Views from the contracting coalface

If you're an out-of-work contractor with no savings, sorry, but it's just too bad. Just as the industry has biblical fat years, it also has its lean, and it's best to put something aside.

If you’re an out-of-work contractor with no savings, sorry, but it’s just too bad. Just as the industry has biblical fat years, it also has its lean, and it's best to put something aside.

That’s the view of Chris of Auckland, 47, who's been in the industry 15 years.

Chris weathered a near-barren year in 2001, gaining just two months' work with Clear Communications until he was one of 20 the telco let go in December. However, the previous five years were profitable.

“Contractors earn 60% to 100% more than a permanent person does," he says. “The crucial thing for contractors is that they should be saving half of what they earn, otherwise they are fools. Or they go without. Or they get a permanent job at half the rate. I know a lot of contractors like this. They do not save and they do not learn," Chris says.

Chris has programming skills in Cobol, Oracle and SQL, but says these skills are “in trouble”, while those skilled in Java people are still in demand. Thus he is using his jobless spell to learn both Java and Visual Basic.

“Clients are getting very fussy, wanting contractors having [multiple] skills, rather than three. It’s simple supply and demand,” he says.

But even Java developers have their jobless spells. Graeme hasn’t worked since February, saying the market is at its worst in years. Nevertheless, he sees signs of a recovery, which he hopes will be confirmed by the start of the financial year and the setting of many budgets this month.

Graeme's skills are in J2EE, having been a Java team leader and senior developer with five years' experience. He says such a lengthy spell without work is “most unusual”.

Graeme reports a “few nibbles” from potential employers in recent weeks, but he feels he may have to drop his hourly rate -- previously $90 an hour -- to $85 or $80 to get work.

“The grapevine says that people are getting turned down on price,” he says. Last year, some could almost name their price.

While agencies Robert Walters and Enterprise report declining contract rates leading people to consider heading back to Australia -- Robert Walters claims two recent departees for more money -- Graeme says he has discounted both the UK and Australia because they have the same depressed conditions.

In fact, he believes New Zealand presently has “reverse migration" due to IT people coming home with decent programming skills. A greater labour supply -- including new graduates -- for fewer projects means the contracting market is getting squeezed, he says.

Chris says contractors tend not to know what is happening in the market until their contract ends. “The contracting market is as hard to predict as the sharemarket. There’s no logic to it. It has nothing to do with the state of the economy,” he says.

Chris counts himself as relatively fortunate. “I’m quite happy to take six months' break catching up on life. Even if I can get a contract, the rates could be depressed. I have learnt not to choose jobs at low rates. It is better to stay out of the market,” he says.

However, despite hard times, contractors may be in danger of selling themselves short.

“The key is not to sign up for too long a contract," says Graeme. "If things come right you would be kicking yourself. My thing is to sign for a contract that is not 12 months. Get a shorter contract, which can be extended at the new rate,” he says.

Graeme says he knows of contracting friends who have shifted into permanent jobs. While the market may present opportunities for businesses to employ staff at a lower rate than before, taking such advantage can backfire.

Laurel Gillan of recruiters IT Maniacs says such staff may not feel so motivated and won’t be as productive as if they were getting a "fairer" rate. Companies only get what they pay for, he says.

Graeme agrees, claiming one Auckland firm that employs many programmers has given them “appalling” pay rises, because it thinks the staff have nowhere else to go. “They will bunker down, ride out the storm, but when they have the opportunity, they will move on,” he says.

Instead of just leaving, he recommends asking for more money in the good times. "If you are unhappy about pay, say so. Give them the opportunity to put it right. I have got a lot of money out of the employers that way."

Greenwood is Computerworld's human resources reporter. Send letters for publication to Computerworld Letters.

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