contracting vs. direct hire

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Hey everyone, looking forward to bringing another great episode to this podcast. I'll be speaking with Daniel Oliver today. I'll let Daniel introduce himself, but Daniel and I met at the .NET meetup group here in Nashville. And recently Daniel has moved to the Knoxville, Tennessee area to pursue a new opportunity. In this episode, we're going to go over all things contracting, consulting. What does that look like in today's market? the pros and cons of doing contracting versus a direct full time higher opportunity. As always, feel free to reach out to me via social media. My username is at T. Decin. That's T-D-E-S-S-E-Y-N. If you could, I would love if you could rate this podcast in the Apple or Google Play store.

I would love for this podcast to gain some traction in the market and allow other people to use this as a tool when they're on the job hunt. Also, if you want to reach out to me, that's way to do that is through email that's Taylor at Vaco VACO.com. Hope you guys enjoy the podcast. Danny, what's going on, man? Just usual stuff working and life. How about you, Taylor? I'm doing good, man. I'm doing good. So, so I wanted to first off go ahead and get you to introduce yourself so I wanted to let the listeners know who you are and kind of what you do and so you know we can start from there.

Sure let's give some background about a few and a half years ago actually closer to four now. I moved to Nashville after graduating college. I spent a year and a part at EFC Systems doing C-sharp VB.net's Agribusiness desktop and then I spent two years at care here, doing healthcare with C-Sharp, some plastic ASP, Java Script, Web APIs, and a little bit of everything. Well, I've SQL Server 2. And now, about six months ago, I moved to Knoxville, and I'm at Radio Systems Corporation doing Talon, ESP, which is kind of Java, GUI, and Java framework. then also C-sharp, build automations and DevOps, Azure, Ansible, and a little bit of everything, some Salesforce, Magento, and so on.

Thanks, man. I did a quick intro on what we're going to talk about. But obviously, you sent me some good notes. I mean, tell the listeners what, why you're coming at it from a, hey, let's talk about contracting versus full-time, what does that look like? Like, what kind of wanted you to talk about this type of topic? Well, over the past couple of years, every time I get on the phone with any recruiter, one of the first questions is always, how do you feel about contracting? And it's pretty universal thing. Now, most people's preferences is to be full-time, get those benefits, be a part of the corporate family, if you will.

Right. But contract contract to hire is a lot of the normal now. Yep. Absolutely. Now your position that you took, if I saw correctly on your LinkedIn, was this a, is this a contract to hire? I am an independent contractor. Oh, there is no. So it's kind of honest to hire. If I do a good job and I provide value, maybe they'll get an offer sometime. I don't know. That's awesome. Yeah. In our industry, I don't say this to people because it's more of a recruiter talk. We call it a right to hire in a sense where if everything lines up, you like them, they like you, you do good work and they have the budget approved, it could go full time.

So that's cool, man. So I guess we can kind of hit the first topic. And you can kind of tell me your thoughts and I can tell you mine. So obviously you've done the 1099W2 individual contract versus kind of more of a different types of contract setup. So is this your first time doing your own independent contract? This is, yes. Okay. So what are your thoughts? Because I definitely want to get your thoughts as a developer doing it for the first time. Like was it hard? Was it easy to set up? Well, it's a little more paperwork. It's a little more mental overhead. Okay. But there's almost less overhead.

So when I'm an independent contract, I have to pay more in taxes. I have to pay some self-employment tax. And I provide my own benefits, my own paid time off, which is not paid time off. I learn health insurance and that. So I'm paying for it all myself. Off this flat rate, I charge my clients. And this, it's thought more my side. It's also a little bit less paperwork been doing contract, I be too under um, broa, okay consulting company, because with that, then you kind of have two bosses. You have, you have to report to your contracting company. Yeah. Them also approve hours, have them just keep an eye on you.

Constantly checking up how you doing, constantly checking up on the client, trying to get feedback about me from the clients. And there's, I have two bosses. if I do that, a contract debut too, with independence. I answer to myself and the clients, and that's it. So it's cutting out that middleman a little bit. Yeah, that stinky recruiter. Let me ask you this. What prompted you, because you've only done, and correct me if I'm wrong, you've only done direct hire, per emplacement in your career. This is your first contracting gig, correct? No, actually. Okay. I have to contract W two. Okay. Okay. All of a sudden, I went to the healthcare company.

I did contract to hire, which was next month. And I for all intents and purposes, I worked for the healthcare company directly because I mean, that's who I was next to all day. Right. Those coworkers where I spent all my time. Okay. out effectively considered part of their in-house developer group and they didn't treat me any differently. Right. It was just had to do this to get in. Absolutely. What made you kind of go off on your own? One, moving cities from Nashville to Knoxville is a little difficult. Right. And a lot of developers get hired based upon the reputation, word of mouth. knowing someone and so my Network here in Knoxville was a little lacking six months ago, right and I Did have one contact who made me a pretty nice offer and that We'll pay you what we were going to pay a recruiting company to find someone for us and so So they got someone with a bit more experience than they would have for the price and they don't have to go through any other company.

Absolutely. Absolutely. Worked out. So I know, I mean, you know, I caught up with Kyle Welch on the last episode and then, you know, a good buddy of mine and Raleigh on the previous one before that. And I'm always interested how developers find jobs. So you found this current gig just through word of mouth and kind of one friend you had in Knoxville? Yes. Awesome. And then EFC and then what was the healthcare company you're out again? Care here. Smallville company in Brentwood. Yeah, we're care here at EFC. I know you said care here was through a recruiter. Was EFC through a recruiter? No, that was trucked higher.

Awesome. I went to Tennessee Tech University in Cookville, Tennessee. Okay. And so, EFC systems booked some time to interview candidates from Tennessee Tech. Okay. And I signed up for that. And I was the only one who did. The only person who applied to be a software developer, EFC systems. Okay. So the recruit and other graders, the trying to look for the term of the people in college that help find careers, careers. Yeah, careers, or something like that. Yeah, so they canceled EFC system slots, because they had rooms booked in the university for interviews there. But since they only had one person, me, apply to even apply, their slots were canceled.

So I drove out to Nashville one morning and interviewed at their place directly. And I didn't have anyone there that knew me. I didn't have any word of mouth to help me. Right. So they took a chance on me, which I'm very thankful they did. That's awesome. And spent a good year and a quarter-ish there. That's awesome. So, you know, my thing is, and I'm trying not to jump ahead. you know, too much with your other points, but, you know, kind of my thoughts between like 1099W2, corporate core. I mean, you know, in our industry, obviously we do a lot of contract to hire, and we do really Nashville is a permanent market, if that makes sense.

And so I always tell developers that start out as contract to hire, or even just a contract role, that if they like you, like they're going to keep you because there just isn't enough good tech talent here in town. And so, you know, from a 10-9-9-W-2 perspective, I always tell individuals I work with, I mean, W-2, you know, we handle all your taxes and, you know, everything kind of wraps up under us and I don't know your thoughts, but I feel like it's maybe sometimes more wrapped up a little nicely in than a Bowe W-2 because you don't have to do all the paperwork. But I could be wrong with that.

And then 1099, there usually is a pretty substantial pay difference. So usually it's about eight to $10 difference if you were to run W-2 instead of 1099 because if you run W-2, which is obviously direct through the recruiting company, we handle your taxes and all of kind of the back office. And so if you run 1099, you don't have all that taken care of, so we pay you more. So usually the difference is about, if someone's getting paid $60 an hour, W2, it really, from a 1099 perspective, it's probably gonna be 70 to 72 an hour, 1099. And so with your thoughts, Is it a little bit more neatly wrapped in a bow as a W-2 or is it about the same?

Oh, it's definitely more wrapped in a bow. It's definitely easier to get along with. Okay. Hey, ultimately the recruiting company, the consulting company, what have you, will help a lot, help explain things. Correct. Make sure that nothing really goes wrong. And so they're good resources there. And if nothing else, they're just a support group. Yeah, absolutely. So wrap it up in NIPO and it is easier. And if someone's done either of those, either versions of a contract, then it's easier to start out with a W2 through some company, I think. Okay. So the next thing you sent over to me and kind of around the contracting side of things.

So it's contract versus contract to hire. And then the impact of being a contractor on my career and the perception of it as well. So from being an impact, from a contract contract to hire, so let's just hit that right now. And that's why I kind of just spoke on. So, and you're kind of signed on as a contract too, and it even sounds like you could potentially go full time as well, correct? Maybe we'll see. Yeah, okay. So, you know, I mean, it's just like what I just said. I mean, in Nashville, I can't speak for any other market, but I know across the US, there is a definite shortage of good developer talent.

And so I always tell individuals that, you know, from a contract to higher perspective, as long as you do good work, it is a wonderful way to get into a company. And so the reason why a lot of times, and a lot of people don't know this, and I have to explain this, a lot of reason why companies do contract to hire is to get people onboard quicker. So we all know that HR is definitely, you know, kind of has a negative connotation in general across all industries and all markets. And so, you know, there is a definite disconnect between sometimes getting people hired on quicker and all the paperwork that happens.

And so I, so most of our clients do contract to hire because the recruiting act as an extension of their HR. So we do all the background and drug tests and we can get people started quicker. And then after around the four or five month mark, the client can go ahead and start talking about conversion. And so overall, it's just a smoother process. And even for contract, you know, and I tell people this who want to do contract with BECO, like, and Daniel, I'll tell you this too, if you ever get tired of kind of doing your own thing. You know, if you come up under VACO, you don't have to market yourself.

If the contract's coming to an end, we do that. And so that's one of the pros for getting on to a recruiting company and to work with a recruiter who knows the market because we can be proactive if your project does come to an end, we can market you around town. So that's just kind of speaking contract versus contract to hire. So I didn't know if you had any questions or thoughts from my comments. All of that is perfect, true. If you have a good support family, then it makes things a lot smoother. They're effectively your employer and you're become a consultant rather than quote unquote a contractor and it makes it pretty smooth.

Yeah. You know and I know there is another negative connotation with contracting in today's market with recruiters because I don't know if you can agree with this but typically and I joke with this working with developers I go you know typically the way contracting works is you get hired with with a recruiter who just started recruiting. You get placed on a client project, that recruiter gets fired a few months into your project because they're brand new at their jobs and they don't know what they're doing. And then you have to get changed hands a few times within that company. And then you don't know what's going on, you don't know when your project comes to an end, you have no contact at your recruiting company.

So most people, their idea of contracting is very sour. And I don't know if you've heard those stories or have had that yourself happen. I've definitely heard those stories from a lot of people that have been contractors. That really matters the company. That the recruiter that placed me at care here, when I did contract to hire, She did leave the next year, but she made sure that I was transitioned off into new contacts. Good. And they kept it constantly communication going. It was still smooth, even so. Good. And good. I got to circle back. I just thought something, but circle back to your point of being an extension of HR.

Yeah. When I was going for the healthcare company, I took multiple drug tests. I did multiple background screenings and all these things take time. And if the candidate comes to employer and the recruiter can know the company that he's already passed these, we know he's gone past these others, they're like, okay, yeah, sure, that's fine. And it speeds things along. Yeah. So your next kind of point that you sent over to me was impacted being a contractor on on your career and then my perception as that as well. So being a contractor on your career is never going to be negative unless you do bad work.

There are some instances where a career contractor has, it gets tired of kind of the contracting route and always find a new position and they do want a full time position. I would say that's the only time where I run into any issues because usually the employer doesn't want this guy to jump ship after a year. I would agree with that. I've heard higher ups when I helped interview for care here. I've heard multiple higher ups bypass on candidates because they have a lot of short-term contracts and the general comments were we can't depend on this guy the last year or he's gonna leave us after six months or he just doesn't have any long work history at one location.

Right. And that we passed on probably a few candidates that had the knowledge and could have stayed if we had given them chance. Yeah, I mean, what are your thoughts on that? Just your two cents? I mean, do you, as a developer, I mean, if you talk to a guy who has what it takes, it could be a good developer. Do you see any issue passing on them because they're a career contractor? I, it just based on the surface of being a career contractor, there's nothing wrong with that. I'm not going to pass on them because of that. What I personally would pass on them for is if they come in and they're already talking about the next thing.

And it's obvious that this is just something to do for three or six months. Yeah. And it's so it's really what the personal face to face is like if they're looking to build here or if they're looking as a stepping stone. Yeah, absolutely. I would agree with that. So one thing I always tell individuals that I work with, it's all about telling a story, right? So I have a lot of people that come to me that have been career contractors or that have done the the perm full-time salary side for a long time and want to get into contracting and then they do that for a bit and then they want to get back out and they want to go back full-time.

I always tell people that ultimately as long as you have a good reference that can speak to your project and that you delivered everything on time and had no issues then there shouldn't be any issues with you going to a more consulting type of opportunity down the road or full-time opportunity. It's all about telling a story and making sure that you end on good terms. I can't tell you how many times guys jump ship, guys and girls jump ship and they just burn some bridges and then as a recruiter, I mean the red flags go off. And so I think being making sure your personal brand and reputation in the market is very solid.

It's all back to word of mouth. Absolutely. Absolutely. Nashville is a small place. Most everyone in healthcare has worked with another person, some company or another, because all the healthcare companies just seem to trade their people back and forth every four or five years. Yeah. So the next question that you ask is his why contracting is terrible and why is it awesome. I will say this, I think as a developer, and this is my two cents, I'm not a developer, and so Daniel definitely correct me if I'm wrong. A lot of times, once you get to the one year mark or 18 month mark, you've got a pretty good grasp of the systems, the application, and the business of that company.

And so ultimately at that point, if there's no more new development happening, it's usually just bug fixes and enhancements to already existing applications. And while I've talked to developers day in, day out, and there's nothing wrong with that, I know a lot of developers want to work on a lot of green field projects, right? Like a lot of new projects, new development, new tools. And the benefit that I see of contracting is typically, Typically, not 100%, it's usually new development. Now, there's a lot of contracting out there where they need someone just to come in and maintain their legacy.net web form application. And so that is definitely out there.

And that's why you got to go with a recruiter who actually knows technology and you can actually tell you really what you're getting your hands into. Because the last thing you want to do is be sold as you're going to be working on some cutting edge technology and then get placed on like a mainframe application. So, you know, I would say the main benefit of contracting is you can get a lot of exposure to a lot of different technologies and a lot of different environments and a lot of different industries. And if benefits are important, which most of the time it is, you can still find like Vaco, we have benefits that we provide.

Now, Graham, they're a little bit more expensive than the industry average, but we provide benefits. And so you can really, if you're basically making pretty good money because hourly, we can pay a little bit more hourly for contracting versus full time. And then you get to work, like I said, in different technologies and different environments. So I want to know your thoughts on why contracting is awesome. You're completely right there. Being contractor, it's new technologies all the time. I'm learning things every day. And I love learning new things. And that one of the choices of why that's a positive for contracting is that thing 18 months in two years in.

It's going to be maintenance mode from there on out. out. Yep. As companies, I've seen that I've helped, helped do. Everyone wants to hire the best. Everyone wants to hire the people who have a hunger to learn to improve and are going to stay on top of things. The problem there is they want to hire the best no matter the role. So if it's this job to maintain a 20 year old mainframe application that hasn't even realized that there's such a thing as a cloud. You're not going to keep a skilled developer in that position and they're quickly going to grow bored and leave or they're just the work quality is just gonna suffer.

Yeah. And so, in those circumstances, perhaps worth considering hiring someone who doesn't have that drive to learn, who's just content with how things are, who is just content. Yeah, absolutely. And there's nothing wrong with, you know, if you want to make a career supporting vb.net web forms applications, there's a lot of that out there still, especially in the healthcare space. There's nothing wrong with that. There's just this disconnect. Exactly. Hiring and the actual job. Exactly. Exactly. You know, why why contracting is scary? You know, I obviously deal with this day and day out with with guys who are full time that, you know, are wanting to make a jump, but are worried about contract to hire or contract.

Contracting is obviously scary because budgets can be pulled. That's part of the big one. You know, you could. Yeah, your project could be cut short. So, you know, the recruiter sells you on a one year project. You come in. I mean, I had one developer, for example, I placed them at one of our clients and, you know, the client told us it's probably about a three month project and he knocked out all of his work in about six weeks. Yeah, which is awesome. But then of course, like they had nothing else for him at the time. So his contract came to an end. So, you know, I think there are some negatives.

You know, there's pros and cons with perm full time salary as well as contracting, right? And so, you know, I think contracting, you really have to quote unquote interview and really know your recruiting company or vendor that you're using. I would say that's key because if you're going to go to the contract and route you got to make sure there's ton of communication like I try to give all of my guys and girls 30 days notice at least that is my plan and so that we can go ahead and start selling them across town and placing them on another project. You know I have 20 people on project for me right now working across Nashville.

And a lot of those individuals, their contract has been extended countless times. And so I guess that's going back to contracting the pros of it is that if you do well, you'll keep getting extended. But yeah, you know, contracting budgets can be pulled, projects can be completed early. You know, you could be sold one thing and then you get in there and it's not it. but that's more on the recruiter or vendor side than anything else. So I want to see your thoughts, Daniel. A lot of friends have asked me about contracting over the past few years and see what my thoughts are and try to get feel if they want to do it.

And every time, every question centers around guarantees. Yeah. Am I guaranteed six months? Am I guaranteed work? Am I guaranteed this project? Am I what's gonna happen after those six months? Am I guaranteed something else? Right. The answer to all that is there is no guarantee. There's no mental risk here. And actually I was listening to Dave Ramsey a few months ago and he made this point that no job is guaranteed. If a company has a bad day, if the department has a bad day, for whatever reason, a W-2 full-time job is not guaranteed either. There's just no formal end date. Contract, it may have a formal end date built in with possible extension.

Who knows? But it's guaranteeing you, well, not even guaranteeing you. It's strongly saying you'll probably have this for this time duration, which is a different kind of guarantee. Right. Return it. Ask that. We want you to agree for six months to do this. But with a full time Tennessee, I believe Tennessee is at will employment stay. Correct. Yeah. I mean, so technically you can be fired for no reason whenever. Or you can leave for no reason whatsoever. True. That too. And so it's a risk versus benefit. Not benefits as a health insurance, but benefits as in pros and cons. Yeah, pros and cons. Do I want to agree to do this technology for six months?

Where are the consequences if I break it? Are those even written in the contract? Better hope that you pay attention up front and get up. Absolutely. And I think you just hit it on the head too, man. And this is what I get across. This is why I try to communicate to all the developers I work with. Like there's no guarantee that we're even gonna be on this earth tomorrow, let alone that a full time job is going to last, you know, as long as a contract job. Um, ultimately at the end of the day, it is your body of work that, uh, sells, sells yourself.

So you get into a perm gig and you're just not producing three months in, you're gone. Yeah. And so, you know, I, I always tell guys that like, listen, Don't let the word contract keep you from something you're wanting to really do. Because the last thing you want to do is being a job that you don't enjoy doing. Exactly. Life's too short for that. Absolutely. Yeah. Wait too short. Wait too short. Well, Daniel, thanks. Thanks for hanging man. That's everything that you sent me. sent me, tell the people where they can find you on social media and if you have any last closing remarks. My only closing remarks are it may not be for you or it may be for you.

That's up to you. And I'm on Twitter, I'm on my GitHub, I'm on LinkedIn, I'm on all the social media. So have a good day.