IT Contractors have had a good time of it for many years now. Aside from the dot-com bust downturn in the in 2002-3, contracting as a whole has been a good profession to be in for a decade.

Now that the economic outlook has turned bleaker, what should IT contractors do to prepare themselves in case things get worse?

Put Money Aside

Many of us will know IT contractors who have splashed most of their income on gadgets, expensive clothes and holidays, only to be caught short when the time comes to pay their self assessment liabilities. In prosperous times, when contracts are a-plenty, this type of situation can usually be turned around.

However, when there are fewer contracts around, and clients put IT projects on hold, it is essential that you have spare funds set aside in case you are forced to sit "on the bench" whilst looking for new opportunities. The IT contract market seems to have held up well over the past year, but no-one can realistically expect the contracting world to escape the recent turmoil in the financial markets completely unscathed.

If you have not set aside funds for less favourable economic times, now is as good a time as any to start. Ensure that you set aside all future tax liabilities (including VAT) in a high interest bearing deposit account, and save as much as possible on top.

New Contracts & Renewals

It is almost inevitable that most companies will be affected in some way by the global economic downturn, and unfortunately IT contractors are often not far down the list of things to "downsize" if and when the time comes.

In boom times, most contractors can be choosy about whether they stay in their current role, or look around for more rewarding or challenging contracts.

Unless you are extremely highly skilled, it is likely that the supply/demand ratio in most skill areas during a downturn turns significantly in favour of clients.

If you are nearing a renewal date soon, it is probably wise not to push for a rate hike if the market for your individual skills is poor. Additionally, if cuts are being made on your project, common sense should prevail when negotiating rates.

If you are unhappy with your current role, whatever you do - don't jump ship until you have secured a new role. In past downturns (such as the 2002-3 one), it was not uncommon to have reports of agents receiving 100 CV's for a single role.

Conclusion

It goes without saying that all contractors hope that the housing and global finance markets rebound as soon as possible, but until that happens, a "prudent approach" to savings and contract renewals would seem to be the best way forward.

Apologies to readers for the Gordon Brown-ism in the last sentence.