeonholed.

Thanks that's good validation.

I assume from your comment you must be a Contractor, can I ask how do you find it?

You're welcome to - I love it. I've never been happier. Like everything else there are pluses and minus, but I've found that professionally, I've been able to meet my goals in a way I never could as part of an organization. In fact, clients find me more valuable, because they know that I'm in to get things done, done solidly, and done forever.

Interestingly enough, I also feel as if I'm a key member of every team I join. I don't do the loan gun in the basement thing, which is probably a key part of it.

That's so encouraging thanks man!

If I could abuse your kindness, I hope you dont mind - could I ask what you average contract length are? What is the average period it takes you between finishing a contract and finding a new role?

When you say a substantial increase, how much of an increase is that?. And also, are you considering other expenses/losses such as accountants, pensions, etc, etc

My current package is along the following; 45k, 2k bonus, pension, private health, private dental, some training, and perks (gym, subsidised food, etc).

Regarding the pro's and con's in terms of benefits yes, I am considering them, and still a substantial net salary increase (2x)

No.

There is a world-wide shortage of competent programmers, and companies are starting to realize that irrelevant biases are hurting them.

Fair point

what matters is interest, passion, maturity and experience, not length of time in one place.

>> experience

Good point! And that's my concern (eg. Broad = Contracting Vs. Depth = Permanent)

What is your background?

I'm 25, strong academic background (BSc + MSc).

4 years professional experience at the same company, currently a Senior Dev.

In my current role I do a lot of greenfield development, machine learning, big data stuff and working with Open Source technologies.

I'm basically a mirror of your experience and age but in a different technical area, out of interest where are you planning on getting the contracting customers/clients from? contacts that you've made over the years?

Not really. Initially I just plan to go through normal job adverts / recruiters (as much as I'd hate it) / LinkedIn / etc.

Hopefully as time goes on, and I get to build a proven track record, I might start looking into doing more word-of-mouth jobs than anything else.

I dont know about elsewhere in the world, but if you too are in the UK, I still don't know whether I will be going through an umbrella company or setting my own LTD and handling the paperwork myself (through accountants).

Hope this helps.

Also in the UK, from experience most people seem to go through umbrella companies as they will also help find clients, then when you've got some contacts start to go off by yourself and get a Ltd company setup to save on the 20-30% that the umbrella will take from you.

Looks like I might have to do something similar, just a bit risky trying to get them first few customers, especially when you have no contracting experience.

Yeah you have a valid point regarding the umbrella company. It does offer some benefits (eg. you are a PAYE and if taking loans for car/house you can say you are employed rather than self-employed which could hinder your bargaining abilities). I do not think they help that much when it comes to finding contracts. My understanding is that they handle the paperwork and finances, thats about it.

Just put your CV out there and apply to 2-3 jobs. See the feedback you get and take it from there. I don't think previous experience as a contractor is important - that being said, having professional experience in the field is definitely very important.

It depends on the type of umbrella company, for example mosaicisland which is telecom based will actually find you jobs/clients, however they take a higher percentage. They call you an 'associate' engineer.

I was in your position back in 1997 and I went into contracting in the UK. It worked out great for me, and I would definitely recommend it. I found it very easy to get work through jobserve.com. In fact once I'd done a few contracts, I built up networks of other contractors and recruitment agencies who gave me tips about upcoming contracts.

You just need to set up a ltd company and manage your own payroll/accounts/pension and then find an accountant to do your end of year accounts. Or you can pay an accountant to do it all for you (but it will cost more). I found it difficult getting a reliable accountant in the UK - every single one of them were late preparing my accounts.

As long as you don't mind moving to a new company every 6-12 months and working on potentially boring projects, it is a great experience. The money is great in the UK, and the work is generally relatively easy. I eventually got fed up with mind-numbingly boring projects and sitting with nothing to do most of the time (I think I work too fast), and eventually ditched it and worked full-time on my own startups.

I would recommend waiting until you get your first contract before quitting your job (that's what I did). Some want you to start immediately, while others will let you wait a month to give your notice.

What would you say a realistic rate is for a contractor?

Also, would you suggest charging per hour or day?

These kind of long-term contracts pay the 'market rate'. Back around 2000 the market rate was about 30-40GBP/hr or about 300GBP/day, or higher in the city. Although I haven't done any contracting in the UK for quite a while, I do occasionally look at the contracts out there and the rates seem to be about the same these days. Just go to jobserve.com and you'll see.

Right now I live in Canada and charge US$100/hr for short term contracts (up to a few days), although normally I quote fixed-price and it works out roughly $100/hr or a bit higher. This is mostly for customizing my own product to a customer's requirements.

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