Independent contractor or permanent employee – which one is best for tech pros?
When it comes to tech careers there is often the dilemma: Independent contractor vs permanent employee. Like all things in life, both situations have their pros and cons but. Bottom line, it all comes down to what you value the most. This article will walk you through both options and, hopefully, help you make the best decision for your career.
There is a very high demand for IT professionals almost everywhere, especially for developers (Java, Frontend, Backend, etc.). And, while 10 years ago managers had a prominent position, nowadays developers are the ones taking the seat and, in some cases, getting paid even more. This means the technique and hard skills are being given higher priority. So, when a company hires these talents the question comes: should you work as a freelancer for a project or as a full-time employee?
The financial point of view
Having a contract with a company offers more security and is, in many ways, more convenient. By having this bond with the company, you benefit from a variety of subsidies that allow you to generate more money at the end of the year. And, in case of holidays, disease, marriage or parenthood, you can also still have income.
Also, if one of the parts wishes to end the contract, there is a notice period, which offers a sense of security for both. Besides, the company takes care of all the taxes, which is way more convenient for the employee.
These are some benefits included in a permanent employee contract:
- Health insurance (covering all family)
- Pension fund
- Phone, internet paid by the company
- Company car
Contrary to a full-time employee, contractors have a contracted gross amount with the company and all benefits must be covered by themselves. Contractors are responsible for managing their taxes, pension fund, health and revenue insurances, and every other benefit. Companies will not get them any subsidies – which means that when you do not work, you are not paid (in case of holidays, disease, marriage, or parenthood). Besides, with this type of bond, there is a shorter notice period to give (usually 30 days). It is more of a Business to Business relationship: you and the company are business partners.
The good thing about being a contractor is financial independence. You will never complain again that your company doesn’t give enough benefits such as a phone, car, health, or pension fund, because you are the company. Plus, as a contractor, the companies usually give you a bigger gross salary, since they have fewer costs and less risk on their side.
Nevertheless, for most people, the insecurity of an independent contractor kind of contract is just not feasible, they prefer to have a “security net” provided by the company.
Technologies stack point of view
On the other hand, full-time workers stick to a project and to the technologies stack. Of course, there are great opportunities within companies, providing you training and career follow up. But usually, within a company, an employee is forced to manage more people and lead projects working less with technology. This, sometimes, leads to losing a good developer to get a bad manager.
Being a contractor offers a lot of flexibility when it comes to choosing the technology stack to work with. If as an independent contractor you are not happy with some projects, you can easily search for one that suits your needs and taste. And, regarding experience, we see it as a competitive advantage. The contractor has contact with more realities and companies, learns and works with more technologies, and can easily gain a wider experience than permanent employees.
The career point of view
One of the biggest advantages of being a permanent employee is the fact that companies tend to invest in the talent they have in-house. It’s much likely that someone with experience becomes the team or department manager – there is trust from the company and they bet on people they have trained. If you aim to become a Director, Head of Department, or Manager, you should aim on being a permanent employee. Nothing is wrong with starting in a company as a contractor. When the opportunity to become a manager arrives, try to change your contract to become an employee. This happens quite often.
Independent contractors are seen as external professionals hired for specific positions. Especially in times of crisis, they are the first ones to be cut and not having their contracts renewed. Being a contractor normally means you renounce the company ladder, so it’s less likely that you make progress in a company. Your career path will be decided by you: if you wish to excel in framework, technology, or domain, you will keep investing in yourself, doing certifications, and training. It also happens the same if you wish to move to management, you will invest in training for management, and then do the switch to a different area.
And now, what should you do?
Our advice is that you think strategically and ask yourself questions like:
Do I want to learn as much as possible in a short period of time and make it a competitive advantage in the future? Do I value and need a sense of security and guarantee my income? Do I prefer to grow in the same company and be promoted to a managing position? Etc.
Whatever option you choose – independent contractor or permanent employee – make sure it’s what’s best for you – and we are here to give you an extra hand on that.
Our founder’s experience
Marco Pincho, Founder of Sprint CV
I’ve been a contractor since 2013 and I don’t see myself going back to being an employee. Let me tell you why:
- The way companies manage promotions and salary raises are totally dull and, in my opinion, don’t reflect the performance of employees, nor the responsibilities that they had during the year. There are often a lot of excuses: you cannot be promoted two years in a row, you are too young to have a specific title, there is no space for promotions this year, the budget was cut, etc.
- Taxes and benefits – I own the responsibility to manage my taxes and every time I wish to take specific training, I don’t need to ask permission from 3-4 different persons in a company.
- The sense of not having a security net makes me sharper and more proactive in the market. Not because I am not happy with the current project, but mostly because I need to always keep my network active and ready in case, one day, I need to move to a different project/client.
- A false “security net” provided by the company is not more than revenue insurance that you can get in any insurance company. During the current COVID crisis, how many employees were laid off or fired? It is true that more independent contractors were fired, but as a contractor, you need to cover your downfalls so when you get good contracts, you can get good revenue and health insurance.
Sprint CV – Your ally in your tech career
We want to be on your side when you decide to go all-in for a new challenge. We are also here to provide you with free guidance on the next steps of your career such as:
- Second opinion on your CV
- Advice and help you to search for a better job
- Connect you with companies hiring to work at the European Commission
Feel free to reach out to our founder on Linkedin or via Email.