Contractor Meat Market: Readers Respond
Readers respond to recent article on shrinking contractor pay rates.Ive been contracting as an Oracle developer for seven years now. A year and a half ago, I quit my permanent job at an Internet startup just before they failed, and I took this contracting gig. I was getting a nice premium rate (for being available on such short notice) up until last December, when the HR guy told me, "Take a 20 percent pay cut or your contract is done." This was two weeks before Christmas! I managed to negotiate only having to take an 11 percent pay cut, but I sure didnt like it. The attitude from the customer Im seeing is, Its a buyers market so, screw the consultants. I distinguish myself from the herd with "value added" services. For peanuts I provided PL/SQL training for 20+ of my clients developers. When particularly sticky tuning problems pop up, Im one of the first that people turn to. I try to pass on my expertise and knowledge to their staff, so they become better developers. I had a big hand in creating the programming architecture and standards for their database-drive Web applications. I dont merely do the work as directed by the customer; I use my 17 years of industry experience to help the customer design and build highly maintainable systems. For this, I feel worthy to earn a salary thats well above what mid-level developers earn (since Im a senior-level developer). If a client thinks that hiring a mid-level consultant is just as good as a senior-level consultant, and not worth the extra money, I would hasten to point out to them that they get what they pay for. Even in todays repressed IT job market. Dan Clamage
It was nice to see an article in the press that begins to describe the foul conditions in our trade today. The one thing you didnt mention is that the U.S. government also seems bent on destroying this as a career, through their continued support for the H-1B program. Even though around 900,000 people have lost their jobs in IT, there are still over one-half million H-1Bs in the country, supposedly to alleviate the "labor shortage." Most of us are not against the H-1B program out of xenophobia; rather, we object to the program because it brings in people essentially as indentured servants who are deported the minute they lose their jobs.
LINDIN Consulting Inc.
New York As a Marketing & Business Development Manager for an accomplished IT Search firm in Chicago, having worked here almost 5 years, I believe I have another side to the story. While it looks like the contractors have the short end of the stick right now, from where I sit its the other way around. A contractor can literally pick which agency will pay him more for the same job, which directly relates to how much the corporation is willing to pay that particular agency. Often its just enough for everybody to make a nice profit and the contractor to be compensated nicely as well. However at times it doesnt work that way. You mention lack of loyalty by search firms... I have to laugh because in my experience, its the corporations themselves that have a problem with loyalty. Even if you are on their golden Preferred Vendors List, sometimes you have to shell out and pay your contractor before the client ever pays you. This can be as much as $100/hour for a high level professional. Usually a firm will pay it for as long as they can, and then theyll have to take the heat when the candidate isnt getting paid, when it was really the end client who didnt pay. There are many reasons that corporations like to work through agencies... it gives them a central point of contact, and the firm handles all the busy work...screening resumes, background checking, paying the contractors payroll taxes and per diem, etc. But in a big company, sometimes paperwork gets lost, processes take time, and there are always mix-ups... heck, some people just plain lie. A couple times, a corporation has completely stiffed us for our fee and weve had to compensate their contractors for the work they did out of our pockets. So instead of making money, we lost it. Is that greedy? I dont think so. Lane Eddington
Manager, New Business Development
Electronic Search, Inc. I agree that the market in large corporations is becoming strictly MSP-based. Unfortunately, MSPs tend to select based on the buzzwords in your résumé. That means invariably which programming languages or product modules are listed--because that is the only way they know to reduce the [number of] résumés they must examine. So, "Cast yourself as a consultant, not a technician" does not work for people like me and several of my employees who are experienced modelers, analysts, designers and project managers. Ive tried working with a number of MSPs, but they instead try to choose based on the programming languages in the environment rather than analysis skills. Even functional knowledge is discounted in favor of these. This is a sad state of affairs, since poor analysis and design is the cause of most project failures. No amount of technical knowledge can fix missed business rules that cause design changes. Unfortunately, none of the people hiring in the MSPs (in my experience) have ever been involved in development and hence do not know. Case in point: One of my employees was rejected by two or three MSPs for a specific consulting position at a large pharmaceutical for lack of Documentum product knowledge. The same person was hired by that pharmaceutical through another company where the recruiter/salesman had hands-on knowledge of the industry. Treating these requirements like [its a] meat market is detrimental to the large corporations. Do the large corporations realize what they are giving up? They are not being presented with the right people because of this layer of middlemen. I think the middlemen work well when the skills needed are cut and dry or low level--e.g., Java programmer. Other levels do not work at all. Ask the corporate managers how many interviews they do now before a suitable person is found. I would suggest the average number of interviews per selection has gone up from before. How much time do they spend (at a higher cost) than before? The argument for using MSPs was to save time--is this really happening? I do not see evidence of it. Besides, whose time is saved? The expensive IT manager who has to do more interviews? Or the cheaper accounts payable person who has to pay fewer vendors? Has anyone actually done a cost comparison? Or is this another Big Three business strategy that does not do whats promised? Ulka Rodgers
eTransitions Inc. One of the sad testimonies of working for yourself is that it is very lonely at the top. Unlike people like me who not only have a very steady pay check and a good support system, the self-employed are always on the move, keeping their ears and eyes to the ground and looking for the next job. If the contractor can build a clientele that keeps him/her employed, he/she may actually become a roving employee. However, it is a very volatile market and one can be out of work in a heartbeat. I tried consulting back in the 90s when I was laid off and I really enjoyed the experience until my project was over. Then I re-entered the unemployed market and finally landed the job I am at right now. I loved working at home and working whatever hours I wanted, but I still kept an eye out for a permanent job. Consulting is temporary at best, and when you are raising a family, the risk is enormous. Fortunately, my wife had a full-time job to offset this. Now that the market is so soft I would never try it. Jason McMahon
Dolgeville, NY Two points come to mind: As reader Win Hinkle pointed out, there is a serious gap between hiring managers and contractors (or perhaps better put: hiring managers dont know what theyre looking for - this is especially true in my field, software testing & QA). I can rant and rave about this for hours (people placed in charge of testing almost always have no testing experience or background in testing and testing, unlike programming, is not taught). The second thing that I dont understand, is that if companies are really under severe financial pressure to save money - why do they insist on using agencies? Yes, I know about the centralized billing and prescreening of résumés, but if agencies are taking fees of 30-40 percent (perhaps lower now), and your average contractor is making $100K per year, and your average corporation has hundreds of contractors, they can outsource the screening and billing to me! Why not just insist the contractors are incorporated and bypass the middleman? John Tyson
Salt Lake City, UT