AN INTRODUCTION TO THE WORLD OF CONTRACTING

In this article, I am going to assume that you have very little or no knowledge of working as a contractor or consultant. With that in mind, I will attempt to transform you from your current status to someone who is intimately familiar with the contracting profession. If you are seeking a job in any IT, engineering, or technical-related discipline -- such as programmer, engineer, systems analyst, designer, drafter, software engineer, technician, etc. -- this article could lead to the most profitable and professionally rewarding era of your career.

People who work in this profession have, over the years, called themselves by a variety of titles: contractors ... consultants ... job shoppers ... contract engineers ... technical temps ... just to list a few. I consider all of these titles to be interchangeable, but I will normally refer to them as contractors. Basically, however, they are all the same.

Contracting has three components

There are three different components of the contracting profession. The first I have already mentioned: the contractor. That would be you, the programmer or engineer. The second component is the contract staffing firm, which is the agency that recruits and hires contractors. All the companies that advertise their job openings on this website are contract staffing firms. The third component is the client company, such as Microsoft, Boeing, or General Motors.

Here's the way this industry works: The client company contracts with a staffing firm to recruit and hire contractors (like you) to work on the client's project on a temporary job assignment. That's a very simplified description of the contracting profession. But, it does give you a basic foundation for what I am going to be discussing.

In explaining this further, let's assume that one of the thousands of client companies who often utilize contract personnel has a major project underway. They have tried to hire enough direct employees to staff that project. Unfortunately, they have not been successful, and now find themselves falling behind on their schedule. The client can then turn to one or more contract staffing firms, and ask them to supply contract personnel in the job disciplines they require. Highly skilled contractors will then be hired by the staffing firm(s), and step right in, normally side-by-side with the client's direct employees, to work on the project.

There may be other reasons for a client company turning to staffing firms to furnish them with contractors. Perhaps they are a company that anticipates ups and downs, as far as manpower forecasts are concerned, over a several-year span. We frequently see this in the aerospace industry. Such clients are far better off hiring contract personnel, rather than captive employees. In that way, they avoid the enormous cost of searching for and hiring each employee. Contract staffing firms have vast files of resumes for well-qualified contractors who are immediately available to fill their client's needs. The client also avoids the day-to-day costs of maintaining that individual as an employee (paying for things like insurance, payroll, and other administrative burdens adds up very quickly). The contract staffing firms assume all those costs. The client also avoids a reputation, among their direct employees, of continually hiring personnel then, a couple of years later, letting them go. Contractors know that their job assignments are temporary and are always prepared to move on to other projects. Direct personnel are usually not conditioned that way.

As a contractor, working in this manner, you would be working on the client's project, under client supervision, but you would be an employee of the contract staffing firm that placed you. They would give you your paychecks, withhold taxes, and pay any benefits that you may receive (such as vacation, medical, etc.).

During the late 1990's another rationale emerged for clients to hire contractors through staffing firms. Now we often see contract positions being advertised as "contract to hire" or "temp to perm" or "contract to direct." This is simply a "try before you buy" approach. Both clients and contractors are more frequently "checking each other out" before committing to a long-term relationship. This has proven very beneficial for both the hiring clients and job-seeking contractors.

Frequently overlooked as a reason for entering the contracting job market...but perhaps the most valuable reason of all...is the opportunity for professional growth. This career enables individuals to work for a variety of companies, learning from each and taking that knowledge with them to their next assignment. And, in this day of constant changes -- with new software, programs, and computers being introduced on a regular basis -- keeping up-to-date is critical for your long-term career health. After a few years of contracting, one can amass an invaluable set of skills. Added to whatever professional training one may undergo along the way, it doesn't take long for a contractor to make him or herself a very valuable commodity.

There are a variety of ways that a contract assignment can be structured.

The most common method is to work as an employee for a contract staffing firm on assignment with that company's client. The staffing firm normally finds the contract job opening, then hires you to work for their client. That is basically what I have been discussing up to this point…working as an employee.

Or, if you prefer (and the contract firm and client will allow it), you can work through the same staffing firm as an independent contractor instead of an employee. This method, however, involves more responsibility for the contractor and more risk to all three parties (contractor, staffing firm, and client). An independent contractor must pay his or her own taxes, insurance (including liability), etc., and must qualify with the IRS to work in this manner. IRS Form SS-8 is the document that you would use to qualify. There are several questions to submit for approval. People found to be illegally working as independent contractors, by the IRS, are subject to fines and penalties as well as payment of back taxes. Fines and penalties can be levied on any or all parties found to be participating illegally. As a result, some staffing firms refuse to place individuals as independent contractors because of the risks to their company (as do some clients). The bottom line is this: if you can qualify with the IRS to work as an independent contractor...there are definite advantages to doing so.

A third way that some people become contractors is to form their own corporation and work as employees of that corporation. Their company simply bills their clients for work performed. They then pay themselves out of corporate profits. This method, too, is not as simple as working as an employee of a staffing firm. Complications with incorporating, dealing with the IRS, carrying your own liability insurance, providing benefits, and finding companies that will hire you in this way, make this perhaps the least popular method of working as a contractor.

Why do people work as contractors?

There are many rewarding aspects of working as a contractor. The most important, to the majority of those working in this profession, are:

• Making more money than you would probably make at a similar direct (captive) position
• Having the opportunity to travel, if you wish, to different job locations for work
• The professional challenge of working on a variety of projects for different companies
• You should never be charged a fee when you apply for, or accept, a position as a contractor

Contract employees first surfaced prior to World War II in the Detroit area. They were hired to help in the retooling and manufacturing of automotive plants for the war effort. The profession has been steadily growing ever since. You will find contractors working in virtually every major industry in the world... including software, aerospace, nuclear, computers, marine, petrochemical, automotive, industrial, manufacturing, electronic, civil, entertainment, chemical, textile, financial, commercial, refinery, communications, publications, architectural plant layout, tooling, brewery, transportation, electrical, structural, mining, pulp & paper, etc.

Typically, the average length of a contract assignment is from six to nine months. Many last longer; some are also shorter. Once an assignment is completed, the contractor moves on to other employment (usually with a different staffing firm working for another client).

Contractors are highly qualified, highly paid individuals. They often have obtained additional schooling and technical training in their field. They are, therefore, very well qualified to handle most jobs in their specific discipline. That is a major reason why they are usually paid more than their direct counterpart would be paid. And...the opportunity to make more money is why most people become contractors in the first place. Besides receiving a higher than usual rate of pay, contractors often get daily per diem (in addition to their hourly rate), and travel pay to their job locations. Of late, many have entered this field because they have lost their captive position due to downsizing by their employers.

Besides being a professional at their job discipline, and having a desire to make more money... an equally important quality that must be a part of every contractor's makeup is the ability to be mobile. They must be able and willing to relocate, sometimes thousands of miles from their homes and often with but a few days to report to a job assignment in another city, state or area of the country

Some contractors don’t travel from city to city to work on assignments…

Although the contractors I have just described are mobile and travel from city to city for various job assignments, there is also another type of contractor. I call them "freeway", "subway", or "local" contractors. In many major cities of the United States, there are thousands of these workers who continually go from assignment to assignment within the same metropolitan area, and usually continue to live at the same address. Most local contractors are located in the major metropolitan areas of the United States, such as: Los Angeles, San Francisco, Chicago, Dallas, Detroit, Seattle, Boston, New York City, Washington DC, and Atlanta.

Three things sometimes make local jobs less desirable to the "road" or "out-of-town contractor." (1) The pay is usually somewhat lower than for a similar "road" job. Sometimes this is simply caused by the lack of per diem paid to those who work away from their tax home. Other times, it is actually less money per hour. (2) The length of assignments for local contractors tends to be somewhat shorter than for road jobs. And (3) local contractors are more frequently required to attend job interviews -- unlike their "road" counterparts, whose resumes are often the extent of their personal contact with client firms prior to reporting for work (unless a telephone interview is requested).

On the plus side, however, is the fact local contractors are often able to build up a reputation with many client companies. If a contractor is really good at his or her job, he or she is likely to be called back more than once by some companies. In some cases a local contractor may be able to remain working for the same contract staffing firm on several consecutive assignments (often accumulating vacation time, remaining on the company's 401(k) plan, and retaining medical insurance without interruption).

Why are contractors paid more than their direct counterparts? Often, it is because their jobs are temporary. Other times, it is because the expertise they provide is not readily available on the open market. When a client company is behind schedule on a project...they are usually willing to pay a premium for needed expertise.

When the project is again under control, or completed, the contractors will likely be terminated, and must then find another assignment. If they are lucky, the contract firm for which they were working will be able to place them on a new job immediately. More often, however, contractors will be left to their own devices to find their next assignment

You will need an effective resume...

If this kind of work intrigues you, or you see it as an opportunity to find that dream job you have always been seeking...you'll need to prepare a professional resume. Your resume is generally the first contact you have with a contract staffing firm and, often, the only contact with a client company until your first day on an assignment. So you must have an effective resume. And, because most contract firms now scan, or in some manner, input all their resumes into a searchable database...your resume needs to be presented in a manner that makes it easy to scan. Because of that, new resume preparation guidelines are required that will enable firms to scan your resume.

• Use white paper and black ink.
• Don't underline words.
• Don't use script or other fancy typefaces.
• All letters should be of the same quality (no light or broken letters, no smudgy or filled-in letters, etc.)
• Don't hand-write anything on your resume.
• If you're using a dot matrix or inkjet printer, utilize the best quality of type the printer provides (i.e. letter quality, dark copy, etc.).
• Avoid boxes or unusual configurations.
• Don't use columns.

There are numerous excellent resume formats you can use. I'm going to talk about just one ... but one with which our subscribers have found continued success. If you use this format and the guidelines we suggest, I can't guarantee you'll land a job. But, if you do adhere to this format, I can assure you that your chances of getting a contract assignment will have definitely improved! Sample Resume

Things you should do with your resume:

• Use 8-1/2" x 11" paper.
• Use 10 or 12 point type size.
• Keep your page margins to a minimum of 1/2" or more (1" is best, 3/4" is also preferred to 1/2").
• Make your resume as legible as possible, using a non-serif type font (it is easier to scan) .
• Include a permanent contact, present address and phone number, and an email address (if you have one) near the top of the first page of your resume. That will enable firms to contact you even after you have moved from your present address.
• Include your job discipline(s)...near your name at the top of page one of your resume and a job title for each assignment.
• Include a summary paragraph near the top of your resume.
• Include pertinent education and/or training.

• List jobs in reverse chronological order (most current first).
• Include only necessary personal information.
• Type "Under contract to" for any contract assignments you may have had.
• Include total number of year's experience.
• Give security status, if any. If your security clearance has expired, include the date of expiration.
• Write job descriptions in easy-to-understand terms. Be brief but be as complete as practical.
• Include your name and page number on each page of a multiple page resume (except no number on first page).

Things you should not do with your resume:

• Don't include personal references or hobbies.
• Don't include your Social Security Number.
• Cover sheets are not necessary for contract resumes, unless there is something you want to explain to a potential employer that does not appear on your resume (example: Even though I don't live on the West Coast, and have never lived there, I want to secure employment there to be near my ill parents.)
• Don't use a "Job Objective." This is normally found on a resume for someone who is seeking a "direct" position. A "Job Objective" tells the firms what you want from them whereas a "Summary" tells what you can do for them.
• Don't exaggerate your experience.
• Don't show salary or pay information.
• Don't offer explanations for leaving prior employers.
• Don't use your photograph.
• Don't use abbreviations (except those that are acceptable in the engineering/technical fields, such as IBM, DBA, CAD, E/M, etc.).

Tips to help you shorten a lengthy resume:

• Have it typed by a professional typesetter.
• Eliminate all extra spaces between lines (except between job assignments).
• Use narrower margins (but not less than 1/2 inch).
• Keep job descriptions to 3-5 sentences (older positions may be even shorter).
• If your "length" problem is due to an extensive number of job assignments, leave the oldest positions off and type the following at the bottom of the last page of your resume: "Prior experience available upon request." Then prepare a "complete" resume to furnish only to firms asking for it.

Typesetting your resume:

There are a couple of options to consider when you are preparing to keyboard or type your resume. If you have a computer with your own printer...your choice is obvious. Use them. If you don't have access to a computer, consider using a professional typesetter. Either choice will produce a good quality resume. The major difference between these two methods is that professional typesetting equipment can condense more copy onto a single page than a word-processing program on your own computer can. And, be aware that the typed copy on your laser-printed resume can "flake off" along the crease if you fold it. Most people also do not know that a folded laser copy will often offset on the other parts of the page. You've probably received letters like that through the mail.

And, when you save a copy of your resume from your word-processing program, make sure that you save it in both text and formatted forms. Supply both copies any time you email or send it to a firm on a floppy disk. The text copy can be uploaded into their searchable database, and the formatted copy can be used for immediate submittal to their clients.

Printing your resume:

Once your resume is typed, if you don't have access to a printer, take a typed copy or, better yet, a floppy disk with your resume to a printing company or copy center, such as Kinkos. Kinkos offices, throughout the country, are usually open 24 hours a day. You can also rent time on their computers to prepare your resume. They even provide email and fax services. Printing is not the only thing Kinkos does. Your best option, however, is to use some kind of word-processing software, such as Word or WordPerfect, on your own computer, then print copies on your printer. This allows you the luxury of keeping your resume continually updated. If you have Internet access, you can even email your resume to potential employers throughout the world with a single click of a mouse. Again...don't forget to send both text and formatted copies.

Even if you email your resume to contract staffing firms, you should still have several copies printed for possible use. 25 or 30 copies should be sufficient. And, never send out your last copy. If you have only one copy left, run down to your local print shop and have a copy made to mail. If you don't have access to a printer, you can go to any commercial printer and have them printed using a photo-offset process. All cities have quick printers, besides Kinkos, that can provide that service for you. Make sure to look at some samples of their work, however, before allowing them to print your resume. If you maintain your resume on a computer, the quality of a resume which can be produced on your printer will only be as good as the quality of that printer. A laser printer will give you the best copy ... almost as good as one that is typeset by a professional and reproduced by a commercial print shop.

Some firms still prefer to have resumes faxed to them ... but that doesn't get as good a copy into their hands as emailing accomplishes. I highly recommend email. It's faster, cheaper, and gets your resume into a firm's database without their need for scanning and the resulting errors that almost always occur.

If you do mail your resume, I would recommend mailing laser-printed copies to firms flat in a 9"x12" envelope. Keep in mind, however, that doing so will cost you more for postage because you are using an oversized envelope weighing less than one ounce. If you have your resume on your computer, you obviously don't have to worry about running out of copies. Make sure to backup, though! And still keep a couple of printed copies on hand, just in case. You never know when a contract firm will urgently need a copy for immediate submittal to a client.

If you want to print your resume on a better quality paper, consider a white bond paper with a rag content (available from most printers or paper supply stores) instead of colored paper. Colored paper causes problems for many copiers (contract firms will often copy your resume to submit it to a client). The best paper to use is just a good quality white bond.

NOTE: If you transmit your resume by using a fax card in your personal computer, make sure you see what you transmit. Many resumes received at C.E. Weekly, from subscribers using a fax card, have problems (extraneous characters, missing copy, strange lines, etc.). The format of the received resume is often different than what you think you are transmitting. Try faxing to a friend or local fax number so you can see what a recruiter actually receives! And, only transmit your resume from fax machine to fax machine as a last resort. The copy received is virtually never scannable!

The Internet is a great place to start your job search…

By now, you are hopefully asking yourself, "How do I know what contract staffing firms would offer the best chance of placing me on an assignment?" There are many methods of selecting firms to which you should submit resumes.

I am sure that you are aware of the fact that the Internet has invaded almost every aspect of our daily life. And, nowhere is that more evident than in the search for employment. There are literally thousands of websites where you can review the job opportunities offered by tens of thousands of employers. And there are thousands of websites where you can post your resume to be made available to recruiters. Most companies, including contract staffing firms, have their own websites where they post job openings. The options are endless!

You could spend all your waking hours every day surfing the Internet, with little or no positive results. The secret is knowing where to look. Which websites will truly help you find the job that you want? Instead of spending hours "spinning your wheels"...narrow your options. Find websites that have the most jobs posted that fit your specific discipline and requirements. If you want to work only in the Midwest, find sites that specialize in midwest opportunities. If IT is your field, find sites that have lots of IT jobs posted. If you want a contract position...seek out websites that allow you to isolate their contract postings. Some of the major websites (such as Monster Board and Yahoo) now allow you to search their databases for only contract positions. C.E. Publications also offers that service on our website, CJHunter.com .

And, find websites that provide services that will make your job search easier...such as a resume database that is searched by recruiters seeking people who do what you do...will they email you new job postings that match your job description?...or offer you other job-seeking services?

Don’t ignore print media when you are looking for work…

Print media still offers job seekers an excellent source of job leads. Newspapers have employment sections, where you can find a smattering of contract positions. You should also check out trade magazines that service your specific job discipline. If you are interested in IT work, there are various computer-related publications such as ComputerWorld, InfoWorld, InternetWeek, and the variety of publications that have sprung up recently. Each has an employment section in the back of their issues. And, of course, there are trade publications, such as Contract Employment Weekly, that specialize in contract job advertisements. Unlike the previous mentioned periodicals, C.E. Weekly consists of mostly job advertising and contains jobs only through contract staffing firms. Plus we provide our subscribers with many services that help them to locate and secure contract assignments.

Many periodicals, both trade publications and daily newspapers, now have websites where they list job openings from their "help wanted" sections. And, if you are looking just for contract positions, a good way to get started with your Internet job search is to go to a search engine, such as Alta Vista, Excite, or HotBot, and enter the keywords "jobs or employment" and "contract". That will bring up many sites that have contract jobs posted.

Also, in the contract world, a company with an office in Los Angeles, for example, might have job openings in Florida or Michigan. Therefore, if you are seeking work only in the Midwest, don't rule out sending your resume to contract staffing firms in other parts of the country. For a contract firm, the entire world is their territory.

After you have sent your resume to the Contract Staffing Firms…

Once you have mailed or emailed your resume to the contract staffing firms, you now approach the next phase of becoming a contract employee. Some firms will acknowledge receipt of your resume by mailing or emailing you an acknowledgment. Most will not, simply because of the cost involved with acknowledging the hundreds of resumes received every week.

If you are lucky, a firm will immediately give you a call to ask if you would be interested in a particular assignment. Sometimes, they will send a letter asking you to call them immediately about a job. Many times, however, it is not quite that easy. Because contract firms receive so many resumes every week, and because many firms have comprehensive resume retrieval systems which usually require scanning, coding, input, and even filing of resumes, a contract firm with a job opening in your classification might be delayed in matching you with their assignment.

You can, however, make sure that your resume is "brought to their attention" by calling them (many have a toll free phone number). Your phone call will probably cause them to pull your resume from their computers or files and review it against their current job openings. If you are not able to talk to a recruiter they will, hopefully, get back to you later about a possible assignment. Whether they contact you immediately upon receipt of your resume, or at a later date, they should always get your permission prior to submitting your resume to a potential employer. Of course, jobs in the contract industry fluctuate with the economy, just as all others do. And there are times when contract requirements are cancelled due to any of a number of reasons...such as loss of funding on a project, management decisions, or the availability of captive personnel to fill the client's need.

Once a contract firm has offered you an assignment, and you have accepted, it is best if you ask them to send you a confirming fax, telegram, email, or even a letter, if there is time for it to reach you before you must leave for the job.

In the confirmation, ask them to verify your job title, client company, hourly rate for straight time and overtime, to whom you should report on your first day at work, a starting date and time, the amount of per diem and travel pay (if any and when it is paid), and expected duration. Time permitting, you should have your signed contract in hand before you leave home.

A brief word about the duration of a contract assignment: The moment that you reasonably expect your job to last one year or longer, whether that happens on day one or day 363 of your assignment, that job is considered to be "indefinite" by the IRS. When you are working on an indefinite assignment, the IRS considers your tax home to be the assignment location and per diem is not deductible. So, if deducting the cost of living and working away from your tax home is important to you...keep a close eye on the expected length of your assignment. Most contractors prefer that their contracts state that the length of the assignment is either "temporary" or a specific length of time shorter than one year. Many are written in either three or six month durations. If, at the end of the specified time, the contractor's services are still needed... the contract may be "extended" for another set length. Keep in mind, however, and this is important to the new contractor...most contract assignments can be terminated (or extended) at any time by the client company. A six month assignment might end up lasting six weeks or six years. And, that determination is usually at the discretion of the client company.

Once you are working on a contract assignment…

As soon as you are working on a new assignment, you should begin preparing yourself for your next job. Your resume will need to be updated (reflecting your new job assignment) and copies printed. This may seem a bit premature, but it is the best policy. Then, when your present job is approaching an end or, worse yet, ends without notice, you will be prepared to pursue your next assignment.

In conclusion…

That about covers it, as well as can be done in a single article. I know that it sometimes takes a contractor years to completely understand this profession. So...if you have questions, just email me and I’ll do my best to answer them for you. – Jerry Erickson, Publisher