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FAQ: What are the risks and rewards of contracting?

Making the choice to become a contractor is not an easy one. There are many factors which must be taken in to consideration when making the decision and there are always risks involved.

Many professionals choose to make the leap for the following reasons:

  • To earn more money
  • To gain varied experience with a number of different organisations
  • To become an expert in a specific field
  • To create a more flexible lifestyle
  • To gain access to a difficult industry sector or client
  • To travel

The freedom contractors have is often very appealing to those working in a permanent position, the thought of moving freely between companies after short periods of time and being treated as a service provider rather than an employee, not to mention the higher pay, can certainly be an advantage. However, contracting is not for everyone, and there are a number of negatives which must be taken into consideration. (The points below refer to the majority of IT contractors who work through their own Limited Companies, rather than on a PAYE basis.)

  • Contracting does not offer the security of a permanent position – sick pay and holiday pay are two areas contractors lose out on amongst others
  • Responsibility for administration and finances - takes time and money to complete
  • Worry of government legislation such as IR35
  • Contracts are more likely to be terminated early and often with shorter notice periods
  • If projects dry up or go on hold then clients are not at liberty to find you other work
  • Changes in the market could mean extended periods of time without work

Many IT professionals do choose to take the leap each year and the move can be hugely rewarding. The chance to work on multiple projects with multiple clients every year, and develop a portfolio of experience and skills is highly attractive. For those who do wish to step over to contracting, the process may seem daunting but in reality it is possible to make the move with relative ease.

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