8 Pros and Cons of Software Engineer Contract Work You May Not Know About
From September 2008 to March 2010, contract work increased 2% and part-time jobs increased 16%, while temporary, permanent, and full-time positions decreased significantly (-19%, -36%, -4% respectively). Read on to find out why software engineer contract work can be a safer and smarter career path for you.
Software engineer contract work offers many benefits over permanent positions, although it does have its drawbacks. Here are some characteristics of contract work that can help determine if it is right for you or not:
Contract labor professionals:
Money – the pay will generally be better than for permanent positions, since the employer incurs less overhead.
flexibility – since you are paid by the hour, you are not required to exceed the established weekly hours. In many cases you are on your own time. Additionally, taking contract positions allows you to work on several different projects with different companies.
Experience – contract jobs allow you to gain experience and training in different areas of expertise. This can be a great resume builder, however you want to avoid being labeled a job jumper so show some concentration in specific areas.
Work from home opportunities – many contract employment opportunities are work from home. While some employees feel the need for a structured environment, many love the freedom that working from home offers (and its gas-saving benefits!). If you work from home, you may qualify for a home office tax deduction.
tax deductions – contractors can claim tax-deductible business expenses. Be sure to keep track of all the money you spend on office supplies, phone calls, and anything else related to work expenses. Also keep track of the number of miles you travel in your car to get to and from your employment contract, as this may be another deductible expense.
Cons of contract work:
less benefits – this is not always the case if you find a generous company that is willing to negotiate the terms of your contract.
Uncertainty – During the economic downturn, the average job seeker was primarily looking for job stability. Now that things have relaxed, contract work is regaining its appeal for those who enjoy its benefits.
Taxes and health insurance – While full-time employees have taxes withheld from their paychecks, contractors must take care of their own taxes. Contractors are responsible for paying the self-employment tax, which covers social security and Medicare. In addition, they are responsible for paying estimated taxes, which consist of self-employment and income tax in quarterly installments based on what they expect to earn for the year.
Contract work can be very beneficial for some, while not so suitable for others. Since much of the work of software engineers is project-based, many of you in the field should be comfortable with this type of position. In many cases, software engineer contract work will be the most sensible option for those in the industry and I highly recommend experimenting with it at some point in your career. It can always be used as a gateway to a permanent position and is a great way to test if the company is right for you. Always remember that more than 70% of contract jobs become permanent positions, so opportunities are very likely to open up in the future (Source: IBISWorld).
Employment agencies are often a good resource for finding contract work. Another option is to use independent resources.