As a follow-up to my last post, I’ve added a part II to my contractor profile blog. I thought it would be important for anyone interested to get the contractor perspective directly, sans personal commentary. What you’ll find below are the questions asked and the responses given. Personally identifying details have been removed. In addition, when the responses were similar or unanimous, I combined them.
1. What do you think are the advantages to being independent?
I can pick the projects I want, where I want, when I want. In other words, I have control, something that consulting company employees simply do not have. Employees go where the consulting company has work.
Freedom to pick and choose projects and choose the number of weeks of vacation I want each year.
Every week is a very different proposition.
This is sort of a shocker, but an IC [“independent contractor”] has a more stable employment picture than just about anyone. How so? If I’m on a gig with a PO [“purchase order”], unless the client site burns to the ground, I’ve got work till the PO runs out. Client or consulting company employees are much more at risk as all sorts of things can happen to them whilst working on a project. Of course at the end of the project they have work and I don’t but that’s just my cue to find the next engagement.
As consultants age, they tend to have families. Significant Others and the usually-inevitable offspring have this weirdo expectation that said consultant will be around for the things that supposedly count more than work. Which is pretty hard to do if you are on the other side of the country. So I tend to hold out for more local projects because it gives me a better quality of life.
Sometimes totally awesome projects drop into your lap, sometimes the gig is a stinker. I don’t have to take those stinkers unless I either need the money or think I’ll pick up a valuable skill. I get to decide.
Neutrality (a.k.a. “You are not threatening”)
I put together what I like to call “science projects” that span people I know in the EPM world. They tend to be consultants and work for a variety of companies. I think if I tried to organize this and worked for consulting company X their managers wouldn’t allow the work.
Compensation tends to be higher and self-employment allows for much greater pre-tax contributions to retirement plans.
2. What do you think are the disadvantages to being independent?
(Lack of) Health Insurance
The lack of health insurance and other benefits.
The uncertainty of future project work and needing to find your own work.
If you work for a consulting company you don’t have to find work — your practice manager/sales rep/company management finds it for you. I do have to find work and it’s just about my least favorite task — finding work, wading through the bottom-feeding body shops that all advertise the same gig with ever-increasing percent of bill rate taken out, negotiating rates, hoping that the job is somewhere near to the same timezone I live in — fun, fun, fun.I find the finding of work and the self marketing to be time consuming things I wish I didn’t have to do but such is life.
The lack of formalized training.
There is no magical EPM training facility that gives out advanced tool training for free. You get this as an employee — when I did work, briefly, for a prominent consulting company I was astounded at the quality and depth of the training practically shoved down our throats. I was equally surprised at how little my fellow employees appreciated what they had. I suppose that was a case of not knowing what you have. So I spend a LOT of time on the boards, searching the web for answers, forcing myself to blog about stuff, being really innovative at clients so that they agree to me doing mini science projects. In other words, I have to hustle to keep myself even mildly abreast of all of the changes coming out of Oracle. I have to say that for me, this learning hustle is the only way I really learn. When I worked for that unnamed firm, I found that the training was a good introduction to the subject but I only really learned how to use the tool by doing. So that’s the same for me as an independent and I guess a bit of a wash.One thing I am free of is a consulting company forcing me to do technology X when I have no interest in it. A firm with a brain wouldn’t do that anyway to an employee if for no other reason than it’s a terrible way to motivate someone but I have heard tales.
When you’re an employee, you’re on the team. I am a team of one. Oh sure, I meet people through projects but that isn’t the same. I have to use user groups, the web, my blog, etc. to reach out to other people and have that resource I can ask minor favors of from time to time.
I am both the president of the firm and the person that buys stamps at the post office all at the same time. There’s nowhere to go up or down — short of hiring people this is, within my job, as good as it gets.
Over time my role in projects has changed but if I wanted to manage people, or run multiple projects, or deeply interact with Oracle, there simply isn’t the scope. I find the user groups and the web (blog/twitter, boards, etc.) to be a substitute for the normal growth path in a firm. It works for me, but I suspect that is a personal view and all of that does take time. Who needs sleep, really?
3. In addition, the following information was offered in the category of “Neither an advantage nor a disadvantage”
This is a tough one. There is the expectation by everyone who is not an independent consultant that we make the big bucks. My good years are just that — good. Take a guess re: the bad years. Let’s just say that fiscal discipline is a big, big, big part of staying in the IC game. I have over a year’s worth of living expenses in cash? Over reaction? Think about what happened after 9/11. That was a very bleak time for ICs.
Once all of the expenses (there are others — payroll, accounting, training, miscellaneous) are figured in and a few years are averaged the pay is roughly equivalent to what a senior technical consultant would make at a decent consulting company. It is no path to riches but it is certainly a comfortable life.
What no one quite gets are the taxes. I pay double Social Security because I have to pay my personal and corporate SS taxes and I have state and local taxes that individuals don’t have to worry about. As an example, New Jersey has a $500/year foreign corporation registration fee. It goes on and on and it does add up.
Then there’s the insurance tied to the business: liability, workman’s comp (which I can’t even really collect on), errors and omissions, and of course the big one — healthcare. You may complain about having to contribute to it — I pay the full price. And before you think, “That’s before tax” I’ll tell you that isn’t enough to offset the cost, not by a long shot. There is nothing like getting a 31% rise in health care costs which I will absorb 100%.
Those contracts I sign all go through a law firm for review. Hourly rate, as a favor to me because I am high school buddies with one of the partners, $380/hour. They are worth every penny — I have been in bad projects with, in my opinion at least, less than honest people and a good contract got me out. Again, another expense employees don’t see but their employers do.
4. What type of corporation did you open for yourself?
I did not create a corporation, though many people do so.
If you don’t incorporate, someone can sue you for your personal assets. This is a risk, though I don’t know of it happening to anyone at any point in time in my network. An individual can get general liability insurance, just as someone who is incorporated. The truth of the matter is that consulting firms carry insurance that cover you in most cases. When they don’t cover you, they may request that you have your own insurance.
When I started there was no Limited Liability Corporation (LLC) so I am incorporated as an S Corporation. No one will deal with an individual/1099.
5. Do you feel contractors have a positive or negative connotation associated with them (and why)?
Contractors generally have a negative connotation in the minds of the customer and consulting firm. The customer has a fear that a contractor may be somewhat less committed to seeing a project through to a successful ending point. In addition, a contractor may not be available after the project has completed. Consulting firms have financial incentives to utilize their own resources, which are generally less expensive. In addition, consulting firms are incentivized by Oracle to retain minimum numbers of certified consultants. In my case, I am usually as dependable and loyal as any employee. I keep email access with multiple consulting firms so that a client can reach me years after a project has ended. Though I may be a more expensive resource, if business is slow for a consulting firm there is no worry of carrying a bench.
Clients (and hiring consulting companies) are only interested in “Can he/she do the work, on time, and on budget”? If I can point to a series of projects, with clients that will act as references, I’ve answered the question.
6. Do you feel discriminated against when you’re working with regular consultants and/or clients?
I have only had the discrimination experience during the beginning of one project. The project manager wouldn’t listen to my advice and even forced application design decisions on me. It really back-fired on him and he did a complete turnaround mid-way through the project. It is also not unusual to be treated better than some “real employees” at times.
Consulting companies typically are decent to me because:
- They hired me — why would they then treat me badly, especially when I can leave at the end of a contract?
- If I am not a complete idiot on the project, they usually want to hire me. Okay, sometimes they don’t but that is up to me not being a complete idiot.
- A happy IC on a company project = a productive resource which is what they want.
- It’s just common sense, see points 1, 2, and 3.
Have I ever had a clash be it technical or project-related? Sure, I’ve had differing opinions and sometimes I’ve been right and other times I have been 100% wrong. I try to own up to my mistakes.
7. Do you feel that being technology certified makes a difference in landing gigs?
My certification has not had an impact on me landing gigs.
I don’t think that certification makes a difference. I like to think that the years of experience, etc. make up for the lack of current certification. Maybe all that does, maybe not. Also, the tests are a joke, not because of their material, but because it is trivial to buy the results and every bottom feeder buys it and then claims “certification”.
8. What would it take for you to work for a company/consulting firm again (or would you not)?
I think that I would work for a company/consulting firm if I was offered a truly unique opportunity that I thought would be a good learning opportunity. I would also consider it if I was in need of medical insurance.
For me the big issue is travel. I love my family. I understand how consulting companies work and the need for a body wherever one has been sold. But that’s the consulting company’s concern, not mine. So would I work for a firm again? If it were local, or if I really and truly was not going to travel all over the country, then maybe, if the technical challenges were there. Also, I would have to balance that with the lack of control. I don’t control very much as president and chief bottle washer of my firm, and the mistakes I make are sometimes real howlers, but they are my mistakes. There is something almost transcendentally satisfying about making decisions that affect you all by yourself.
9. Without going into specific reasons for why or why not, do you think you’ll be able to retire early based on your choice to become an independent?
I don’t think I will ever be able to retire, but I may be able to start my dream job earlier.
As I’ve detailed before, the money simply isn’t there.
10. Who do you feel are your biggest threats as an independent?
I was afraid that off-shore resources might be a threat, but that has not been the case. I guess other independent consultants would be my direct competition, but there is enough work for all of the experienced resources.
Keeping up with technology, training, the US/world economy going into the dumpster forever. I have to decide which products are going to be worth my time and which ones are going to make the test of time. It isn’t easy and I don’t have close relationships nor the resources to spend lots of partner time with Oracle. I’ve branched into some tools that seem to stick around and I’m doing more than I did in the past. So I guess that means I find keeping my skills up to date and relevant to the market as my biggest concern.
11. How do you go about finding gigs? What percent (guesstimate) is through subcontracting through consulting firms vs. other avenues?
Almost all of my work (90%) comes through consulting firms finding work for me. If I am slow and I need work, I will reach out to old clients and the few consulting firms that find me the most work. I also reach out to friends in the business and let them know if I have availability.
Subcontract is about 75% of my work. Otherwise, I do a lot of professional outreach that keeps my profile out there. Most of it is volunteer work but there is some name recognition because of it. Of course the best is a direct to client engagement both because there is no middleman and because I have no layer between myself and the client. I don’t, as a rule, use brokers any more.