IT contracting in the US
 

All,

I am married to a US Citizen, and am applying for permanent residency. We're planning to move to the US in winter 2016/17.

I'm wondering about the benefits of IT contracting vs being a permie there. Is there much contracting going on in the States? More importantly, is it seen as a respectable career choice for IT professionals in the way it is in the UK? Or does it mainly comprise people who are trying to get permanent work?

I'm a BA in financial services in the City at the moment. I'm happy to get a perm role if contracting isn't a smart choice in the US, but would like to know a bit more.

Any thoughts appreciated. I'm sure it varies from state to state and city to city, but any general information would be great.

(I'm also aware that the tax benefits of being a contractor in the US are generally non-existent, and that the lack of healthcare benefits is a very big deal.)

Thanks,
CF

Re: IT contracting in the US
 

I work in software sales selling to both developers and operations, as such I get to meet a lot of IT folks around the US. While I'm only speaking to a subset of the field, I rarely come across contractors. A lot of people are either permanent, or work for a body shopping outsourcer. Different to the UK where it was very common to be working with contractors at my prospects.

The exception to this is I do come across some folks who would describe themselves as individual consultants and have some specific skill set, this is rare from what I have seen. An example might be "Continuous Delivery expert for BSS in telco".

Hope this helps.

Re: IT contracting in the US
 

Hi

I was a contractor in the UK for over 10 years prior to moving to the US. I work in Financial Services in IT.

From my calculations I didn't see much benefit in contracting at my level - in fact I found it very difficult to actually find a suitable contract - the market seems to hire permie for anything other than short term contracts. Plenty of folks do it but it tends to be at the lower level than the higher levels unless you have specific specialized skills.

With respect to benefits almost all of the contractors I use and know almost always have a spouse who works permie and therefore health insurance is provided that way. With Obamacare being introduced I believe it is now somewhat easier to get affordable coverage with similar benefits to those on offer permie but I have not investigated it at all. That was one of the big sticking points for me other than the lack of roles.

Most folks at my level who "contract" do it on a statement of work basis rather than a hourly / daily type setup and therefore usually will have staff they provide - hence its more of "business" than what I experienced in the UK.

With 2 weeks notice generally being the case and almost all employment is "at will" there really isn't the benefit for companies to not employ directly.

You'll see terms like W2, Corp to Corp etc.... Google S-Corp for an idea about how it translates from a Limited Company.

Re: IT contracting in the US
 

The IRS are cracking down on the 'contractor loophole' used by some employers to obtain cheaper labor.
First, ask yourself if the work you are looking for fits the category of contractor here in the US:
https://www.irs.gov/Businesses/Small...ractor-Defined

Re: IT contracting in the US
 

There are many financial reasons an employer may prefer to use a contractor rather than hire someone. Savings on FICA taxes, paperwork and admin time, and unemployment insurance to name but a few. Employers with over 50 employees also need to consider health insurance. Employers with 20 or more employees are usually required to offer COBRA.

I have 40 employees, and would save a lot of money if the law permitted me to use contractors rather than employees.

Re: IT contracting in the US
 

many companies are now doing contract to hire for permie jobs. I have applied for a few contract jobs but they pay a lot less than permie jobs on the whole. Saying that most States are "at will" states therefore you don't gain the job security like you do in the UK.

Re: IT contracting in the US
 

Howdy, I work in an enterprise IT environment, albeit only for the last year in the states.

To echo some points from above, I haven't seen much contracting here, and nowhere near to the extent of its prevalence in the UK IT industry.
Bodyshopping seems to be more common, but I would add that the rates a 'shopped body' might command here are not what they are in London. Again, I'm only comparing what I've seen in the local market here against London.

Given that California is an 'at will' employment state, even though I'm 'perm', I often find myself wondering whether I'm just in a glorified contacting position myself :unsure:.

Re: IT contracting in the US
 

Hi I manage an IT Recruitment team here in Texas. I have been, over the last year, pretty shocked at how few contract roles we come across

1099 (Think Ltd company) is hard to do due to the IRS crack down and the lack of benefits supplied. In some ways it is a bit like IR35, only it is actually enforced.

W2 is the other option, however this is a glorified perm job. My company hire the contractor as a permie, pay them, sort out their benefits etc and then they are let go at the end of the contract period.

In terms of hourly/daily rates, I don't see enough of a difference (if any) to warrant the hassle of contracting. In fact most of the contractors we place are brits, o nly contracting because we can get them over on our E2 status

Re: IT contracting in the US
 

Saying that I have found the permie rates to be higher in the US generally than in the UK. Also the rates do not vary that much across the country, so find a cheaper place to live and you will earn maybe just a little less, but have a lot more left in your pocket at the end of the month.

Re: IT contracting in the US
 

I would agree, perm rates are generally better on like-for-like from what I've seen too.

Re: IT contracting in the US
 

Right, thanks all, that's very helpful and answers my question fully.

I was hoping to contract so I could have a sensible holiday every year, but doesn't look as though it's feasible. :(

Re: IT contracting in the US
 

Holidays vary greatly from company to company, ranging from 2 weeks starting going up to 6 weeks after years of service, other companies have been 5 weeks for everyone, in California there many companies have "unlimited" . Plus it's a lot easier to take unpaid time off in the US. The other thing that happens here is that some companies allow PTO to rollover from one year to the next , so you can have a 6 week paid holiday every 2 years

Re: IT contracting in the US
 

Ok, didn't know any of that. I had assumed it was 2 weeks until you're senior management, across the board. That sounds much better than I thought.

Re: IT contracting in the US
 

Remember, there is no legal requirement that an employer provide its employees with either paid or unpaid vacation time. So vacation actual varies from starting at zero weeks ;)

Paid vacation is usually always negotiable. A fact I hadn't considered when I first arrived here. I once held a job where a subordinate had more paid vacation than I did. When I asked why, I was told "he asked for more at his interview" :eek:

Re: IT contracting in the US
 

It really does vary. I've never had less than 23 days per year and in my last job I was on 28 days, but I've turned down jobs because they only offered 15 days PTO per year.

Re: IT contracting in the US
 

Contracting here (IT wise) is basically setting up your own business and getting your own clients. Ie running a proper business. You need connections to do this or you need to be prepared to have some kind of model (i.e starve to gain work) where you can get into a network and then take the opportunities that arise. Most independent companies (re: contractors) don't do that well unless you know people. Its that simple. I'd suggest taking a permie job and then look to go on your own after you understand the culture over here. Most people who do this are also close to retirement from what I have seen. (IT wise).

Re: IT contracting in the US
 

6 weeks for me here in the US in Financial services - started on 20 - the problem is that my co-workers seem to think that 3 weeks out of the office is unusual!

Re: IT contracting in the US
 

This has been my experience too.

I'm in IT as a permanent employee of a very large global company. My software development group writes in-house applications and has a large number of large software projects going on at any one time. We keep a large core staff of permanent employees for purposes of stability and holding on to knowledge. We supplement with outside contractors as needed (which over the past 10 years has been constantly) but these are usually permanent employees of other companies - "bodyshoppers" as you put it.

We do occasionally use some high-profile contractors who truly are self-employed. These people are industry experts. Some have written books in their areas of expertise.

The big difference between the UK and US in this regard is healthcare. The UK has universal healthcare through the NHS so it's easier to be an independent contractor as you are not dependent on an employer providing health insurance. In the US, most people need employer-provided health insurance to be able to afford healthcare.

Re: IT contracting in the US
 

Did the 28 days include holidays and sick? I naively took a job with 25 days not realizing there was no EIB or extra sick time. I also have to use 7 days a year for compulsory holidays. My last job was more like the UK 3 weeks vacation+ 10 days sick, + 12 holidays. , but no rollover, it was a use it or lose it policy.

Re: IT contracting in the US
 

I'm confused; why are the tax benefits of being a contractor non-existent? Take a look at this article: To be or not to be a 1099 Contractor | 321GoProject
and this article: Currently on 1099, Should i start S Corp for my self?

For the lack of healthcare issue, now that we have the ACA, you can get your own healthcare at a predictable price. True, most companies pay this for you but it's all just numbers you need to compare.

I was a full-time (W-2) employee in the IT industry for over 30 years, making close to $200k/yr in the last years of full-time work. In 2013, I formed an S-Corp with a colleague and now work on projects 'by the hour'. I'm currently charging $125/hr, a number I'm learning is way lower than I could charge. But even at 125/hr, working 2080 hours a year, I'd receive $260k/hr. I pay $7k/yr for an ACA compliant health plan.

But the big advantage, financially, is not just the higher hourly rate, but the tax benefits as identified in those articles above. I write off all my mileage (driving to clients), my cell phone, my office 365 subscription; my laptop(s), and all my toys; I pay myself home-office rent (which does bite me back as personal income); etc. On the downside, I don't get stock options, or retirement contributions.

In my case, though, the biggest advantage is that I have great control over my schedule. I'm currently working only about 20-30 hrs/wk, by choice, and also setting my own daily schedule - nothing before 11am, and quite a bit of work in the evening (which I prefer). After 30 years of being a 'permie', I'm so happy not to have to deal with company bs ... meetings, policies, etc. I work; I get paid; it's that simple.

I was well-served by being a full-time employee; worked in some great companies, with great people, on great projects, and did well with stock options and benefits. But at this stage of my career, I just want to keep myself busy and work with people I like (I just fired my biggest client because they kept ignoring my advice ... it was great to have the freedom to tell them to go find someone else).

Re: IT contracting in the US
 

Pretty much describes my situation! I'm relying heavily on the contacts I made as a permie. I worked my butt off all my life and got a great reputation, so it's been easy to approach my 'network' and find work.

I will also add; I took 6 months off after my last full-time job, and now work a much reduced schedule. I never cared about the limited time off as a permie, since my work was always great. But now I'm making up for it!

Re: IT contracting in the US
 

Sick pay was covered through a disability policy that the company paid for. If you were ill in the first year I think you had to take the first 5 days out of PTO but after that it was covered. I got 8 or 9 public holidays on top of the 28 days PTO. If I'd worked there a few more years I'd have been on 33 days PTO. You could roll over 5 days each year, and if you needed more time off for something that sick pay didn't cover then you could take it from a donated bank.

Re: IT contracting in the US
 

One other point I'd add about contracting / being self-employed; I recently applied for a home equity loan and found that they would not consider my income at all since I had less than 2 years of operating history as a corporation / self-employed. It didn't matter in my case because my g/f's income was sufficient to cover the requirements, but - had we been younger / earlier in our careers, this could have been a big issue. One more reason to be a full-time employee as you get started.

Re: IT contracting in the US
 

I'll soon be on 28 days of Paid Time Off (PTO) based on years of service (that's the max that anyone in my company can have - including the CEO). I can also purchase an additional 5 days (which basically means I can have 33 days off if I take a slight pay cut). I do not have to use my PTO for the statutory holidays - I've never heard of salaried employees having to do that unless they are in jobs that require them to work some holidays (e.g. my wife has that issue as she is a nurse). I do have to use PTO days if I'm off sick. I've never had a job in the US or Canada that included free sick days. My last job in the UK had unlimited paid sick days and as long as you didn't abuse it, you were OK. I think I averaged about 12 sick days (i.e. bad hangovers) a year.

Re: IT contracting in the US
 

That's exactly what I thought until I got a job in healthcare. I am an exempt employee and have to take public holidays out of my 25 days PTO. I work in IT. It has to be the worst benefits going. I just took the view it's safer than the HI Tech sector at the moment and my commute went from an hour to 15 mins.

Re: IT contracting in the US
 

Do not undervalue time spent not commuting. It's making a huuuge difference to my quality of life, I love spending an extra couple of hours per day with my kids.

Re: IT contracting in the US
 

Totally agree, I spent 7 years with 5-10 min commute, then they moved 60-90 minutes away, hence the change of job. Still sucks having less vacation. It was nice seeing my kids growing up, I could even come home for lunch.

Re: IT contracting in the US
 

Absolutely. I have been telecommuting for about 10 years. It's not just the extra time with family that is a bonus. I'm available to walk the dog, take kids to doctor appts, etc. It means the house isn't empty should someone come by and think about breaking in. Not having to deal with the stress of a commute is good for my health (as is walking the dog). I save money on gas, wear and tear on the car and lunches. I can run errands when everyone else is at work. And I don't even have to shower every day! ;)

Re: IT contracting in the US
 

I've started contracting myself over the last 2 years, still working full time though. And i'll echo what everyone else has said. If you want to be a self-employed contractor, you have to know people, its that simple, you cant do it by yourself from scratch unless you get incredibly lucky.

Its better to work for a company build contacts, work on the side, be extremely reliable and nice (being nice is very important for IT people); and that way you'll build a network.

I had someone i worked with for 6 months, 2 years later they called me to ask to do project work for them and it started from there, guess I make an impression on them. Two years later, we are now talking about partnering up for our own web design/hosting company in the next few months.

Re: IT contracting in the US
 

I'm interested in what field of IT your permanent job is and the contracting. I'm considering transitioning to contracting with a view to open a company; I would start by staying full-time and contracting part time.

Re: IT contracting in the US
 

I'm in web development for my full time job. And now also in my consulting. But I now additionally do hosting, server management via VPS cloud software and moving into cloud storage.

Just doing whatever i need to do and learn to make more business.

I would even go so far to say that if someone asks if you can do something, just say yes, google is your friend and 9 times out of 10 you can figure it out, and then that new knowledge will open up more avenues.

Re: IT contracting in the US
 

Interesting.
I take it you work with smaller clients/projects?

Re: IT contracting in the US
 

Yes - I'm a self-employed web developer and if I only said yes to projects that I already knew how to do then I'd never have any work. That seems to be the nature of web development...

Re: IT contracting in the US
 

Not entirely. I guess I dont just do web development because I also build out restaurant/office/warehouse networks, security and POS systems.

Build physical machines, desktops, render servers, regular servers.

To be honest the only things i dont do is program coding. Never had a head for it.

Re: IT contracting in the US
 

Interesting. Thanks.

I've run into a few people using Google unfortunately. It didn't work out.

But then I had another experience with a larger company whose developers couldn't work out why they couldn't capture more funds on a credit card authorization than they had initially authorized.

Re: IT contracting in the US
 

What kind of resources are you using?

Stack? Other forums?
I've been looking for a friendly Enterprise IT help type forum.

Re: IT contracting in the US
 

OSNN is the forum I've used for years. But I hardly use any specific forum I usually just google the error or issue and go from there. Usually it'll just jog something in my head and I'm like "uh that's so obvious idiot" I enjoy insulting myself when working. Keeps me on my toes. Lol

I entirely self taught. But been doing it since I was 14. 36 now. I have a head for self teaching others need to be taught. I also can only learn by doing prob a mental defect. But one I know about. The benefits of it means I just get stuck in.

Re: IT contracting in the US
 

Agreed. The key thing is, to get started, you need to be flexible and need to work your ass off. Make damn sure that first project is a success and your customer is very happy, and don't necessarily charge for all the hours you put in. I use my judgement when deciding how many hours to bill. I recon that charging $125/hr assumes I know what I'm doing, so if I get work that I'm not very familiar with, I'll gladly sink a bunch of hours into the project to come up to speed, and only bill those hours that I think are appropriate - totally a judgement call.

Also, sometimes opportunities come up that you want to pursue and you know you don't have the skill, so you learn as you go and charge accordingly. 10 years ago I worked (full-time) for a Dev VP in a startup, doing all the infrastructure work (servers, networking, etc). We drifted apart, but 10 years later she remembered me as a hard working/resourceful guy and asked if I would set up the Amazon Web Services (AWS) environment for her new startup. I told her I didn't know anything about it but would learn. She preferred to give me the work based on my general work ethic and resourcefulness rather than give the work to someone who had the specific experience. So I put in dozens of hours of free time just coming up to speed, learning everything I could, and then built out her entire infrastructure on AWS - a skill that is now very valuable to me. I probably made a loss on that first AWS project but it has now become a great source of revenue for me.

If you do good work, and are flexible, it's amazing how people will refer work your way. You just have to be able to get started.

Re: IT contracting in the US
 

As you google your way around, I find that some sites keep coming up as helpful - stack overflow, spiceworks, etc. I've also found that google is so much better than bing or yahoo for finding answers; every now and then I find myself on someone else's machine where bing or yahoo are the defaults, and I can't find anything! This could of course be a matter of 'training' at this point ... I know how to make google work for me after a long period of trying.

Re: IT contracting in the US
 

I seriously undercharge by a huge margin $50 p/h. But I also work full time elsewhere, so dont feel the need to charge more. Although obviously I should. In saying that though; I usually charge an agreed upon amount per project now than just per hour. I find clients much prefer this, and honestly so do I.

Re the AWS, even if you didn't charge anything, the learning experience and the ability to offer those services to others was payment enough I imagine.


This is totally true. Google is just significantly better. I used stack overflow a lot, I used to use spiceworks more, but it doesn't seem to come up in results much anymore.