So. I have been working in enterprise IT for almost 20 years. But as of December I have taken my first contract role.
The lack of subsidized benefits stings. I had to sign up for ACA insurance, which is probably the most ironically named piece of legislation in history. In that it is not at all affordable, for me, compared to the company subsidized benefits I am used to.
The upside is that I get paid for every hour I work and I get time and a half for weekly hours over 40. Which is fucking fantastic.
That said, I have recently been involved with interviewing other contractors to work for the business I am working at. And I have seen some offers go out to people that are objectively less qualified than myself for more money than I am making.
So my question is, how should I handle this? The company I work for directly is a a contract firm who in turn hires me out to work for another company. Should I approach my contracting company? Should I approach the company I am working for indirectly? Should I approach them both?
I would approach the company that hires you out. In my past experience as a contractor the firm who hired me out charged a rate per hour at that time was Sun Microsystems. So they were paying me a percentage of the hourly rate which can be neogotiated if you are a good earner.
To ask the company you are sent to is probably a contractual problem for them.
Yes, the first few contract jobs are a pain until you know what the rates are. You’re in a good spot for the next time you negotiate salary. I’m in software and there is typically a mandated break in service after x months, so negotiations are just part of the job. If it were me, I would ask for more from the contractor that’s paying you, and if they won’t budge, there is always the next gig.
It depends a bit on the context, the branch of the business and your personal relationship to both of the companies.
If the company that’s paying you gets you all kinds of jobs and helps you make sure that you never have to worry about not having a gig somewhere, and if you’re someone who sucks at job acquisition because you don’t know how to network and market yourself well… then there’s a benefit in working with a middle-man.
However, if you wouldn’t have trouble finding work on your own and/or if you’re working for that other company 99% of the time without there being a real longterm benefit, then you might want to try to find out if the other company would be willing to hire you directly. Maybe the contract they have with the other company prohibits that, maybe it doesn’t. But if it’s a longterm gig, you might want to bring it up at some point because it’s not like you owe the other company for the rest of your life. If you’re running a company that’s in the business of outsourcing or providing freelancers/contractors to third-parties, then losing some of them to said third-parties over time is part of the natural flow.
A smart contracting company has an agreement with their clients that if they hire you they have to pay a fee (similar to a headhunter’s fee). You need to find out if that is true with your contracting company.
I’d be very wary of trying to go direct with the client without first asking the service provider about a raise and checking your contract.
Obviously, the company that placed you there is making a percentage of your contract and would rather keep it that way. So they may be accommodating to renegotiating with the client or reviewing their percentage (less likely).
Then there is the possibility of clauses in the contract preventing the client from just hiring you.
And I’ve contracted with big companies which actively do not want to hire contractors directly, as they prefer to deal with a small number of known suppliers HR can deal and negotiate with more efficiently.
So know what you are getting into before you dive in.
That said, as a contractor, you are a gun for hire with no particular loyalty or ties to any company. So you should definitely look after yourself and negotiate the rate you think is right for the job you do. If you think you are underpaid, you should bring it up and/or consider that useful experience for your next contract.
Plus in the recent financial climate, a lot of business struggle to get full-time headcount, yet can bring in contractors much easier to fulfill work. Full-timers represent additional burden on the P+L which companies at times like to avoid - stuff like accrued leave has to be recorded as liability, etc.
To be clear, by “hire contractors directly”, I didn’t mean as permanent employees, with all the legal obligations that implies. I meant bypassing agencies and contracting with the consultant directly.
I worked as an IT contractor for an oil company for quite a few years, And they went from working indifferently with contractors and/or agencies to only accepting 2-3 vetted consulting companies. If you weren’t with them, you wouldn’t be contracted to work (barring really exceptional circumstances and explicit authorisation from very high up management).
The contracting firm I am directly employed by is one of two “preferred” staffing agencies for a pretty large oil and gas company I am deployed at. The oil and gas company has a ton of contractors, probably 2/3rds of their IT staff are contract. I am on very good terms with said oil and gas company. They like me, they like my work. That said, they are not gonna hire me as an FTE at this point, regardless of any agreement they have with my staffing agency. They like contractors, probably for accounting reasons, but whatever.
So my question is basically, I have a contract that runs through May, what are my options for re-negotiating my rate mid-flight? Fast forward to May, I am pretty sure I will get extended at the rate I am wanting now but ideally I’d like to get that rate now. Or at least sooner.
Well, that’s the kind of world I have about 17 years worth of experience contracting for. :)
I’d say your chances of renegotiating mid contract are probably not super hot. That’s because you run into budget planning and approval constraints. Also, there are long management chains due the fact that your direct manager is likely not the one with the power to raise your rate, …
I’ve managed to renegotiate rates mid contract once during those years, but it’s because they were in a position were they relied on a colleague and me to produce their quarterly results and basically had no choice. Also, our agents were purely agents, not staffing companies. So we were basically negotiating with our managers directly and then telling our agents what the new rate would be. It also helped that we had worked in the department longer than all managers above us.
Outside of those special conditions, it’s a lot more realistic to renegotiate rates for your next contract renewal. I usually would start the discussion in the month preceding. The manager is going to have to get it approved anyway; that will be the perfect time for them to also agree that you are an asset to the company and you are worth the raise.
Now, that said, conditions can and will vary from one company to another. And I don’t know exactly how the above will play with your staffing agency (I was grandfathered with my agent for a long time, which gave me more flexibility than newer contractors). But it seems to me that trying to rush a rate increase before the end of the 3 months left and getting it approved is neither ideal or very realistic.
As someone who annually hires in excess of 30 contractors a year, I’d say nil. Your job is to negotiate up front. Chalk this up to learning & when May roles around (not that far off), renegotiate then.
the reason is many fold - the client is the one who says “hire someone and $X is my budget”. Your contracting agency then hires you for $Y and their profit = x-y. Trying to renegotiate mid-cycle you are basically asking the company you currently work for to pay you more and take less.
When you are renegotiating your contract, if the client doesn’t budge, then your company will have to decide whether to not make as much money. My experience is that the client (me in this case), only will give more $$ if you have unique skills (not better skills, unique skills) that are very hard to find. Again, this is done up-front.
I only deal with negotiations up front - as we can only hire contractors for 12-18 months depending upon geo. I can tell you negotiating higher than we’ve budgeted is a major PITA as to even get to the point of interviewing you, we’ve had to go through 3 approval chains, including a VP and if we are going to pay you more, that means we have to do that all over again - and endure a gauntlet of questions on why we’re paying more for this special guy.
So, it’s in your best interest to let your company know up front that you want more so they can tell the client before the approval gets done so it only gets done once. You’ll find out if they feel you and your skills are worth it compared to others they’ve hired.
Well, in this case he already knows the others with less skills get more money, so there’s that part, but I hear ya there Tman. The time to negotiate for more is not far off, but it’s not some kind of, “Well, do you have special skills” thing. It sounds more like they folks hiring took advantage of an information gap and that has to corrected this time around.
Appreciate the feedback all. I am really happy in my current role. I feel like I am paid well for my work. The only thing that made me post here was seeing shitty candidates being offered 33% more than what I make.
So while I was super happy before, now I feel like I am being screwed. Even though I am not really being screwed, its just that other people are being paid a windfall rate that, in my opinion, they don’t deserve. Based on the responses here, I will bite my tongue and just try and set myself up for a fool proof renegotiation of my rate in the month or so before my current contract expires.
