Joining the contractor economy: Pros & cons

Contract work is booming, aided by rapidly evolving new technologies, the desire for greater work-life balance and the increasing casualisation of the workforce – the number of casual employees (i.e. workers on higher hourly rates but without leave entitlements) and independent contractors has risen by $110,000 and 51,300 respectively since 2012.

This new ‘gig economy’ certainly has its advantages, but before you resign from your nine-to-five job, make sure you’ve considered the pros and cons of contract work.

The contracting boom

New technologies have completely changed where, when and how we do business. Cloud computing, web conferencing and mobile apps, for example, make it possible to work from home, from an office, or from the other side of the world.

Just as we’re no longer confined to a traditional workplace, the meaning of work has fundamentally shifted. Employees were once taught to expect ‘jobs for life’, but in the new economy they’re increasingly attracted to flexibility.

What’s the difference between a freelancer and an independent contractor?

While the terms are sometimes used interchangeably (as both freelancers and contractors are self-employed), freelancers generally work for multiple clients at once from their own premises while contractors are more likely to work for one client at a time on a specific project, generally from the client’s office.

Contractors run their own business and perform work for others, without having the legal status of an employee. The Fair Work Ombudsman website has information about the rights and obligations of independent contractors.

Top industries for contractors

Rather than recruiting permanent, full-time staff, employers are increasingly hiring on a job-by-job basis – contracting allows them to engage specialist talent in an era of reduced hiring budgets.

Industries that commonly hire independent contractors include:

  • Computer and IT.
  • Accounting and finance.
  • Project management.
  • Legal consultancy.
  • Business consultancy.
  • Building and construction.
  • Clerical and administration.
  • Community and personal services.
  • Professional, scientific and technical services.

Want to gauge which roles are most in demand in your industry? Jobseeker sites such as in Australia and in New Zealand are great places to search and may also offer insights into the skills required, and amount of remuneration you can expect to receive, if you do decide to move into a contract role.

The advantages of contracting

There are many advantages to working for yourself as an independent contractor, including:

Improved work-life balance: Contracting enables you to choose jobs that best suit your family, health and personal goals.
Greater flexibility: Work can be done ‘on demand’ rather than nine-to-five, and from a range of locations.
Bargaining power: You can often set your own rates, and there’s the potential to negotiate better terms.
Variety: With multiple employers comes the potential for greater work variety.

Contractors looking to advertise their services to prospective employers can do so via online platforms such as UpWork, CBP Contractors, Hipages and of course, LinkedIn. Many of these sites allow businesses to advertise vacant positions, or search a database of registered contractors to find a good fit for the opportunity.

For employers, the advantages of hiring independent contractors include:

Access to talent: New talent-matching platforms, such as PwC’s Talent Exchange and Allen & Overy’s Peerpoint, enable employers to access a range of skilled professionals for a specific project.

Scaleability: A contractor workforce can be scaled up or down as needed, which means it’s possible for businesses to expand while keeping operational costs in check.

Potential for lower costs and risk: A reduced in-house workforce can result in lower costs (such as savings on employee benefits and office space) and therefore lower financial risk.

The disadvantages of contracting

It’s not always easy being a contractor. Some of the disadvantages include:

Isolation and lack of support: A contractor can be seen as a lone wolf, rather than part of the team, even on longer-term jobs.

Irregular cashflows and workloads: In an ‘always-on’ economy, contractors are expected to be available as required, but there may be times when work is not available.

Increased administration: As a contractor, you’re generally responsible for paying your own income tax and GST, managing your own accounting – including sending and receiving invoices – and insurances.

The disadvantages of hiring contractors include:

Lack of availability: As contractors work for themselves, your preferred hire may not always be available, and they may not prioritise your business.

Increased recruitment: Regularly utilising contract workers can mean advertising and interviewing far more often than businesses who only hire permanent staff.

Reduced visibility: If the contractor works off-site, or in a completely different city or country, it may be more difficult to oversee their work.

What makes a successful contractor?

Contract work isn’t for everyone. While the flexibility and increased autonomy might be appealing, you’ll need to have strong time management and organisational skills, self-discipline, and the ability to work unsupervised to deadline. You’ll also need the drive and motivation to keep finding more work.

Employers hiring contractors will be looking for people with initiative, a high level of professionalism and great communication skills – for instance, the ability to keep stakeholders apprised of progress, delays and outcomes. Contractors may be representing an employer for just a short period, but they should still have a strong sense of ethics and responsibility.

Whether you’re looking to hire someone in a contract capacity, or be hired as an independent contractor, it’s important to establish an honest working relationship.Having previous employment, references and qualifications independently verified can help to build that trust.

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