As a general rule, IT contractors earn significantly more than permanent employees performing similar roles. You could potentially double you ‘gross’ earnings for performing a similar job.
Contract rate basics
Of course, contractors have to put up with the uncertainty of finding short-term work and weathering economic downturns, so these factors inevitably result in higher pay levels. The way contractors are taxes is also different from the traditional employees, so although your contract rate may be double your gross salary, your take-home pay is not likely to be twice as high.
Contract rates vary greatly according to the location of the contract, the skills and experience required to perform a given role, and other factors such as the general strength of the IT contract market and the attractiveness of the role.
Typically, you will gain an idea of the typical rates paid for roles by talking with agencies and other contractors. You will also be responsible for negotiating as high a rate as possible when you secure each contract.
Where can you find contract rate data?
Despite the ever-expanding size of the contracting industry, there is only one remaining online database providing rate-related information.
ITJobswatch is a handy site which provides high level data for key roles (such as Analysts, Developers) as well as specific skill sets (e.g. Oracle, UNIX, Java, .NET). This database is also the source for our in-house Rate Checker, and the data is derived from contracts posted to the leading online job boards.
In the past, other sites like Jobstats provided fairly rough, but effective graphs showing the relative health of the industry, but these sites are no longer maintained.
Other useful sources of average rate information
Although sources of realtime rate data are scarce, many organisations publish rate-related reports, some of which we’ve included below:
- The two leading recruitment bodies, APSCo and REC, publish regular industry pay updates, including contractor and permanent markets.
- E-Skills – tasked with making sure the company has the skills to fuel economic growth, the site also provides training and salary information. Their Technology Insights are useful for general information on the IT market (health / employment).
- IMA – Interim Management Association – provides quarterly reports on interim pay and market conditions.
- If you’re a digital IT contractor, you can get some good information via JM Digital (surveys, market reports, etc). Their 2016 Salary Guide is a good source of data.
- SJD Accountancy publishes quarterly contractor reports, which include average daily rates of respondents, and whether rates are going up or down. They have over 14,000 clients, so a fairly healthy sample size!
- The London Employment Monitor from Morgan McKinley is useful to gauge the health of the financial services contracting market.
We’ll add further sources of information as we find them.