Tech workers are increasingly taking contract jobs

Christine Ruiz quit her 9-to-5 job last summer to do the same job as a contractor instead. In both places, she is her manager of compliance, the person who ensures that the company’s software does not violate its policies. But Lewis said she wanted to pursue a higher degree, and that switching from full-time employment to freelancing would give her more flexibility. She, like many independent workers we spoke to, was fortunate to maintain her health insurance through her spouse.

“The last few years may have been a little more stressful,” Lewis said.

Lewis is one of many high-skilled workers who have found reasons to leave traditional employment for independent work, including contract, freelance, and other non-traditional or non-traditional employment arrangements. This type of job is generally considered less stable and lacks many of the benefits and protections of typical jobs, such as health care and unemployment insurance. This means that it is more suitable for workers who have financial or family leeway. But employees have more flexibility about when and where they work, and hourly wages have increased. Many interpret this proposition as worth the risk of independence.

Businesses love the idea too. Businesses are increasingly incorporating the use of highly skilled and highly paid contractors such as IT managers, software engineers, data analysts, accountants, nurses, lawyers and financial professionals into their plans. – Demanding skill sets with many options in a tough job market. Companies are often willing to pay these people more by the hour instead of hiring them on short-term contracts.

“It’s either the chicken or the egg. Do new hires, millennials and Gen Z want more freedom and a better work-life balance, or are they looking for the best job for their skill set? Is the opportunity really there?” said Andrew Bartolini, founder and chief research officer of supply management research firm Ardent Partners.

One of the reasons more people are turning to independent work is that regular employment doesn’t seem all that hot in certain industries right now. After a string of recent layoffs at some of the biggest and most profitable tech companies, including Amazon and Google, some workers are out of work and many of them were considered high performers at a time when their I’m having a hard time finding a reason to be at the top of my field. These once-high-profile tech companies are making cuts just to appease investors and are starting to behave like any other lousy corporate America. Meanwhile, traditional industries are calling workers who were working from home during the pandemic back into the office in what appears to be an arbitrary power play.

Suddenly, contract work doesn’t look so bad.

Both workers and employers seem to think it’s a good deal

Those who do contract work increasingly see it as a stable alternative to conventional employment. Last year, 67% of his contractors said he felt safer working independently, compared with 32% of him about a decade ago, according to data from his MBO Partners, a contractor compliance firm. I’m here. The same survey found that 76% of those workers were “extremely happy” with their decision to work independently, and 64% said it was not because they were unable to find a conventional job. , said it was his choice. According to a survey last year by freelance platform Upwork, 73% of freelancers said their perception of freelancing as a career has become more positive, up from 68% of him in 2021. I’m here.

“Contracting feels like a less stable form of employment, but I’m not sure the contractors themselves feel that way.” Recruitment agency. When it comes to weighing the pros and cons of contract versus conventional work, “contractors say these trade-offs are generally fine,” she said.

According to Gusto’s research, flexibility in when and where to work was a top priority for these workers. (An Upwork survey found that flexibility was his second most common reason after making extra money.) Just decide how many companies you want to work for. The majority (73%) surveyed by Gusto had multiple clients. This is a strategy that Wilke interprets as an attempt to stabilize.

“It’s like diversifying your stock portfolio,” she said. “Instead of working for one company, she will work for several companies, because one of them doesn’t have a job for her, but the others do.”

Employers prefer to sign these types of highly skilled positions for a variety of reasons, but primarily because they are cheaper than full-time employment. Ardent estimates that companies pay an additional 30-45% on top of a traditional employee’s base salary. Additional costs include unemployment insurance, medical expenses, employment costs, and retirement benefits if things don’t go your way.

Sean Middleton, chief revenue officer at highly skilled freelance platform Toptal, said that independent workers often earn higher hourly wages, but companies don’t have to cover all the other costs. You can save.

“It’s all-in and cheaper,” he said.

Hiring and being hired on a contract basis is easier than ever thanks to a number of online marketplaces such as Toptal, Upwork, Catalant, We Work Remotely and Kunai. In addition, the rise of remote work has reduced the discomfort and difficulty of integrating teams. Because it’s not very obvious on the Zoom screen that some people work directly for the company and others don’t.

“Technology has made it easier. Think of all the collaboration tools that exist today that didn’t exist five years ago,” said Kate Duchene, CEO of professional staffing firm RGP. I’m here.

Companies also need to move faster than ever before when it comes to identifying needs and bringing products to market, said Jim McCoy, senior vice president of enterprise solutions at staffing firm ManpowerGroup. So they need a lot of expertise, but that expertise is only needed for a short period of time.

“It’s easier these days to find people who want to do this,” McCoy said.

Contract work is not for everyone

To be clear, despite the rise in contract labor, traditional employment still makes up the majority of US work patterns. However, contract work has been growing in popularity for some time now. Five years ago, one in Gusto’s 10 paid through his HR platform was a contractor. Now it is 1 in 5. The current recession does not seem to dampen that trend.

Nearly 70% of organizations say they plan to increase their use of non-employee labor in the next six months, according to a survey by Ardent Partners. Consulting and staffing professionals and independent contractors made up 38% of his critical project teams in 2020, according to an RGP survey of senior managers. This is expected to rise to nearly 50% by 2024.

All of this may be less evidence of contract labor than the prosecution of regular employment.

“These numbers wouldn’t be as high as they used to be if traditional work didn’t work out,” said Steve King, partner at Emergent Research, a consultancy on the future of work. “If people were happy, engaged, passionate about their jobs, and earning enough to live on, those numbers would be much lower.”

Contract work is also becoming more attractive as the market expands to include higher paying and highly skilled jobs. MBO Partners found that between 2011 and 2022, the number of independent workers earning $100,000 or more per year more than doubled to his 4.4 million. Temporary employment research firm SIA found that from 2019 to 2022, spending on professional staff, including those who perform jobs such as IT, engineering, nursing and accounting, increased 61% in the U.S. to $130 billion. I discovered that I had reached a dollar. Meanwhile, spending on low-wage commercial workers, including industrial jobs and clerical services, increased by only 13%.

Increased contract labor brings with it many of the risks mentioned earlier. For example, insecurity, having to take care of your own health, and no unemployment insurance when contract work fails.

To tolerate that risk, many of those who choose such jobs have safety nets such as savings, a spouse with insurance, or another traditional job. Some are young.

Sandeep Sood, CEO of Kunai, which contracts engineers to help build digital tools for enterprises, said:

There is also a slippery slope between outsourcing work to domestic workers and outsourcing work abroad. If your employer thinks something can be done by a third party as well, why not hire someone in another country where it can be done even cheaper? It may look like a boon to American workers, but it may not be so in the long run.

And while professional contracting can be beneficial to some, it can be abusive to others. Employing and they do not have the same wages, benefits and perks as employees. They may also face terrible working conditions. His YouTube contractor at Google, who does a lot of menial work for the video platform and earns $19 an hour, went on strike in his February. Those hired remotely say they’re being asked to come to the Texas office, where his quarter of them don’t live, as a way to bust the union.

For all remote jobs that give contract workers flexibility, in industries such as hospitality and warehousing, some contract work contributes less to benefits. Gig his workers, such as Uber drivers and his Instacart shoppers, often get very little hourly wages. Platform demands are constantly changing, and gig workers are taking home less and less over time.

Emergent Research’s King says the employee’s goal is to find contract work that offers benefits well in excess of costs.

“Without autonomy, control and flexibility, the worst can happen,” he said.

Even in highly paid and flexible situations, contract work is not for everyone. Your ability to do this work depends on many other factors, such as your personal finances and risk tolerance, that enable you to make ostensibly risky choices.

Kerry Anne Hoffman, traditionally employed as a project manager for the past decade, was fired last month from her most recent job at a tech startup. As she looked around the landscape, mindful of other tech layoffs, and companies might be reluctant to hire new employees, she thought perhaps it was time to try freelancing. rice field.

“I always wondered if full-time freelancing was a viable option to pay the bills, feel satisfied, and feel challenged, but I didn’t want to quit my job.” Hoffman told Recode. “The layoff felt like a try.”

With health care through his spouse and savings from his previous job, Hoffman felt safe trying out a full-time contract. She sees this as a way to be challenged and empowered to work on different projects with different clients. I think she is very attractive. So she leverages her LinkedIn network, reaching out directly to companies, and using contract employment platforms. Hoffman says she hopes to earn 60 to 70 percent of her previous salary in her first year as she tries to establish herself and get repeat customers.

“I see this as a great opportunity to see how different jobs are possible,” Hoffman said.