10 reasons why being a Contractor won’t Make my Future Work

Earlier in my career, I was an IT contractor and a software developer, and I was introduced by agencies. Projects typically ran from three to six and sometimes as long as nine months. I understand the opportunity that being a contractor can be for people. It can appear to be more rewarding than permanent salaried employment. However, I believe there are 10 reasons why, in the longer term, being a contractor won’t?Make your Future Work.

1. The challenge of continuing to build relevant skills in your marketplace

This is particularly intense for people in the IT area, where successive waves of technology can very quickly make those premium skills that you honed earlier in your career irrelevant. But I think it applies in many other cases, whether marketing, sales, finance, operations, HR or project management. The whole subject area continues to evolve. What’s fashionable and important is constantly changing. As you get older, updating your skills while maintaining contracting activity continually becomes harder and harder.

2. It’s very difficult as a contractor to evolve your career

As a contractor, you are hired as a specialist who gets things done. You often won’t be given the opportunities to manage and lead. You are limited to delivering your specialist skills. Again, referring to my experiences in the IT area, you can start, perhaps, to have a team leader role, but project manager roles are more challenging to take on. If you are pigeonholed as a software developer, this undermines your ability to increase your rates. As you get older and older, you are likely to become irrelevant.

3. HMRC rules have changed

The rules around being self-employed or trading through a limited company have changed. The traditional model for an independent contractor was to work through an introducing agency, which sold your time by the day. Then you are paid for every hour that you’re contracted to work. However, the increasing implementation of IR35 in all larger employers means that HMRC and employers will likely see the time-for-money contract as a hidden employment relationship.??

You can get around some of these challenges by writing statements of work and taking financial responsibility. However, this becomes increasingly difficult because employers and agencies don’t want to take risks. You end up working as an employee of an umbrella company, and more of your gross value is taken out through taxes and charges by the brokers in the system. It was very attractive in the past when you could take dividends out of a company and charge a good premium on your salaried rate. Now, it almost becomes a loss-making proposition compared to a salaried employee getting pension, holiday pay and sickness bundled into their annual salary.

4. You become subject to ageism

Over time, you become subject to the same ageism pervasive in many employment areas. However, surveys have demonstrated that employers consider older workers more productive and reliable. This hasn’t changed the attitude of recruitment managers or the agencies that serve them. Again, I talk to contractors stuck in a loop where they are seen as overqualified, which is often code for you’re just too old.

5. You thought being a contractor was working for yourself, but it feels like being employed

In a sense, as a contractor, you are working for yourself because you are a freelancer. But you have very little control over how you do your job and build your future. It’s all mediated through an agency and your contract client. To truly work for yourself, you need to be able to pick your hours, choose your clients, define your proposition and not rely upon expensive intermediaries who ultimately control your every move.

6. There isn’t the option for working part time

It isn’t easy to move from a full-time contracting relationship to a part-time contracting relationship so you can build other opportunities in your life. Occasionally, I’ve seen contractors who can negotiate a three or four-day-a-week relationship, but most roles are seen as full-time. As you move to the 2nd half of your career you may want the time to pursue a side hustle or to have more flexibility in your workstyle because you’re supporting elderly relatives or challenging teenagers. Full-time only can become a real barrier to?Making your Future Work.

7. Remote working may not be viable long term

As you get older, you may be less inclined to buy into the 3,4,5 workstyle that so many of the contractors I’ve met must commit to. I have had spells when I spent three nights away from home, four days on the client site and the fifth day working at home. It makes it impossible to participate in a normal family night or a conventional social life or build a commitment to regular community activities [choir, sports club, etc].??

Although during COVID, remote working became the norm, I fully anticipate the demand to be onsite and be present in person will increase. As you get older, you potentially have to look further afield for the available assignments, then 3,4,5 or even 5,5,5 (having to travel to the client on Sunday to be ready for Monday morning). Working becomes inevitable.?

8. It’s very difficult to do anything else

Starting a business while you’re an independent contractor is very difficult. In fact, any substantial transition is hard. This is because, as a contractor, you often build the contracting workstyle into your whole financial planning. This means that you’ve built financial commitments that rely upon being able to work 240 days a year at the rates you’ve been able to command. When you’re not working as a contractor you’re not earning.

Taking a sabbatical is a costly experience. Even reducing the number of working days can become very expensive. As people get older, the gaps between assignments can get longer. The pressures of working harder while you’ve got an assignment increase, and your capacity to develop other alternatives, such as a business, becomes vanishingly small.

I’m reminded of a good friend I knew for many years, whom I would meet every two or three years. He wanted to talk to me about starting a business. But as a highly paid contractor, he recognised that the commitment made to school fees, university fees, mortgage, etc., meant he had to carry on working at the same rate. So now, in his early to mid-50s, he is in a place where contracting is the only thing he knows and the only thing he can do. However, I decided to break out of the contracting treadmill much earlier in my career.

9. You’re not enjoying the corporate environment

To a certain extent, you are shielded from internal politics as a contractor. You are one step removed from the day-to-day political wrangling. Everybody knows you’re not going to be there indefinitely.??

People want you to succeed, but you’re coming in from outside and will inevitably challenge the status quo. That will mean that you are subjected to corporate politics. Many people I talk to have got to the point where they no longer care about corporate politics. They’re tired of fighting them.??

10. You want to believe you are making a real difference

Time and again, as you get older, your life develops, and you are keen to move from whatever success you have achieved earlier in your working life to care more about the difference you can make. This focus shift from success to significance is very difficult to achieve within a contractor workstyle. As a contractor, you are just a ‘gun for hire’ and will usually have very little involvement that will enable you to influence the organisations that are your clients. Typically, your relationship will be short-term and tactical.??

Conclusion?

In summary, many individuals step out of full-time salaried employment and see the contractor work style as a viable alternative.

It can certainly be attractive in the short term, promising more flexibility, variety, and opportunity. But in the long term, I would suggest that it’s a fix that fails.

There is another way… check out?https://2ndhalfcareer.com/?to find out more.