Is IT Contracting Right for You?
Posted on:
by Cathal McAliskey
IT Contracting Advice
The rapid evolution of technology has driven an increased demand for specialised IT skills, making IT contracting an appealing career choice for many professionals in the Irish market. However, like any career path, IT contracting has its pros and cons.
IT contracting, especially in software development jobs, has become increasingly popular in Ireland. Contracting involves working on specific projects for a set duration, typically 6-12 months, usually paid on a daily rate basis. While the potential for higher earnings (up to 20% more than permanent positions) and flexibility attracts many professionals, it also comes with challenges like a lack of job stability and benefits.
Why Choose IT Contracting?
Increased Earnings: Contractors often see a significant income boost. A permanent Senior Java Developer will earn around €90,000 a year while a Senior Java Contractor can earn around €500 a day which is roughly €110,000 annually. A 22% increase.
Tax Efficiency: Contractors can claim various expenses, such as computer equipment, travel, and home office costs, which can further enhance their take-home pay.
Skill Development: Contracting offers rapid exposure to different industries and environments, allowing professionals to quickly gain experience and new skills. This is particularly valuable in the fast-evolving world of software development jobs.
Flexibility and Work-Life Balance: Contractors enjoy the freedom to choose their projects and work schedules. This flexibility often leads to a better work-life balance, as they can take breaks between contracts for travel or personal time.
Challenges
Lack of Job Security: Contracting positions are temporary by nature, which can lead to periods without work between contracts. In the Irish market, this means volatility, especially in an economic downturn.
Limited Benefits: Unlike permanent employment, contractors do not receive benefits such as health insurance, pensions, or paid leave. This requires contractors to manage these aspects independently, often incurring additional costs
Responsibility for Own Business: As independent entities, contractors must handle their taxes and invoices. This administrative overhead can be managed by an accounting partner for a fee.
Networking Necessity: Success as a contractor often depends on one's ability to network and secure continuous projects. In Ireland, being part of professional networks and staying updated with industry trends is vital for maintaining a steady stream of contracts.
Benefits for Companies
Project-Specific Expertise: Employers can hire specialists with the exact skills needed for a project, ensuring high-quality outcomes without long-term commitments.
Cost Control and Flexibility: Contracting allows companies to manage costs effectively by paying for expertise only when needed. This flexibility is especially important in today's unpredictable market.
Innovation and Immediate Impact: Contractors bring fresh perspectives and can start contributing immediately, which is crucial for projects with tight deadlines.
Low Risk: Contractors are considered as resources, not headcount. Keeping headcount down increases productivity and reduces cost. Contract end dates ensure companies are not paying people when they do not require their services, the same cannot be said for a permanent employee.
For more information check out our FAQs blog on IT Contracting in Ireland.
Setting Up as an IT Contractor
When transitioning to IT contracting, professionals can choose between three setups:
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Umbrella Company Employee: Ideal for short-term contracts, offering tax efficiency and maintaining Social Welfare benefits. Best suited for daily rates up to €200 and employers PRSI is paid.
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Umbrella Company Director: Suitable for those new to contracting, providing higher income retention and flexibility in tax planning. Best suited for daily rates from €180-€400 and employers PRSI is not applicable.
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Private Limited Company: Best for long-term contracts with higher daily rates, allowing for complete control over finances and expenses. Best suited for daily rates of €400+.
Contracting Myths
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Loss of Social Welfare: Contractors can still retain benefits under certain setups.
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Can’t get State Pension: Contractors are still entitled to a state pension.
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Can’t secure a Mortgage: Although more difficult, contractors can secure mortgages, especially with the help of a specialised accounting partner.
Conclusion
IT contracting in Ireland offers significant benefits for both professionals and companies, especially in software development. Recruitment agencies in Dublin and recruitment agencies across Ireland like GemPool play a crucial role in connecting contractors with the right opportunities. These employment agencies offer guidance on market rates, candidate availability, and help navigate the complexities of contracting.
Ultimately, IT contracting in Ireland offers numerous opportunities for growth and high earnings, but it also demands a proactive approach to career management. Contractors must enjoy flexibility and have a willingness to adapt to changing job environments to thrive in this sector.
During the economic downturn, we’ve seen volatility in the demand for IT contractors. We have seen several companies letting go of contractors to reduce costs, with others considering contractors to keep headcount down. We’ve seen a slowdown in some areas within IT such as Software Development while others like Data Centre Operations remain steady. On a positive note, we are starting to see an increase in the demand for our services and in the demand for contractors. While the market is not as buoyant as it was pre-pandemic, we are moving in the right direction.
For more information or to explore IT contracting opportunities connect with us. Whether you're a candidate or a company, we offer insights and support tailored to your needs. If you’re looking to navigate this challenging market and find the best IT contracting talent, visit our hire talent page now. If you’d like to discuss if IT contracting is right for you, connect with me.
