Contractors
As you might have surmised, I suspect the job market in Austin will be moving in a few particular directions. Currently, I see a lot of recruiting activity, but I also expect that to be ephemeral and temporary. For job seekers, my recommendation is grab while the grabbing is good.
For job seekers, there are exactly two classes currently operating in the market: principal companies (hiring mostly employees) and contracting companies, hiring mostly W2 contractors. In case you missed the memo, a W2 contractor is an employee of the contracting company, but a contractor from the point of view of the principal (hiring) company. All contractors are considered disposable by definition, which is why they were hired under those conditions in the first place. NB: A W2 contractor is in a weak position legally and from a taxation standpoint. Accountants and attorney are recommended.
Contractors: The Austin job market, and I suspect a large fraction of US city job markets, are moving away from long-term* 1099 / C2C contractors. I have worked in this capacity since the summer of 2008, and so regret this trend. I've seen it coming for quite a while.
Such contractors take some serious risks in doing what they do. While the money is about as high as can be expected, the costs are also fairly high. 1099 / C2C contractors experience fairly routine breaches of contract (I've experienced it, more than once), have to pay their own bills (and health care is a genuine mess right now, a huge expense), pay for liability insurance, accountants (gotta have 'em, no joke) and often lawyers.
A contractor knows he/she can be terminated in an instant, and so is likely to work very, very hard, never complain, rarely if ever sue, do exactly what he/she is told. Contractors never say no. They routinely put up with unpleasant work conditions and difficult circumstances. In some workplaces, contractors form the backbone of the workforce. Employees have a very different set of incentives, and are less afraid of challenging their employers. Employees are less expensive, but they have legal rights, something real contractors do not have.
So, contractors are kind of like voluntary slaves. If they are careful as hell, they will walk away with a fairly significant chunk of change. They will also suffer increased health problems, high levels of stress, higher levels of family problems and divorce, more disorganized lives. They do it for the money. Job satisfaction is not typically a concern for contractors.
Given all these things, you might be wondering, why don't companies use 100% contractors? It is manifestly obvious that their productivity is higher per hour than employees, they present less legal risk, and they can be disposed of at any time, for any reason, or no reason at all.
The answer is easy: labor and tax law. Exempt employees can be "encouraged" or cajoled into working insane hours (and I know of plenty of employees of start-ups that routinely worked 80 to 90 hour weeks). While employees are a higher legal risk for employers, those employees are unlikely to sue, and most often will do as their employer asks, particularly when young and rising up in the job market. They are concerned about their reputations and do not wish to acquire radioactive status.
Contractors, on the other hand, are almost always limited to 40 hours per week. Since the overwhelming majority of team leads and managers have scant training or experience with contractors, it is fairly easy to waste contractor time. Most managers who use contractors are just too busy to carefully allocate time and projects. They are looking for the contractors to ease the workload.
As a long-term contractor, I can guarantee employers that I will be significantly more productive than employees on a per hour basis. It appears that most managers underestimate the effort needed to manage contractors effectively.
Employees: New or inexperienced managers are best served by employees only. They then have some room for a learning curve and error. Experienced and well-trained managers have some options. Start-up? Employees only, except where you can't find critical workers. Hire only young and hungry folks and work their keisters off. The contractors you hire are only for specific projects and have a defined and agreed-upon timeline. They are short-timers by definition.
Established, steady-state enterprises? Some skill and significant effort is required to make the case that contractors are the best bet. A mix of contractors and employees will usually satisfy labor and tax legal issues. That mix will tend towards more contractors as the enterprise tends towards end-of-life.
To attract good employees, competitive salaries are key. Oracle, for example, is paying very, very well for these people, and employees will have the huge advantage of getting in on the right side of the market (cloud computing, managed services). They are not kidding around, and they mean business. Currently, competition is fierce. In Austin, I predict that Oracle will hire away a lot of workers from other companies and enterprises, and every hard-working contractor who becomes an Oracle employee will thank the day they decided to make the change.
Conclusions:
For job seekers, there are exactly two classes currently operating in the market: principal companies (hiring mostly employees) and contracting companies, hiring mostly W2 contractors. In case you missed the memo, a W2 contractor is an employee of the contracting company, but a contractor from the point of view of the principal (hiring) company. All contractors are considered disposable by definition, which is why they were hired under those conditions in the first place. NB: A W2 contractor is in a weak position legally and from a taxation standpoint. Accountants and attorney are recommended.
Contractors: The Austin job market, and I suspect a large fraction of US city job markets, are moving away from long-term* 1099 / C2C contractors. I have worked in this capacity since the summer of 2008, and so regret this trend. I've seen it coming for quite a while.
Such contractors take some serious risks in doing what they do. While the money is about as high as can be expected, the costs are also fairly high. 1099 / C2C contractors experience fairly routine breaches of contract (I've experienced it, more than once), have to pay their own bills (and health care is a genuine mess right now, a huge expense), pay for liability insurance, accountants (gotta have 'em, no joke) and often lawyers.
A contractor knows he/she can be terminated in an instant, and so is likely to work very, very hard, never complain, rarely if ever sue, do exactly what he/she is told. Contractors never say no. They routinely put up with unpleasant work conditions and difficult circumstances. In some workplaces, contractors form the backbone of the workforce. Employees have a very different set of incentives, and are less afraid of challenging their employers. Employees are less expensive, but they have legal rights, something real contractors do not have.
So, contractors are kind of like voluntary slaves. If they are careful as hell, they will walk away with a fairly significant chunk of change. They will also suffer increased health problems, high levels of stress, higher levels of family problems and divorce, more disorganized lives. They do it for the money. Job satisfaction is not typically a concern for contractors.
Given all these things, you might be wondering, why don't companies use 100% contractors? It is manifestly obvious that their productivity is higher per hour than employees, they present less legal risk, and they can be disposed of at any time, for any reason, or no reason at all.
The answer is easy: labor and tax law. Exempt employees can be "encouraged" or cajoled into working insane hours (and I know of plenty of employees of start-ups that routinely worked 80 to 90 hour weeks). While employees are a higher legal risk for employers, those employees are unlikely to sue, and most often will do as their employer asks, particularly when young and rising up in the job market. They are concerned about their reputations and do not wish to acquire radioactive status.
Contractors, on the other hand, are almost always limited to 40 hours per week. Since the overwhelming majority of team leads and managers have scant training or experience with contractors, it is fairly easy to waste contractor time. Most managers who use contractors are just too busy to carefully allocate time and projects. They are looking for the contractors to ease the workload.
As a long-term contractor, I can guarantee employers that I will be significantly more productive than employees on a per hour basis. It appears that most managers underestimate the effort needed to manage contractors effectively.
Employees: New or inexperienced managers are best served by employees only. They then have some room for a learning curve and error. Experienced and well-trained managers have some options. Start-up? Employees only, except where you can't find critical workers. Hire only young and hungry folks and work their keisters off. The contractors you hire are only for specific projects and have a defined and agreed-upon timeline. They are short-timers by definition.
Established, steady-state enterprises? Some skill and significant effort is required to make the case that contractors are the best bet. A mix of contractors and employees will usually satisfy labor and tax legal issues. That mix will tend towards more contractors as the enterprise tends towards end-of-life.
To attract good employees, competitive salaries are key. Oracle, for example, is paying very, very well for these people, and employees will have the huge advantage of getting in on the right side of the market (cloud computing, managed services). They are not kidding around, and they mean business. Currently, competition is fierce. In Austin, I predict that Oracle will hire away a lot of workers from other companies and enterprises, and every hard-working contractor who becomes an Oracle employee will thank the day they decided to make the change.
Conclusions:
- It looks like the 1099 / C2C market in Austin is collapsing
- No information on W2 contractor market, but I suspect it will be going away, too
- Employees are the way all companies seem to be moving
- If you do get a 1099 / C2C position, the unspoken contract term will be the expectation that you are a Magic UnicornTM. You will have to produce results fast and keep doing it to keep your position.
- The coming cloud revolution will deprive about 75% of current Dev Ops workers and managers of employment over the next few years. That needs to be taken into account.
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