Self-employment on the rise for tech professionals: is this a good thing?

Self-employment on the rise for tech professionals: is this a good thing?

Summary: In today's crazy economy, self-employment or entrepreneurship may be the best way for IT professionals to go.

TOPICS: IT Employment

IT jobs are increasingly being staffed by self-employed or contract professionals. Is this a good thing?

Patrick Thibodeau just put together a report in ComputerWorld that points to the growing reliance of organizations on freelance, independent IT professionals to get things done.

IT worker-By Michael Krigsman
Photo: Michael Krigsman

For starters, he notes that 18% of all IT workers these days are self-employed, according to data from Emergent Research. The number of independent IT workers are growing at a rate of seven percent a year, the research group calculates.

Another firm, Computer Economics, pegs the percentage of self-employed IT workers in larger enterprises at 15% -- up from just six percent in 2011.

Emergent's Steve King says the growth in contract IT labor is all about quickly pulling in needed skills on a moment's notice. "In today's world, change is happening so quickly that everyone is trying to figure out how to be more flexible and agile, cut fixed costs and move to variable costs," he is quoted as saying.

So, enterprises save money (of course), and also gain more agility as they tap into the contract pool for the skills they need. In today's cloudscape, there are many types of skillsets that are needed to either deploy cloud applications and services, or better integrate them into existing enterprises. Add that to skills needed to handle all the new types of databases and frameworks (NoSQL, Hadoop) and mobile technologies. It's very difficult to maintain a bench with every conceivable skill for unforeseen (as of this month) opportunities that arise.

Enterprises need to establish dynamic confederations of teams and contractors that are available to pursue new paths of business as situations arise, and then be able to just as quickly stand down these teams.

But is it a good deal for IT professionals? Some argue that the contracting and of IT jobs is diminishing opportunities for meaningful employment. In some cases, it may even run afoul of government employment regulations. (In a famous case a few years back, Microsoft suffered the repercussions of categorizing some IT workers as contractors). 

But for many professionals, it's a chance to build a more entrepreneurial career with more variety. It means more independence, and very likely, more job security than a full-time job. An IT contractor may be working with several clients, and as some clients end projects, other clients can be engaged. Working full-time for one company is essentially having one, single client.

This is an amazing era in the tech sector. All the tools and platforms one may need are available, sometimes at no costs, online. An IT professional can quickly launch a practice or business with low start-up costs.

Ultimately, in today's crazy economy, self-employment or entrepreneurship may be the only way to go. 

Topic: IT Employment

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  • except u get double screw with obamacare

    You can't buy group insurance pre-tax and you have to buy an expensive plan with crap like prenatal care for a man to subsidize the scum's plans.
    • The "scum"

      This comment needs to be removed. It has no place in civilized discussion.
      Scott Lowe
      • "Scum" and civilized discussion

        To Scott Lowe, when a beloved family member loses his or her medical plan, doctors, and health care facilities -- which is happening to hundreds of thousands -- due to this man, Obama's, lawlessness, abandon and arrogance, "scum" is a POLITE word.
        • "Misguided" is probably the appropriate word

          "Scum" is properly reserved for rude, criminal, or malicious behavior.

          It is possible to be wrong without being evil; indeed, most wrong political decisions are made in good faith.
          John L. Ries
    • "Scum" is too obtuse

      Let's be clear. The problem has a name. It's name is OBAMAcare. The man and his "plans" are disastrous in every regard. That is all too obvious today.
  • On the whole...

    ...self employment is what we should always be encouraging. Unfortunately, we do a very bad job of it.
    John L. Ries
    • In what way?

      Not everybody (heck, the majority) of people would never make it on their own. Why push people to be self employed if there is no benefit to it for them?

      And I say this as a one time self employed consultant. There are many pros, but there are also a lot of cons, too.
      • Then we..

        as a society have a serious problem don't we? Maybe we should be promoting and teaching youth of today to develop the skills so they can make it on their own.
        • I agree with that

          "Maybe we should be promoting and teaching youth of today to develop the skills so they can make it on their own."

          I agree there. Teach them, then let them chose the option that best suits their needs/desires.

          "Pushing" to be self employed is like anything else - you may very well be pushing someone into something that isn't their cup of tea.
          • We do put a huge number of burdens on small business

            That's about as specific as I care to get for the moment. We shouldn't be pushing anyone, but I do think that an economy in which a high proportion of the working population is self employed (a nation of shopkeepers) is better for democracy than is our present "nation of servants".
            John L. Ries
          • This is the best thread of all

            ZDNet posts until now. :D
            Ram U
    • Movies and magazines

      Independence is the best way ahead for a vibrant healthy economy. Just look at the Entertainment biz. It is full of independence in a ver changing flux. To put a production together the producers (that's the job title) pull in folks of all sorts of skills and personalities to get a project done, very very few jobs in this sector last for years and years. Yet it is a trillion plus dollar industry.

      It's just my opinion based on 40+ years of work, but working as a long-time employee for a big company or government isn't a growth choice in terms of spiritual or mental growth at the individual or society wide level.
  • It is the best way

    If your not trying to get off someone else payroll or a contract , your dead in this industry and someone else is making your money , taking the cream off the top and paying you next to nothing while they collect large sums of money . Diversify
  • Risky and unstable

    Contracting is like having small business it is only good for some people. You have to take care of everything and there is no guarantee you will have any money coming in tomorrow. Plus there are extra taxes and healthcare insurance issues. There is not enough money in contracting and it only adds much more stress and uncertainty.
    • Tomorrow

      Tomorrow comes with no guarantees wherever you work. You want to be a slacker your whole life? Go work for the Federal Government, or become an mid-level administrator in some mega company or a educational establishment.
  • Other trades comparison, bad tax code history

    15%, at large firms? Contracting, as in the skilled trades, should be a significant percentage of the workforce. For example plumbers run about 15% self-employed.

    A lot of computer work is project based. Contracting just makes sense for such work.

    Back in the 1970s and early 1980s it was a good mix. But some nefarious business forces cozied up to legislators and got protection for their body shops. See Section 1706 of Tax Reform Act of 1986. That put most truly independent self-contractors at great disadvantage in the market of long-term projects, over six months. Companies not longer wanted to risk using them.

    The IRS itself in audit targeting makes life difficult for the self-employed, and that has grown worse, both in chance of audit and more and more tax forms and paperwork keeping requirements over the years. The exposure of getting something wrong in tax paperwork can easily be the equal of a year's pay or more, as a mistake can continue for years, and then SLAM -- the IRS "greetings and salutations upon your selection for audit" letter comes in.

    If you go self-employed, at that same time hire a reputable tax accountant.

    Today, I suspect, most contracting is the body shops having people on contract to companies as W2 employees to the body shop. Independent contract 1099 people direct to the company is rare. Because of the 1706 risk, and a few decades of habit.

    It should be more independent contractors direct to the bigger companies. Should, would, could. Yikes!
    • @bvanw the 1706 and now the Indian control over the IT contract

      I agree with @bvnw regarding the 1706, now a days large companies like ATT, Verison and the like REFUSE to work with non-w2 contractors because of the 1706. what is worst, the Corp to Corp folks are forced to carry expensive insurance policies that favor the contracting company with such insurance policies like car insurance even for jobs where the consultant does not have to drive for the company except to go to/from work.

      then there is the Indian control of the consulting trade, imagine getting a call ALL THE WAY FROM INDIA for a Job in South Carolina for a SharePoint Architect where the indian with a fake name like JOHN ROBERT tells you the customer needs a sharepoint expert in 20 related technologies, be a certified architect, be an expert trainer and be willing to accept a pay check of 35 to 40 dollars an hour so the can charge the customer 150 to 200/hr. ahh and it has to be all inclusive to out of the 35 dollars you have to pay for transportation, food and lodging.

      we as a country bitch about how the Mexicans come to this country and steal our low wages, but I don't hear anything being said about how the Indians come to this country and steal our high wages and lower the mark, heck they don't even have to come to this country, all they have to do is change their name and our government offices both local and federal go overboard in giving them our jobs with the neat excuse of "WE CAN'T FIND TRAINED WORKERS IN THE US' where what they mean is "WE CAN FIND CHEAP WORKERS IN THE US"
  • Employee of Record Companies as an Alternative

    You can always use Employee of Record (aka PassThru) companies if you are worried about IRS regulations, or are looking for a group healthcare rate. I used for years before going back to a traditional job. They take 3.9% of your bill rate, max of $6k but given that they handle all the backend services, I use to spend more than $6k on an account and payroll services. YMMV, but IPS was great for me. I'm not affiliated with IPS, and don't currently use their services.
    • Thanks for the reference to iProfessional

      It's nice to know there is such a resource available.
  • Contract IT Employment ... Why Only IT?

    A problem here is the swing to contract IT employment, although sold as a flexibility and kill enhancer for companies, is significantly targeted at people in the IT Profession. Large companies have people whose profession is to manage "sourcing" this market. It would be less of an issue if ALL professions were part of this labor force, but only the IT profession holds a significant percentage of this sort of labor force. Where are all the contract finance people? Under the sheets, this services agendas like "job security" by making contractors do the unpleasant work of cultural change with efforts directed at increasing productivity, or automating long standing processes that are costly, and need revamping. That way, if the project fails, blame the contractors, if it succeeds, internal IT takes credit. Also, departments targeted for application development and the ensuing cultural change are emboldened when contractors are employed, due to the "customer satisfaction" aspect that contractors need to provide over internal IT people. Also, by not making the investment to hire full time IT people, employers skate the costs of benefits, state employee taxes and the like, as well as the ability to ruthlessly terminate contractors on a whim, rather than being tied up with employment law or internal policy. SO lets call a spade a spade here ... "IT ain't all flexibility and skill enhancement" that companies are after.