High Tech Employers Turn to Contract Workers

By Dana Greenlee, co-Host WebTalkGuys Radio

It seems that the tech job market is looking a little more favorable these days. In an economic upturn, contractors are the first ones employers hire.

Recently the Minnesota-based Techies.com reported on some new research data on the new trend in tech employment. Apparently this Techies.com research project has found employers are hedging their bets on the new economy by hiring contract tech professionals instead of permanent staff.

Techies.com president, Paul Cronin, gave us time for a few questions about his companies’ findings on project-based work and staying on top of the tech employment game.

Q: The Techies.com research has uncovered a trend in the way a tech worker is now hired. Tell us what your findings identified.

Cronin: The economic situation is such where contract work is a leading economic indicator. When recovery comes, a lot of companies feel more confident hiring temporary contract workers to get through their peaks and valleys of staffing. On the other hand, when the economy goes south for a little while, that’s usually the group of people they let go first. So it provides a lot of flexibility. It’s also cost-effective. Right now, with the economy looking to come back, there’s a lot of pent-up demand out there. Companies’ confidence levels aren’t quite there yet so they’re looking to contract workers to come in and help them get through their projects.

Q: From a tech workers perspective, this seems a less secure employment situation. How should the technology worker view this from a long-term standpoint?

Cronin: The tech worker should see this as a great opportunity. One of the best ways of finding permanent work is through networking. When you’re out there talking to people and building relationships, it just seems to me that if someone offers you a project that is going to last 30-60-90 days and it’s a project that you’re qualified for and may even challenge you, it would make a lot of sense to take that project. The opportunity of staying with that company is increased by the fact that you worked with them already.

Q: What are the advantages for employers in trending toward contract positions?

Cronin: First of all, it’s cost-effective. The employers pay only for the hours they need and use. You may need somebody 40 hours this week and 20 hours next week, so it buys a lot of flexibility. You don’t want to hire somebody full-time because you may only have a project that will last 90 days and you don’t want to make that commitment. The other advantages are long-term cost management. If you’re in an industry that has some cyclicality to it, you want to manage your labor by using contract workers. Another one would be increased loyalty, which is a long-term perspective that people don’t think about. When you try before you buy, it works for both the contractor and the employer. When you hire somebody that has worked for you as a contractor, his loyalty is already built up. You’ve already gone through the dating process and you like each other so there is an opportunity to have a strong relationship going forward. You’ve reduced your cost of retention because you know that person is going to stay longer.

Q: Are there certain things contract workers should do to position themselves to take advantage of contract work?

Cronin: They need to network and also use the online web tools to post their resume and let people know they are interested in contract work. One thing that outplacement companies teach anyone that’s in job transition is you’re responsible to take your search into your own hands. You can’t be waiting for the phone to ring. Headhunters do a good job of finding jobs for people, but you just can’t put your entire future in the hands of just one headhunter.

Q: We’ve heard of online resume sites like HotJobs.com and Monster.com. What kind of online services does Techies.com provide?

Cronin: Techies is a niche job board for the technology person. At Techies, we provide introductions to organizations that are looking for IT people, both on a permanent and a contract basis. Because of the situation in the economy right now where companies are looking for contractors, we just opened up a new page on our site called ‘Tech Project Center’. When we opened it up, we announced it in our newsletter and we had 5,500 techie contractors come to that website within a 24-hour period.

Q: What types of resources are you offering there?

Cronin: We offer training to our membership at a discounted price. You can keep your skills updated. It’s a very reasonable e-learning solution. You can subscribe to 300 different courses in your field.

Q: I thought it wasn’t good to put short-term employment on your resume.

Cronin: In 1996, I was laid off and one of the things I learned from that process was to set up my own business and create my own business card. As I was networking for business opportunities, a contract position came up and I took it. For a consultant to have many small projects of a month or six months, that’s fine. You’re right - as an employee it doesn’t look good to have jumped around. But as a consultant, it’s expected. You can also use the staffing companies as a way of marketing yourself. If you work for a temp company and that’s on your resume, you can just say ‘hey, I was just leveraging their marketing capabilities to get me some introductions to companies’. It’s an intelligent way to positions yourself as you’re looking for a job.

Q: Let’s talk about the bottom line: salary. What should a contract worker think about to negotiate their pay? Is contract pay trending up or down these days?

Cronin: As an independent contractor, you want to remember to cover your overhead. If you were working before for $25 an hour, you don’t want to just go back to $25. You want to cover those costs. Most companies recognize that. You can do that and still compete on your own because staffing company’s do that likewise. A staffing company is going to mark up the labor costs to them to cover their administrative fees. A staffing company is going to charge 1.5 or sometimes 2 times their direct labor. As long as you are fairly priced for your skill set in the market, you should do fine.

Q: What’s the scoop on being a Techies.com member?

Cronin: At Techies.com, we’re always looking for the best tech people. Techies hang out with techies. We have just shy of 1 million members. If you’re looking for a tech worker, you have the ability to search our database via skill sets or job families. On the posting side, we match motivators with skills. Also, we use push technology. When people register on the site, they create an ‘auto-bot’. Whenever there is a match to a job in their skill set, our technology will push that job right to them so when they open up their email, they’ll have the opportunity to look at that job right away.

Read more about the research with Techies Editor Nick Doty.
~ WTG

(Dana Greenlee is producer and co-host of the WebTalkGuys Radio Show. WebTalkGuys, a Seattle/Tacoma-based talk show featuring technology news and interviews. It is broadcast on CNET Radio in San Francisco and Boston, on the web at CNET Radio, WebTalkGuys Radio, Sonic Box and via the XM satellite network and on NexTel's Wireless Web.  Past show and interviews are also webcast via the Internet at http://www.webtalkguys.com).