Contract Tech Jobs: Everything You Need To Know

by | Finding A Job

Approximately one in five open roles in the tech industry is for an independent contract worker, according to data from LinkedIn. What do you need to know about contract tech jobs?

Continue reading to learn more about contract work in tech, including the advantages and disadvantages of pursuing contract jobs, whether you should quit your full-time job for a contract role, and what happens when your contract ends.

Note: I’m a tech career coach specializing in senior managers and executives, not an employment attorney or tax advisor, so please be sure to consult an appropriate specialist before making any decisions that may impact your finances.

What Is A Contract Job?

For starters, what does it mean when a job is listed as “contract”? As a tech contractor, you are typically self-employed and work on a temporary basis for a pre-determined (contracted) period of time.

This is different from being an employee on payroll and working for an indefinite period — until you quit, or your employment is terminated.

Most full-time employees will receive benefits such as health insurance, employer-sponsored retirement plans, and paid time off. When you’re an employee at a tech company, you may receive additional perks such as performance bonuses, stocks, and paid time off that comprise your total compensation package.

Conversely, as a contractor, your compensation is typically limited to your hourly rate or weekly salary. This rate is typically higher than that of employees, since you don’t receive the same perks and will need to cover additional taxes not covered by your employer.

Why Do Tech Companies Hire Contractors?

There are pros and cons to being a contractor in the tech industry, which I cover in subsequent sessions, but first, why do tech companies hire contractors in the first place?

One of the biggest reasons to hire contractors is to quickly address a company’s business needs without needing to commit to a long-term employee. Contractors can be used by tech companies as a cost-saving measure, since they don’t provide them with the same benefits and perks as traditional employees.

Another common reason tech companies hire contractors is when their staffing needs fluctuate. During the holiday season, for instance, tech companies can hire contractors to address surges in consumer spending. Similarly, if a company is preparing for an IPO or merger, it can hire temporary contractors to support the transition.

How Long Do Contract Roles Last?

Speaking of temporary, tech contract roles typically last from 3 to 6 months, with the possibility of an extension. Importantly, some tech companies limit the total length of time you can contract with them.

Thankfully, if you secured your contract through an IT staffing agency, they can often present you with additional opportunities at other tech companies they represent, if they have them available.

What Are The Advantages Of Contract Employment?

As a tech career coach, I’m often asked whether it’s better to be a contractor or an employee. Truthfully, there’s no singular answer when it comes to whether you should pursue a W2 or 1099 role, as I share in this Glassdoor article. A lot of factors go into evaluating whether you should accept either kind of role.

One of the biggest advantages of contract tech roles is that your base hourly rate or weekly salary will typically be higher than if you work as an employee. However, as I mentioned previously, you will have to factor in the fact that you’re not receiving healthcare insurance, stocks, equity, and other fringe benefits. Plus, you’ll have to plan for extra taxes.

If you receive health insurance from another source, such as a parent or your partner, however, you may not need to worry about getting health insurance through your employer.

Additionally, a number of my tech clients enjoy the variety that contract work provides them, since they often get to switch projects or companies every 3 to 12 months. Contract work can be a good fit if you get bored easily and crave variety.

What Are The Disadvantages Of Contract Employment?

Contracting for tech companies doesn’t come without drawbacks. The biggest disadvantage tends to be not receiving the same benefits package as a typical employee, which can represent tens of thousands of dollars, if not more, in compensation.

Some of my clients have noted that certain company meetings and perks, such as shuttle buses or gyms, are off-limits to contractors. Clients have also noted that some companies have a culture where contractors are seen as inferior.

Should You Quit Your Full-Time Job For A Contract Job?

So, what happens if you end up receiving a contract offer when you already have a full-time job?

Although few workers would have given up stable full-time employment for an uncertain contract role pre-pandemic, the recent tech layoffs have made many job seekers recognize that even full-time employment isn’t as stable as they thought.

Additionally, many job seekers use contract roles to break into the tech industry and gain exposure to companies that can be difficult to gain otherwise.

While only you can decide if it makes sense to leave your current full-time role for a contract job, here are a few questions to ask yourself:

  • What’s my long-term potential with this organization? Is this company known for converting contractors into full-time employees?
  • Could this be used as a “lily pad” role?
  • How will I feel if my contract ends and I don’t get offered a full-time job?

Ultimately, you’ll need to reflect on your situation and conduct a cost-benefit analysis to decide whether pursuing contractor work makes sense for yourself and your finances.

What Happens When Your Contract Ends?

Now, what happens when your contract position ends? Well, it depends, in part, on the company and your position.

Many workers take on contract roles with tech companies in the hopes that they’ll receive an employment offer with the company at the end of their contract, or at least have their contract extended beyond its initial length.

However, there’s also the possibility that your contract will end and you’ll part ways with the company, which you want to be prepared for — mentally and financially.

Conclusion: Pursuing Tech Contract Jobs

Tech companies hire contractors for a variety of reasons. Before accepting a contract role, you’ll want to weigh the trade-offs of being self-employed versus on the payroll as an employee, since there are pros and cons to both.

And if you’re contemplating leaving your full-time position for a contract tech job, you’ll have to decide if the potential payoffs are worth it. My hope is that this article provides you with a jumping-off point to conduct your due diligence. You’ve got this!

About Dr. Kyle Elliott

About Dr. Kyle Elliott

Dr. Kyle Elliott is the founder and career coach behind CaffeinatedKyle.com. His expertise is in Silicon Valley and high-tech. As a result of working with Dr. Elliott, senior managers and executives have landed jobs at Meta, Amazon, Google, and nearly every other tech giant you can imagine.

A trusted career expert, Dr. Elliott’s words have been featured on Business Insider, CNBC, CNN, Entrepreneur, Fast Company, Fortune, and The New York Times, among dozens of other leading publications. He has been recognized as a Best Career & Interview Coach, Best Resume Writer for Silicon Valley/Tech Managers & Executives, and LinkedIn Top Voice (the platform’s highest honor).

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