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Start-Up Guide :: Contractor recession survival tips

Published on Jan 19, 2009 |

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With rates on the slide and the number of contract openings shrinking, what can IT contractors do to ensure they get through the current market downturn intact?

Here are some ideas from the Contract Eye team.

1) Cash is King - The most important thing you can do right now is to preserve cash. Although there are few "jobs for life" out there, IT contractors are more vulnerable to the whims of client job cuts than many others. Make sure you have some cash put aside in case you're out of contract for a period of time - enough to pay the bills for at least 6 months in an ideal world.

2) Tax Liabilities - Regardless of your personal expenditure, current contract market conditions, or anything else for that matter - you must always ensure that you have set aside funds to meet you tax liabilities - VAT and Corporation Tax consuming the lion's share.

3) Bank Account - Following on from the first two points, don't let your cash sit around in a practically zero-yielding business bank account. Not only should you put aside any spare company funds in a high interest savings account (or as high as you can get these days), you can also open very competitive current business accounts - with no transaction charges.

4) Contract Extensions - If you are already in contract and have a contract extension coming up, now may no be the wisest time to push for a 10% increase. Unless you are simply indispensable to your project, it is probably advisable to be grateful for the extension.

5) Rate Cuts - We have reported many examples of across-the-board contract rate cuts this year, particularly in the financial sector. As with contract extensions, this is now a buyers' market for IT skills, and unless you have another secure role lined up somewhere else, like many others - you'll typically just have to accept the rate cut and be grateful that you are in contract.

6) Brush up your CV - If you are currently seeking contract work, or think you'll soon be on the look out for a new role, you should pay attention to your CV. Both in the content and presentation, this is the first thing a potential client will see, and you could be out of the running from the start if you haven't made an effort.

7) Networking - Many contractors can work for years in multiple roles without using recruitment agencies at all, as they find many of their roles via contacts they have built up over the years. The first people to know about new contractor requirements on a client site are the people who work there rather than the agents. So, go against the anti-social contractor stereotype, and look up old contractor colleagues and ask around to see if any potential work is on the horizon. Also, keep in touch with your agency contacts - as in life, they're more likely to get in touch with you if you're approachable, friendly and professional.

8) Make yourself indispensable - As we mentioned before, being an essential person on a project is a great way to ensure your security during an economic downturn. Do whatever it takes to become indispensable - do extra work, work extra hours, deliver high quality work and most of all, keep on the right side of the decision makers.

9) Be Reactive - Successful long-term contractors are also successful business people. If you feel your contract position is under threat, think of ways to make it difficult for your client not to renew. If it comes to it, you could offer to work fewer hours or at a lower rate if the client is forced to make cost savings. You can also look to do extra work in addition to your contract work - the Internet has provided a wealth of opportunities for contractors to access (and bid) for work.

10) Be Realistic - In the last downturn (following the dot com bubble), many contractors found it hard to find contract work. At the same time, many others had far less difficulty and continued to find contract roles - even if they had to accept lower rates. Contractors who keep their skills up to date, make an effort to network and are proactive and business-minded have always stood a better chance of weathering any economic downturns.

Further Resources

What should contractors do during an economic downturn
How to succeed as an IT contractor