Software Dev career advice: Salary vs Contracting

[TStringList]

I would be weary of a contracting house where you speak to a CEO instead of an account manager or HR who should be able to explain this stuff to you.

The contracting route can be a way to boost your earnings. You will need to take minimal leave as no work = no pay. You will also be responsible for your own medical aid and retirement fund, as well as accounting fees for tax returns. Also no bonus. It's more risky in that your contract can easily be terminated. You are also less part of a team and more of a resource. However, if you have entrepreneurial ambitions, it could become a springboard for you.

The permanent gig, you know what it's about. A couple more jumps and you'll be earning what you want.

 

[cguy]

"Your net salary is always what's most important" - what he said.

That's pretty suspicious right there.

 

[Akasha]

Message me if you want a referral to Entelect, can share the recruitment bonus

 

[itareanlnotani]

Main issue I see here is you'll have issues invoicing to only 1 company, if you do that, SARS will deem. you to be working full time for them, and tax appropriately.

Second is 7 years exp, only 400/hr? yeesh. I don't get out of bed for that.

 

[Die Uwe]

Im at one of the big 4, new CIO just said no contracts will be renewed. Existing contractors will work out their term and can apply to become fulltime employees. So just watch out for that.

Why dont you apply directly at another bank? The one sure way to grow your salary fast is to move companies.

Unfortunately most corporates in SA doesnt reward loyalty, only once you resign do they want to bump up your salary, instead of paying you what you are worth from the get go.

I moved companies 3 times in 4 years, each time getting a 20-30% increase, now im back in my old team, getting a lot more money then I would if I stuck around and got 7% increases. I also build up so much more experience and connections.

In this industry you can be great at your job, but it is your connections that gets you into the good offers.

Personally I wont go with company B, I would go with company A and use that offer only as a bargaining chip at your currently employer for a proper 30% bump in salary

 

[Benedict A55h0le not]

I think for IT it is always good to contract. More pay, and, a contracting software developer is less likely to get stuck in a rut and not grow skills. The only way to get pay up is to job-hop, and contracting allows for that.

 

[cguy]

I think for IT it is always good to contract. More pay, and, a contracting software developer is less likely to get stuck in a rut and not grow skills. The only way to get pay up is to job-hop, and contracting allows for that.

I disagree with that. By all means, move if your company isn't paying you properly until you find a good one, but the big bucks come from learning how to solve hard, complex problems, ideally with exposure to IP, and you won't get that from short term stints or contracts. I think you can grow fast by hopping/contracting, but you're also going to hit a ceiling fast.

(2 companies in the last 20 years here, 4 in my career)

 

[Benedict A55h0le not]

I disagree with that. By all means, move if your company isn't paying you properly until you find a good one, but the big bucks come from learning how to solve hard, complex problems, ideally with exposure to IP, and you won't get that from short term stints or contracts. I think you can grow fast by hopping/contracting, but you're also going to hit a ceiling fast.

(2 companies in the last 20 years here, 4 in my career)

I do agree with you, but maybe this is more for juniors. If I only stuck to what people at work taught me, I would be much less valuable today. All my valuable skills of today are learned by myself. Yes, the long term experience is crucial, but that in itself is not enough to keep your skills up to date. Generally in IT, definitely in SA, loyalty means being stuck in a rut and not growing skills. If you are junior it matters less, since everything is a new skill. If you are senior in IT then contracting makes it easier to stay out of a rut and grow your skills and income.

 

[s0lar]

I disagree with that. By all means, move if your company isn't paying you properly until you find a good one, but the big bucks come from learning how to solve hard, complex problems, ideally with exposure to IP, and you won't get that from short term stints or contracts. I think you can grow fast by hopping/contracting, but you're also going to hit a ceiling fast.

(2 companies in the last 20 years here, 4 in my career)

From my experience I prefer contracting apart from the cash incentive of nearly double of a permanent role. I am easily bored, also when contracting on many sites you get a wide toolset/workflow that enables you to deal with a wide range of system design or issues quickly. As well as having a broader knowledge base to draw from.

For hitting the ceiling thats pretty high cash wise. Last contract was indefinite at $12k p/m. Do you job well and 9 times out of 10 you get a permanent offer.

 

[Cius]

So I work at a big company as a dev, and just turned down a freelance contracting offer that included a 30% raise, paid in pounds with full remote work. I still turned it down. The reason I did was I would lose a permanent job and essentially be month to month every month with these guys. Essentially what was required was that I set up a company and invoice them month to month for my time. The issue I have with that is they could fire you at a moments notice by just cancelling the contract.

I used to freelance contract between 2005 and 2007 and back then everyone thought it was fine. The world economy was experiencing spectacular growth and it almost made sense. I ended up accepting a permanent position just before the 2008 financial crises hit and I saw the big company I worked at go from 30+ contractors on our floor down to about 2 in the space of 3 months. All those guys hit the job market at the exact same time when all hiring froze due to the crash. Us permanent employees where fine and no one fortunately got retrenched. This is why I won't go back to freelance contracting. You never know when the next big thing will hit and I have a family to feed. If you have the risk appetite though it can be a big stepping stone.

 

[Harmonic]

So I work at a big company as a dev, and just turned down a freelance contracting offer that included a 30% raise, paid in pounds with full remote work. I still turned it down. The reason I did was I would lose a permanent job and essentially be month to month every month with these guys. Essentially what was required was that I set up a company and invoice them month to month for my time. The issue I have with that is they could fire you at a moments notice by just cancelling the contract.

I used to freelance contract between 2005 and 2007 and back then everyone thought it was fine. The world economy was experiencing spectacular growth and it almost made sense. I ended up accepting a permanent position just before the 2008 financial crises hit and I saw the big company I worked at go from 30+ contractors on our floor down to about 2 in the space of 3 months. All those guys hit the job market at the exact same time when all hiring froze due to the crash. Us permanent employees where fine and no one fortunately got retrenched. This is why I won't go back to freelance contracting. You never know when the next big thing will hit and I have a family to feed. If you have the risk appetite though it can be a big stepping stone.

Easy problem to solve. Take the extra GBP and put it into a savings account until you got 6 months pay.

Continue enjoying GBP knowing you have a 6 month buffer if any changes. If you can't get a tech job in 6 months, something else is desperately wrong.

 

[Tomtomtom]

This is why I won't go back to freelance contracting. You never know when the next big thing will hit and I have a family to feed. If you have the risk appetite though it can be a big stepping stone.

Companies want to have their cake and eat it. They want someone dedicating their time, but to be able to let them go at any moment.

Only way to play it is with a) diversity of contracts and b) aggressive saving.

You got to have more than one client, preferably in unrelated fields. And you have to be saving more than everyone else.

 

[cguy]

I do agree with you, but maybe this is more for juniors. If I only stuck to what people at work taught me, I would be much less valuable today. All my valuable skills of today are learned by myself. Yes, the long term experience is crucial, but that in itself is not enough to keep your skills up to date. Generally in IT, definitely in SA, loyalty means being stuck in a rut and not growing skills. If you are junior it matters less, since everything is a new skill. If you are senior in IT then contracting makes it easier to stay out of a rut and grow your skills and income.

Agreed, it is probably very “work-type” specific too. If you are developing new tech, R&D, etc., you are likely always at the cutting edge no matter how senior you are. If you’re building products using the same tech stack again and again, one will likely stagnate.

 

[cguy]

From my experience I prefer contracting apart from the cash incentive of nearly double of a permanent role. I am easily bored, also when contracting on many sites you get a wide toolset/workflow that enables you to deal with a wide range of system design or issues quickly. As well as having a broader knowledge base to draw from.

For hitting the ceiling thats pretty high cash wise. Last contract was indefinite at $12k p/m. Do you job well and 9 times out of 10 you get a permanent offer.

You will definitely get a broader set of knowledge, which will of course increase your worth on the market, although in my experience it isn’t worth as much as depth.

$12k/m is great for SA, but I expect it’s an outlier created by the fact that most overseas companies would prefer to relocate permanent, salaried staff to a country with a primary office. $12k/m (~R2.5m/y) isn’t that hot there.

To be clear, I am agreeing with you because I hadn’t considered the “contract for an overseas company” option into my comparison, because I don’t consider it an apples-to-apples comparison.

 

[flash99]

I have not read any of the answers but nevertheless if you go the contracting route you will need to save up for leave, the sick leave you get at the moment, pension/retirement annuity and also medical aid. Sick leave and medical aid you only need when you need it but you never know when that would be e.g. COVID or an accident. Note that you should also take out an income protection plan. Training is also something you may need to pay for yourself and also not get paid for the hours when you are on the course.

Annual increases/bonuses are another thing to consider as you may not get what the permanent staff get. Had a stretch of 4 years without an increase! You may also be expected not to invoice for social events/team building and of course the compulsory lunch time you are meant to take. Will you be needed to be on standby, callout or overtime and will these be a an overtime rate or just your normal rate?

Do they expect you to bring your own devices? Must you pay for your own data and voice costs? Do they expect you to have a car and will they compensate you for work travel (this is not from home to work which you also cannot claim from SARS). You will also need to hire a tax consultant to help you with your tax at least initially.

There is not much benefit tax wise to being a contractor any more and in many companies you are disliked because you are apparently earning more than the permanents. Employers do like this option as it is easy to get rid of contractors compared to permanent staff. If I am not mistaken, SARS was pushing that contractors working full time at the same company for more than 2 years should be viewed as permanent.

I hope this sheds some light on contracting and questions you may want to get answered. Remember the only agreement that you have with the company is the contract initially so if you can get a copy, then many of your questions shall be answered.

Good luck