The curious case of the permanent contractor

When I first came to the UK, I found the concept of the IT contractor was very different to the Indian IT contractor. In India, an IT contractor or ‘contract employee’ is like a daily wage labourer. Let me explain why. The wages are much lower compared to a permanent employee. You work for a company which takes a huge amount from the client and pays you a pittance. The client hires contractors because it takes a long time to go through the recruitment cycle and hire somebody. Cost is traded off for speed of recruitment and deployment. Moreover, the contractor is an easily disposable resource; when a requirement ceases, just chuck them out. Most people turn to contracting because they can’t get in as a permanent employee. There are a huge number of IT aspirants versus the number of IT jobs in India which means that the competition is stiff and the more relatively mediocre you are, lesser are your chances. The biggest goal that a contractor usually has is to impress the client and become a permanent employee. A lot of them succeed because the client finds that they are getting a good person for a fraction of the pay they’d give a new permanent employee. (not to mention the cost of recruitment and on-boarding costs). They usually pay off the middle man by hiring another contractor for some other project, so that the middle man company doesn’t lose business. It sounds eerily similar to the terms of an indentured servant of the 17th century.

In contrast, I found the contractors in the UK to be the elite class of IT workers. They are paid handsomely. To be fair, a lot of contractors are pretty good at what they do (or at least pretend to). Some of them work for middle man companies (usually the rookies), but most of them float their own one man company (for exploiting tax loop holes). They get paid from two to ten times what the permanent employee gets. The only caveat is that once the employer decides to end your contract, it means looking for new job. You also don’t get the insurance benefits or the paid days off that a permie gets. But. I guess, with the money that people get paid, you can buy the most expensive insurance policy and who would want a day off when it means losing so much money!. The client gets someone who is reasonably good and rarely takes days off. The permanent employee wants to stay permanent only if there are vested interests like stock options, wanting to be in the same place, the perceived thought of a career or most commonly plain old mediocrity.  Sometimes it is more expensive to fire long term employees than keeping them. This brings me to the title of this post. I found a third type of employee in the UK. The ‘Permanent Contractors’ are hybrids who joined the company as contractors, but gained so much knowledge of how things work and how to get stuff done in the company, that it is very hard to replace them. You can buy skills but you can’t buy internal knowledge (it develops with time and experience). These people get the best of both worlds they get job security of a permie and the pay of a contractor. I have seen people who have been ‘contracting’ at the same place for five years. They feel they are a part of the company. Such a culture exists in the UK because there is a an acute shortage of people with good IT skills and smart people in general. The same is the case even in India. Most people would disagree since there are a gazillion engineering and MBA schools in India churning out millions of people who are supposed to be good at something or the other. But there is a huge difference in having a fancy degree from a fancy college and being good at something. I’ll save that rant for some other post.

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