Far too few software engineers in the UK even consider contracting
That’s my premise, and it comes from my experience working as a contractor and as a salaried employee, as well as speaking and working with people who work in both styles.
I’m here to share a little bit of knowledge on the pros and cons and to explain how, in my opinion, a software engineer can know whether they are ready to go for contract work.
Pros: money and flexibility
There’s no mistaking it, money is the number one driver for most people to go to contract work.
Where a reasonably skilled software engineer in the UK can make about £40–100k (~£150–£380 per working day), a contractor can make £550-£1100 per day with the same skills.
That can mean a huge jump in gross income (gross here means “before tax”) or the same income with far fewer working days.
The tax situation can also benefit contractors, if you set things up right, to the extent that you will have noticeably more money in your pocket for the same earnings.
Contracting is also more flexible.
While salaried employees might be subject to 20 days of paid holiday, a contractor could find themselves much more often between work, with a choice of whether to start looking now or later.
As well as time off, a contractor can choose to take on other work from other clients, or to start their own business on the side.
Salaried employees often have restrictive contracts which don’t allow this.
Cons: less stability, more hassle
Switching to contracting isn’t a free lunch!
There are some cons to contracting and how important they are is personal to you.
First and foremost there is the uncertainty.
While no job is guaranteed, contractors are often less certain of what their working situation will look like in a year.
This can have an effect on life plans and even if you are confident of your ability to maintain work, others might not be. Banks for example typically require two years of stable contract work to enter into any kind of mortgage agreement.
This uncertainty can be mitigated by gaining multiple clients, and accumulating savings, but that takes time and energy.
There is a degree of certainty that comes, legally enforced, with full time employment. That includes the certainty that you will be paid for some time if the company decides to let you go, if you are sick, or pregnant.
Contract work sometimes comes with a zero-day notice period, and hourly billing doesn’t help much when you are sick.
As a contractor you are also less likely to have a company which is interested in your own career development.
A great manager is usually interested in growing their employees’ skills and keeping them happy by giving them interesting, challenging and diverse work.
That doesn’t come along too often in the world of contracting. More often than not, you will be asked to do a task which you already have the most or all of the skills for.
Contracting includes a reasonable amount of hassle that simply is not present in salaried work.
There is the hassle of finding work much more often than you might be used to, and there is also the hassle of negotiating HMRC’s rules and regulations.
You are responsible for paying the right amount of tax, not your employer.
You are less likely to get (literal) free lunches, work outings and the other trappings of salaried work, but you will have more money to pay for your own lunches and holidays.
Knowing whether you are ready to do contract work
There is a myth in software engineering that all contractors are highly-skilled specialists and therefore deserve the big bucks.
That perhaps stems from reality — you are unlikely to find contract work for your first professional coding experience.
But further down the line than “beginner”, there is a normal curve of contractor skills which matches pretty closely with salaried employee skills.
Contractors are usually those who have weighed up the pros and cons and decided that the money and flexibility is worth the hassle and instability.
If that sounds like you, but you are worried that you area bit too close to the “beginner” end of the spectrum, a great way to test that out is to apply for contract roles.
Everyone starts somewhere, and the market is desperate for engineers of medium skill and above.
There are recruiters who can help you to find a role which fits, and they have an interest in getting you a contracting gig.
Once you have decided that contracting is something you would like to try, the next steps include determining an appropriate rate, finding a contract and setting up your tax and legal status.