Software developer contractor

jonneymendoza · 9 Jan 2013 at 14:39

Is it actually cheapper to employ a contractor then a perm?

i had a recruiter calling me trying to talk me down for these reasons:

Rate i want is ambitious(even though a few mates of mines earn that rate or more)

Too many contractors in the IT industry thus more competition and rates getting lower.

Perm roles are cheaper for the company then contract roles so they dont hire contractors anymore

9/10 other recruiters who offer the rate am after are telling a lie..

Southy_ · 9 Jan 2013 at 14:59

Bear in mind one thing when talking to a recruiter: They get more money placing you as a permanent employee.
My company pays 15% of the first years salary for a successful appointment half after 3 months the other half after 6.
So a £30k permanent employee gets the recruiter £4.5k for pretty much no work. Also 15% is a low amount that my company negotiates due to a LOT of recruiting.

I don't know the rates for placing a contractor, but it is going to be less.

When you calculate everything you get as a permanent employee: Holiday, Sick Pay, Training, Pension Contribution, Bonuses, Health/Dental Cover, Eye Tests for VDU work.
You can pay a contractor double the permanent and still come off better in the long run. Plus the benifits of no (or very low) notice period, companies can save a lot of money. Especially on 6-12 month contracts.

jonneymendoza · 9 Jan 2013 at 16:19

so as per normal the recruiter chatting off of his backside lol.

so it would be even cheaper if i apply directly witout a agent

Amleto · 9 Jan 2013 at 16:42

You don't pay the agent anything. Some companies will only deal with agencies, though.

jonneymendoza · 9 Jan 2013 at 16:55

cheaper for the company i mean

Ev0 · 9 Jan 2013 at 17:49

Yes, however if the one agency were the people who introduced you to the vacancy even if you then went direct, or through another agency after them, the original introducing agency are the ones who will be eligible for any fees based on you taking the job.

Oddly I was told as a permy I was more expensive than the contractor I replaced.

Haircut · 9 Jan 2013 at 20:14

Southy_ said:
Bear in mind one thing when talking to a recruiter: They get more money placing you as a permanent employee.
My company pays 15% of the first years salary for a successful appointment half after 3 months the other half after 6.
So a £30k permanent employee gets the recruiter £4.5k for pretty much no work. Also 15% is a low amount that my company negotiates due to a LOT of recruiting.

I don't know the rates for placing a contractor, but it is going to be less.

Why do you say that the agent gets paid more for placing you as a permanent employee and then say you don't know what percentage they get by placing you as a contractor?

A contractor friend mistakenly got paid the fee that should have gone to the agency for his first month in a new contract.
He worked out that it was 18% on top of what his invoice should have been, and this is on a £600+ daily rate.

bluesouljah · 9 Jan 2013 at 22:15

Yeah, 18% is about the going commission an agent makes. I worked mine out and it was about the same.

Mr^B · 9 Jan 2013 at 22:25

jonneymendoza said:
Is it actually cheapper to employ a contractor then a perm?

i had a recruiter calling me trying to talk me down for these reasons:

Rate i want is ambitious(even though a few mates of mines earn that rate or more)

Too many contractors in the IT industry thus more competition and rates getting lower.

Perm roles are cheaper for the company then contract roles so they dont hire contractors anymore

9/10 other recruiters who offer the rate am after are telling a lie..

Rate is ambitious because you have no track record.

It is cheaper (long term) to employ a contractor than a perm, that's why the market exists.

Most rates *are* a lie, they are the top whack that you will get knocked down from.

There are a large number of contractors, specifically developers, but the good news is that most of them are not very good. I have a hire rate of about 10% of people who make it past the CV and phone interview, maybe less.

jonney_joop · 9 Jan 2013 at 22:31

Mr^B said:
Rate is ambitious because you have no track record.

It is cheaper (long term) to employ a contractor than a perm, that's why the market exists.

Most rates *are* a lie, they are the top whack that you will get knocked down from.

There are a large number of contractors, specifically developers, but the good news is that most of them are not very good. I have a hire rate of about 10% of people who make it past the CV and phone interview, maybe less.

u have high expectations

i do not like interviewers who ask questions that are trying to see if u memorized an API character by character and prefer intervews that actually ask u to solve a problem using logic.

that is what development is all about. not about knowing the most word by word on the whole JAVA API but someone that can solve problems with logic.

Java and the likes are all just tools to do a job just like how a tool box carried by a plumber are just "tools" as well.

Mr^B · 9 Jan 2013 at 22:40

jonney_joop said:
u have high expectations

i do not like interviewers who ask questions that are trying to see if u memorized an API character by character and prefer intervews that actually ask u to solve a problem using logic.

that is what development is all about. not about knowing the most word by word on the whole JAVA API but someone that can solve problems with logic.

Java and the likes are all just tools to do a job just like how a tool box carried by a plumber are just "tools" as well.

I pay well, and the work that needs doing is not straight-forward, and involves a great deal of pressure to deliver, and I can afford to be picky.

It's a good job that I don't do interviews like that then. The phone interview is a VERY brief conversation with a few technical questions to ensure that the person has a brain and can communicate effectively.

The face-to-face interview is a programming/pairing task, which we sit down and do together. I'm not interested in API knowledge either, I want to know how the person approaches problems and whether or not I can work with them. Being turned down might be for something as simple as not knowing as many Resharper keyboard shortcuts as another candidate...

I would typically review about 25 CVs, phone interview 15 and face-to-face interview 6 or 7. Competition is VERY strong at the rates which I hire at.

jonney_joop · 9 Jan 2013 at 22:51

Mr^B said:
I pay well, and the work that needs doing is not straight-forward, and involves a great deal of pressure to deliver, and I can afford to be picky.

It's a good job that I don't do interviews like that then. The phone interview is a VERY brief conversation with a few technical questions to ensure that the person has a brain and can communicate effectively.

The face-to-face interview is a programming/pairing task, which we sit down and do together. I'm not interested in API knowledge either, I want to know how the person approaches problems and whether or not I can work with them. Being turned down might be for something as simple as not knowing as many Resharper keyboard shortcuts as another candidate...

I would typically review about 25 CVs, phone interview 15 and face-to-face interview 6 or 7. Competition is VERY strong at the rates which I hire at.

Got any vacancies lined up?

There should not be too much pressure providing you or your team estimates things correctly and not expecting a fully fledged enterprise system to be done in a month.

The pressure is down to poor estimations most of the time not bad developers.

There is a famous triangle and it goes something like this: Time, cost, quality. pick any of the two. u cant pick and achieve all 3

redeye_uk · 9 Jan 2013 at 22:53

Most agents take about 20%. However there is room for negotiation. Some times a client will give them a budget and ask for 3 devs. Now an agent might get someone really good in and make no money on them, but claw back some of their margin through the other contractors. Everyone has to make money at the end of the day, and the agent wants to be seen to be putting forward high calibre candidates.

I remember my first contract was for £200pd. I couldnt believe someone would pay me that kind of money! I kept thinking there must have been a mistake. Now, I wouldnt even get out of bed for that.

Interviews are a weird one. I've had some where they ask the most ridiculous technical questions that you'd only know the answer if you read up on them before hand. Others will give you a technical test to see what your coding style is like. And the rest dont even bother, they just want to make sure you arent a leper and will fit into their organisation.

The things I enjoy about contracting are the fact it doesnt get boring and I dont get tunnel vision. I have worked on all sorts of projects - standard websites, porn sites, tablet apps, TV apps, you name it. I've used so many different js libraries, CSS preprocessors and so on. I'd never have done that if I was content in a perm role and it excites me not knowing what i'll be working on next

redeye_uk · 9 Jan 2013 at 22:55

jonney_joop said:
There is a famous triangle and it goes something like this: Time, cost, quality. pick any of the two. u cant pick and achieve all 3

Ahhh, the Iron Triangle. That takes me back a few years

Mr^B · 9 Jan 2013 at 23:22

jonney_joop said:
Got any vacancies lined up?

There should not be too much pressure providing you or your team estimates things correctly and not expecting a fully fledged enterprise system to be done in a month.

The pressure is down to poor estimations most of the time not bad developers.

There is a famous triangle and it goes something like this: Time, cost, quality. pick any of the two. u cant pick and achieve all 3

Unfortunately, that's not really how it works - estimates are always wrong yet you are always held to them. If you deliver early, you got the estimate wrong. If you deliver late, you didn't work hard enough.

The famous triangle is missing a side; functionality. You can reduce the functionality provided in order to deliver on time/budget/quality.

*addendum* Yes, we are hiring, but for permanent developer(s), not contractors.

jonney_joop · 9 Jan 2013 at 23:30

Mr^B said:
Unfortunately, that's not really how it works - estimates are always wrong yet you are always held to them. If you deliver early, you got the estimate wrong. If you deliver late, you didn't work hard enough.

The famous triangle is missing a side; functionality. You can reduce the functionality provided in order to deliver on time/budget/quality.

*addendum* Yes, we are hiring, but for permanent developer(s), not contractors.

If u deliver early u can save costs. if u deliver late, projects can get canned/canceled because of it.

i've never seen a project get canned for delivering early, infact, the quicker u deliver an idea, the better. Being first out the door is one great way to make it big in the industry

absolutely nothing wrong about delivering on time. You should know, software developing is not as easy as black and white. the most talented developers can stil get stuck on a little small issue that can take a week to fix whilst complex requirements could be done in a day or two without problems, passing full unit testing etc.

point is estimation is just that, an estimation and its always better to overestimate then to estimate thinking the whole cycle will run perfectly smooth with no developer and task having any minor hiccups/issues.

edit: its not a triangle if it has 4 sides

and IMO functionality goes under "quality" as to have a quality product it has to be efficient, meet requirements needs, next to no bugs/issues and u guess it right, have great functionality. "quality" is justa general keyword

aln · 9 Jan 2013 at 23:57

jonney_joop said:
Got any vacancies lined up?

There should not be too much pressure providing you or your team estimates things correctly and not expecting a fully fledged enterprise system to be done in a month.

The pressure is down to poor estimations most of the time not bad developers.

There is a famous triangle and it goes something like this: Time, cost, quality. pick any of the two. u cant pick and achieve all 3

According to what he just said he did pick two. Time and quality. He specifically stated he was willing to pay more to get that. Whether or not he's successful in doing this is another question, but one would assume he's successful enough if he's still running and still paying those higher end rates.

Hiring is hard. Pretty much anyone whos ever done it will make bad hires and turn away good people. Everyone has their own ideas and its a percentages game at the end of the day.

MR^B said:
Unfortunately, that's not really how it works - estimates are always wrong yet you are always held to them. If you deliver early, you got the estimate wrong. If you deliver late, you didn't work hard enough.

You also have the 80/20 rule. When the people you develier to think you're done after 20% of the time and wonder why you want another 4x as much to do "simple stuff".

MR^B said:
The famous triangle is missing a side; functionality. You can reduce the functionality provided in order to deliver on time/budget/quality.

http://en.wikipedia.org/wiki/MoSCoW_Method.

The triangle paradigm is largely broken regardless of if you make it a box or not. Unlimited money can't accelerated time nor create quality, in fact it's probably counter intuitive resulting in the focus being money above all else. Similarly you just can't accelerate every problem. Hiring 9 woman to give you a baby doesn't get you a baby in one month, etc, etc, etc.

Key point of the this post? Everything I've just said is marketing / management BS by people trying to make sense of an imperfect world. The only thing that really matters is the ability to deliver, and thats why respected contractors are paid the big bucks based on their reputations and thats also why someone fresh off the boat doesn't.

MR^B is right to expect a lot. The good new is he's right. Which means anyone who wants to can become part of that 10% or so.

rIcK · 10 Jan 2013 at 04:00

Amleto said:
You have two problems: 1 - you won't have the spare hours in addition to a main job. 2 - a good programmer straight from uni is very rare ime (and others'). With no industrial s/w exp you'd be bottom of the pile.

Most of my programming experience is writing software with others or side projects for small contracts here and there. Stuff I did at Uni was computer games programming.

What would you advise to get some recognized experience? Its difficult since my main job not specifically along that path.

Southy_ · 10 Jan 2013 at 08:53

Haircut said:
Why do you say that the agent gets paid more for placing you as a permanent employee and then say you don't know what percentage they get by placing you as a contractor?

A contractor friend mistakenly got paid the fee that should have gone to the agency for his first month in a new contract.
He worked out that it was 18% on top of what his invoice should have been, and this is on a £600+ daily rate.

Guess I was just making an assumption based on talking to contractors and a recruiter that I know, who have said they make more money overall if they place permanent employees.

jonneymendoza · 10 Jan 2013 at 09:28

Southy_ said:
Guess I was just making an assumption based on talking to contractors and a recruiter that I know, who have said they make more money overall if they place permanent employees.

makes sense a bit.

Dunno if u can even believe some of these recruiters. half of the jobs i have been in i have applied to them directly without an agent/got mates who work there who have hooked me up