Life Anew: Full-time vs. Consultant/Contractor in Software Engineering
Where do you see yourself in five years? How about next week? How about tomorrow? Asked that same first question, I said, “I’d like to have started a business.” As of a few months ago, I’m Founder and, by default, Principal Engineer of Glyph Technology barring some slight latency in that outlook: fully licensed, fully insured, fully taxed, etc… uh yeah, fully responsible. Hey! Don’t pick-on my web frontend too much since ‘tisn’t my forté. =) I’ve been in the software and IT industry for ~17 years initially working as a co-op through 80% of my college career(somewhat out of necessity and some of desire) and then mainly full time work now into my mid-30s.
Through that vast expanse of time, I’ve worked(and seen) part-time, full-time, and a wee bit of contract work. Now, business owner/consultant.
One of my colleagues joked about one role at a previous company in that time being measured in “dog years”: pace of technology? the rate at which dang near everything changed around us? the hours we worked as full-time employees(FTE)? or “D, all of the above?.” There really is no replacement for time and the experience(plus wisdom) it yields. So! Lemme compare and contrast, contrast n’ compare at least a couple types of employment to help you make an informed decision to start the year off right growing in colossal, new awesome ways. “Shall we begin?”
Full-Time Employment
That cushy feeling of stability being gig-free in adult life. It certainly has perks beyond imagination in some aspects depending on the company you join. So what kind of things are you getting?
- Steady income at a market rate for your role(hopefully)
- Insurance!(“Need to clean the pizza out of the deep crevices of my teeth from my early 20s”)
- Fairly straightforward taxes: W-2s are a staple in the U.S.
- PTO: Paid-Time Off to Tahiti and Mt. Everest.
- HUGE group discounts on services or products to get us all into the gym to work off that “freshman 15” and get cheap cellphone bills.
- Longevity/Retention in job function: No more seasonal work!
- Notoriety of the company’s brand(“You’re with Amazon!? Amazin’!”)
- Conferences and some education are paid(and you’re paid for your time attending them)
- Access to latest, greatest technology and at-scale.
- Established legal protection for patents, immigration, etc.
- Steady-ish commute times/methods
- Potential for the big payout/early retirement(through acquisition/private-to-public/organic growth)
- Hopefully, regular bonuses(or at least cost-of-living adjustments)
- Pretty clearly-defined job titles and responsibilities
- Cultural expectations are defined
- Opportunity for career pathway growth(“moving up the ladder”)
- The list goes on and feel free to add those in the comments.
I’ve been a bright-eyed optimist for much of my life always trying to find that silver-lining and have transitioned some to realism being continually forged by the world. So, let’s cut that green grass with a “double-edged sword” and make way for contrasts!
- Possibly long hours: Is that passion? Commitment? Insanity? In it creeps and only you can decide.
- Idea to full Generally Available(GA) product can be pretty slow.
- The Bureaucracy machine: “I own this and you own that; that’s that.”
- Dreaded performance reviews: “Have you played nice? Are you growing the business?”
- Promotion “Twister” where you transition from red to green roles but have to stay on blue/yellow in terms of responsibility.
- The RSU vesting “carrots” to keep you at it whether you’re feeling fulfilled or not(or even sustained).
- Siloed organizations creating regular tidal waves of re-orgs that go on too long.
- Cultural rigidity like a whiskey distiller’s blending methods to maintain a blend.
- And the list goes on…
A “long time ago” in the early to mid-2000s in the U.S., W-2 employment was the bee’s knees(at least for me and still is in some cases). It came with all those assurances. Then, mid-2000s, the housing market and everything around it domino’d bringing us into a job crunch. If you were on a W-2 or had stable employment, you weren’t moving a lot.
Well, we grow and learn from tragedy(or at least we should) because:
“those who cannot remember the past are condemned to repeat it” — George Santayana
In the last few years, there was a tax overhaul that certainly benefited 1099(contract work) among other things. We’re in a booming economy with phenomenally low unemployment as you can tell(~3.5%) and it’s downward trending.(I’ve heard murmurings of bears in the market and if my doctor has said anything worthwhile, it’s to watch out for murmurs.)
The counter employment to FTE is “unemployed.” Just kidding, it’s unequivocally:
Contracting/Consulting
I think we’re already scared thanks to cell plans, TV plans, etc. when we hear “contracting.” However, with time, patience, and intuition, a jungle becomes something beautiful with the right lens. “Who does your taxes?” “I do.” Sure, I used to have a tax professional help me with the taxes and with time, I have combed through the IRS 1040 form and many related forms to understand and properly pay taxes without either the IRS or myself being “shorted.” It’s sometimes painstaking, just like contracting(and consulting) can be if you’re not well-prepared. Let’s “palate cleanse” with some great things it has to offer:
- Versatility in work: Trapped in a monotonous role no more.
- Formalized agreement on work to be performed(avoids “onesie/twosie” off items that somehow grow in FTE)
- Ownership of your work! Sure, companies add ownership clauses but you’re free and clear for side projects galore.
- Work performed is negotiated much of the time at market rates i.e. potentially getting cost-of-living regularly (or even better based on your reputation and demand)
- Building your brand: It is what you make it!
- Greater clarity and more direct correlation of work-performed-to-pay-received.
- Freedom to write about technology and other things without marketing/legal “red tape”
- You set standards for your operating model: Set high security/privacy standards, make way for family life with certain hours, etc.
- Constantly staying up-to-date on technology: A lot of companies want the new “hotness” to do better, be relevant, etc. Look at ML/AI’s current state and blockchain’s former self.
- Quicker results and smaller feedback loop! Your engagement model can be as small as agreed and companies will want to keep it that way to avoid expense creep.
- Greater chance your work sees the light of day: I can’t count the number of times work has been killed off due to “market trends” or “cost savings” and then another company successfully deploys the technology with longevity.
- Not as impacted by the tidal-waving re-orgs: formalized work agreements and penalty for contract termination help keep your work moving in a good direction.
- Flexibility of per-project or hourly work depending on work and timeframe: You like working late into the night or 4-day work weeks? Agree to proper integration points with assurances.(Think Scrum ceremonies)
- Staying up-to-date on federal, state, and local laws, regulations, and taxes.
Relationships you build can reverberate and have compounding good effects. - Your work can be donated to the open source community or licensed for revenue(as long as you didn’t have an agreement that the software won’t be used with a current/previous company or some competitor; cue the legal experts to correct me).
- You can reduce the internal politics and focus on the work.
- Payout penalties can be incorporated if the contract is ended or work commitment is modified without both party agreement.
- Allows for significant gaps of exploratory time: Feeling burnout? Don’t want to have a gap in employment? Contract ends, you go exploring for a set time if you want, and then find the next contract. There’s absolutely no sense to wait for retirement b/c it’s not guaranteed.
- You can negotiate advanced payment(and everybody wants money now to catch the wave of stock market growth in this climate).
Are you a contractor or consultant yet? I thought so…well, at least, I am for many of those reasons and others not listed. There are some drawbacks where you have to be aware. Back to that green yard with the double-edged sword!
- Constantly staying up-to-date with technology: You’ve heard of AQ like IQ, right? “Adapt or die”(or at least know you can’t stay at a company for years kicking the can down the road).
- Certifications: Current and future clients love the certs whether it can prove you can do something or not and it’s an easy eliminator.
- Documentation: I document a variety of things before, during, and after my work is completed two fold more than previously for my own sanity, the customer’s reassurance, and consideration for other developers.
- Commute can vary significantly if you take a 6-month project or one month project for instance.
- Finding low cost healthcare coverage with proper coverage: If you are young and healthy, you’re taking more pay home, but… it takes some legwork.
- Accounting/billing/tax complexity increases: You might have to pay quarterly tax payments to federal/state/local at a minimum to avoid a big bill or interest in April.
- Brand establishment: “I’m sorry, who are you and how can you benefit my business/customers?”
- Relationships you build or unintentionally/intentionally destroy can have unintended consequences.
- Legal help required in some capacity for establishing a business, contract review, or heading off possible legal problems.
- You pay for your own conferences and all expenses required(and you’re not paid for attending unless the contract dictates agreed learning expenses).
- Subcontracting(Well, you might work for a contract company to keep a steady flow of work who is contracted with another company and it might get hairy)
- Having to stay up-to-date on federal, state, and local laws and taxes along with regulatory requirements: It’s January 2020 and there are new laws and revised laws(rarely, less laws).
- May not have control over optimal working conditions: You like working in isolation for focus and quality? Well, this ridiculous open office trend might hinder that.
- Having to “hound” the Accounts Payable team for payment.
- May not be included in the company’s status, outlook, or fun events.
- Influence on client’s company culture is potentially lessened(if you’re hoping to make a big impact).
Certainly significant warning signs…but who’s to say you’re locked into one employment type or the other?: You’re not and I’ve done it. It really takes the tenacity we each have to realize the dreams we have. There are plenty of overlapping bonuses between the two employment types that some companies are truly embracing including remote work to increase productivity, increase flexibility, and decrease commute headaches like here in the SF Bay Area. It’s not for all types of work but it works amazingly well with some great technology here in the new decade.
Other things to consider not just between the two employment types I listed are business outlook: The new year just started. Can you clearly identify the work you’re doing or planning to do doesn’t have just a one year lifespan until the next yearly focus or is your work part of short-term parlor tricks? Does the company you’re working for have a 3- or 5-year outlook or are they at the mercy of fluctuating markets with lack of clear direction to meet the demand? The year has just started and you’re in a great position to make it both an awesome one and following ones.
Please feel free to provide feedback and your own experiences. Happy New Year, Good Luck, and have a great start to 2020! (“I’m Barbara Walters, and this is…” — Cheri Oteri )
Appreciatively,
Chris Anderson
Glyph Technology, LLC: https://glyphtechnology.com
