The 25 Steps in an IT Contractor Lifecycle

By: Gerry McLaughlin
Submitted: 2007-01-17 11:43:29
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What lies in store for the IT Contractor? I have seen the whole lifecycle at least three times, so let me tell you what to expect. To be forewarned is to be forearmed, so you might want to remember where you are in the cycle and what lies ahead.

We might as well start when the economy is in boom conditions.

1. IT Contractors are at premium as companies grab as many as they can get.

2. IT Contractor rates rise rapidly.

3. IT Contractors think their time has come and that the gravy train will go on forever. They think that just a few years of this and their pile will be made and they can then get out and live the high life. To bring this date sooner they also invest their excess money in the booming stock market.

4. A ton of permanent IT workers who would never have risked becoming a contractor before feel that the risk has been diminished and become contractors.

5. This means that there are heaps more permanent positions which will be filled temporarily by contractors.

6. Employers and the consultancies start to lobby the Government about a skills shortage.

7. Loads of students going to college take IT related classes to take advantage of the new boom. This means that when the downturn comes there will be even more IT folk competing for fewer jobs.

8. The boom economy starts to turn down.

9. The Government, who are always behind the cycle, starts opening the floodgates to tens of thousands of cut-price IT workers from the developing world whilst saying that they are not replacing IT workers and that they are not undercutting those IT workers.

10. As company profits suddenly start to dip, V.P. s of Operations are told to find ways of cutting costs so that profits can be protected.

11. Great swathes of IT Contractors get cut from the books of companies across the country.

12. IT Contractor rates start falling. Some companies issue take-it-or-leave it 10 percent cuts across the board to all their contractors--even those with perfectly valid contracts with plenty of time to run. Some companies even go back for a second bite of the cherry.

13. In the second wave, companies start laying off their permanent IT workers to cut costs.

14. Many companies decide that the way forward, to cut costs, is to outsource their entire IT department, many of them sending IT jobs offshore never to return.

15. Not only have tens of thousands of IT Contractors lost their jobs but they see the Stock Market, where they'd invested their hard earned contracting cash, sinking, meaning that they have lost not only their income stream but much of what they have invested for a rainy day and for the future.

16. Many IT Contractors, who have spent their remaining cash on staying afloat, run into problems with the Inland Revenue, Customs & Excise etc., and run into terrible financial problems. Indeed many even lose their partners and family as the pressure builds.

17. Gloom and doom is everywhere as the pundits, and many contractors, say that the best days are over and that IT contracting has had its day. They even say that the bottom of the market is actually the new peak and that there will be even fewer contractors in the future.

18. Some IT Contractors get out of the industry altogether and those that can, take a permanent job. There is much weeping and gnashing of teeth.

19. Many IT graduates appear on the market just as the party is over. Like last time, only one-in-five IT graduates will actually get a job in IT.

20. The recovery begins slowly but gradually gathers momentum as companies get more confidence and make those long outstanding major system changes and give budget to projects that have been on the back burner for ages.

21. Companies take on IT Contractors in the early stages of the recovery as they don't yet have the confidence to take on permanent IT workers yet (or they may not be legally able to as they have so recently laid off a whole load of them).

22. The recovery in the IT Contracting market becomes more gentle but more stable. This usually lasts for three or four years. This is the best time for IT Contractors as, although rates are not as high as during a boom, the market is more stable and we are still well away from a downturn.

23. In a downturn, the most important business driver is cost and the Finance Director is in the ascendant at a company. In an upturn, time-to-market becomes the most important business driver and the Sales and Marketing Directors are in the ascendant. Companies want to get more and better and quicker products to market and the IT systems component is normally crucial in many products and services. Therefore they need new projects but don't want to take on extra staff for one-off projects. This is where IT Contractors come in and companies start competing for them.

24. Suddenly, just when companies need them most, there are many more IT Contracts available than there are IT Contractors.

25. Return to Step One.

Gerry McLaughlin has fulfilled every role in Software Development from Trainee Programmer through Systems and Business Analysis, Project Leader and Manager, Systems Manager and Chief Information Officer with a department of 80 people. Tens of thousands of IT Contractors visit

http://www.ITContractor.com each month to keep themselves in touch with the market.

Article source: Expert Articles