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IT contracting in the US

IT contracting in the US

Old Jan 18th 2016, 11:25 am
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Default 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
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Old Jan 19th 2016, 3:43 pm
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Default 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.
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Old Jan 19th 2016, 3:48 pm
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Default 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.
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Old Jan 19th 2016, 6:00 pm
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Default 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
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Old Jan 19th 2016, 6:08 pm
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Default Re: IT contracting in the US

Originally Posted by goatherder View Post
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.
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.
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Old Jan 19th 2016, 7:31 pm
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Default 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.
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Old Jan 19th 2016, 9:37 pm
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Default 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 .
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Old Jan 20th 2016, 12:26 am
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Default 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
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Old Jan 20th 2016, 12:53 am
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Default 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.
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Old Jan 20th 2016, 1:40 am
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Default Re: IT contracting in the US

Originally Posted by mrken30 View Post
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.
I would agree, perm rates are generally better on like-for-like from what I've seen too.
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Old Jan 20th 2016, 1:20 pm
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Default 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.
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Old Jan 20th 2016, 1:53 pm
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Default 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

Last edited by mrken30; Jan 20th 2016 at 1:59 pm.
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Old Jan 20th 2016, 3:13 pm
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Default 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.
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Old Jan 20th 2016, 4:03 pm
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Default Re: IT contracting in the US

Originally Posted by mrken30 View Post
Holidays vary greatly from company to company, ranging from 2 weeks starting going up to 6 weeks after years of service
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"
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Old Jan 20th 2016, 6:45 pm
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Originally Posted by chesterton_fan View Post
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.
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.
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