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3 reasons to consider contracting

Greater flexibility, higher pay and an improved work-life balance are three of the principal benefits of contracting in the financial services industry. As a result, an increasing number of workers are choosing contracting as a career choice. 

Contractor numbers are increasing

Enabling technologies such as the internet and mobile have created new opportunities for flexible working. A study by American software company Intuit predicted that by 2020, traditional employment will no longer be the norm in the world’s largest economy, as 40% of the country’s workforce will be freelancers, contractors, temps and part-time workers.
 
This is compared to around 25-30% in 2010. Financial services companies are increasingly using contractors to fill the skills gaps in areas such as compliance, IT and cyber security.
 
Contracting is increasingly popular as it delivers so many benefits, such as:
 
Flexibility and variety

Contractors are able to choose their clients and assignments and regularly change them. They also have the opportunity to discover how a company works and decide whether it’s to their liking before committing to a permanent position.
 
A compliance contractor working at a large investment bank told me: “Finding the right permanent opportunity for me is taking much longer than anticipated, so contract work is a good way to not commit to something permanent that takes me in the wrong career direction.”
 
Increased earnings
 
The financial benefits are also attractive, especially at a time when compensation in the sector has yet to catch up with pre-credit crunch levels. “Bonuses have not been great in the finance industry in the last few years, so there is a lot less incentive to work in a permanent role towards a one-off annual discretionary payment.”
 
On top of higher day-rates than employees in permanent positions enjoy, contractors’ tax status can also enable them to take home significantly more net earnings than permanent workers. In some countries, contractors can also claim travel and subsistence expenses and offset these against their tax bill.
 
Improved work-life balance
 
Contractors can spend the whole year in contract or take time off when they need to. Increased earnings can help subsidise taking school holidays off, learning new skills or indulging in hobbies.
 
One contractor I spoke to said that superior contractor rates enable him to earn the equivalent of an annual salary in six months, giving him the opportunity to use the remaining six months of the year to pursue other interests or further his personal development.
 
Is contracting for you?
 
Whether contracting can work for an individual depends very much on their personal circumstances and character. Some people find change stressful. Meeting new people, learning new processes and getting used to new surroundings every time a new contract starts can prove challenging to some.
 
There is also greater pressure on contractors to hit the ground running and start contributing right from the outset. In contrast, new recruits in permanent roles may not become really productive for three to six months.
 
The perceived lack of financial stability can also prove difficult. Contractors don’t benefit from paid holidays and other corporate perks such as medical insurance and pensions, although their much higher net income more than compensates for these benefits.
 
Many candidates welcome the prospect of being less involved in office politics and the constant pressure to progress their career, and this is certainly a benefit of being a contractor. “Contractors can focus on what they are best at, rather than be distracted by the pressures of chasing promotion and advancement. There is no pressure from managers apart from delivering what we have been contracted to deliver” the contractor also stressed.

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