IT Hire Wire

The IT Industry with its myriad opportunities offers several different ways of compensation. The ultimate choice depends on what works best for you after weighing the options.

IT Compensation Options

The most common compensation is Full time salary (with benefits). Most of us are familiar with the salary with benefits structure. Yet, with the economy’s roller coaster ride and with “stable” salaried jobs getting cut, why not explore contracting? Contracting can be either a 1099 Independent contractor working for yourself, or a W2 hourly contractor, typically working for an agency.  A contract position might eventually last as long as that “stable” job anyway, and if negotiated appropriately, pays out much better too! Contracting pays out significantly higher than salaried positions mostly because the salary option is weighed down by overhead & operating costs, as well as vacation and benefit costs.

How to Calculate Contract Compensation

Here’s how to calculate an hourly pay rate that you would need for your desired annual salary:

1. Divide your annual salary by 2000 (the approximate hours for the year). This is a broad guideline.
2. Add the costs you will incur for benefits. With many big agencies you will have the option of picking up medical/dental/vision/401K and other benefits offered at the same discounted rate available to corporate employees. Just factor in the monthly cost and convert it to an hourly amount.
3. You need to consider taxes (social security, federal, state, etc). For W2 contractors, taxes are taken care of by the company. As a 1099 independent contractor you would have to pay these taxes yourself.
4. Factor in some buffer money for vacation/sick/downtime

Negotiating Your Hourly Rate

Negotiate appropriately with HR managers and recruiting agencies based on what you need as your take home figure and you will realize how many additional opportunities are brought to your door by different agencies. Just make sure to keep a reality check on your hourly rate expectations unlike this guy. The great news is that many big companies may have a hiring freeze for full time folks but since their IT projects need to be completed on schedule, are still open to hiring contractors.

Like most things in life, it comes down to personal preference but it helps to know what contracting offers before making that decision. If you’d like more information on contracting, the Software Contractors Guild offers a great list of sites of interest to Contractors.

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