What’s Best for a Software Engineer: Contract or Permanent?

Advice to Help You Decide Your Next Career Move

Many software engineers have the career goal of working in contract jobs. Certainly, the money that you could earn as a contractor is attractive. And you should have greater flexibility to arrange your work around life, rather than your life around work. However, contract work is not best for all software engineering professionals.

In this article, we examine the difference between contract and permanent jobs. This will help you decide which is best for your life and career objectives today.

What Is the Difference Between Contract Work and Permanent Work?

Contract work is time limited. Often, you’ll be hired to work on specific projects. Contract periods are typically three, six or 12 months. Companies hire contractors to fill skills gaps they have, cover leave, to work on specific projects where short-term specialization is needed, or to help upskill existing staff.

As a permanent worker, your job is full-time with a fixed salary. Your tax and other deductions are taken from your salary before you receive it.

The Pros and Cons of Contract Work

The major draw to contracting is the money that you can earn. Because the company you work for does not have the legal obligation to provide benefits such as health insurance and pension provisions, nor are they responsible for your tax an unemployment insurance, they can (and do) pay contractors higher hourly wages.

You’ll also be your own boss, with flexibility between contracts and a better work/life balance. However, when one contract ends there is no guarantee that you will walk into another. Additionally, in poor economic conditions, employers often lay off their contract staff first.

Here is a summary of the main pros and cons of contract work:

Pros of Contract Work Cons of Contract Work
Larger salary Your job security is not guaranteed
You are your own boss No employer benefits such as health and pension
You have flexibility between contracts There’s no career ladder to measure your progress
Your skills are appreciated Administration of paperwork (and tax) is your responsibility
You can benefit from a wide variety of work (and so will your resume) No guarantee of work
Better work/life balance You must market yourself
You stay out of office politics You are easier to lay off


The Pros and Cons of Permanent Work

Job security and employer-provided benefits are the two major advantages of permanent work. Your employer will also pay for your training. You won’t need to market your skills (unless you want to change jobs).

While the opportunity to progress will provide a measure of success, career progression is not always assured – especially if there are few internal promotion opportunities.

In exchange for the benefits of permanent work, you will forego the higher earning potential of contract work, flexibility, and choice of work, and are likely to be drawn into the game of office politics.

Here is a summary of the main pros and cons of contract work:

Pros of Permanent Work Cons of Permanent Work
Job security Lower earnings potential
Regular salary No choice of the work you do
Employer benefits such as health and pension You may get paid leave, but it is limited by your employer
A defined career path Personality clashes and office politics
Training and development opportunities You must conform to your employer’s work hours
Lenders prefer permanent workers Your salary increases are determined by your employer
Employment protection Your skills may not be fully appreciated, and you may not do work that most appeals to you


How Do You Decide Between Contract and Permanent Work?

Before deciding whether contract or permanent work is the right course for your career as a software engineer, you should take time to assess your current needs and your future goals. Consider what quality of life you want today, your longer-term life goals, and how you could best achieve these objectives.

As a contractor, you could set up as your own or operate through an agency that offers contracting and consulting services. If you choose the former option, you will have the added responsibility of marketing your services and the additional paperwork requirements. If you work as a contractor or consultant through an agency, you benefit from many of the advantages of contract work and some of the advantages of permanent work – such as ‘employer’ benefits and 401(K) provisions.

If you are at the stage of your career where you are undecided as to your next move, contact Irvine Technology Corporation today. We’ll help you with your perspective, and can introduce you to some of the best permanent and contract roles available in software engineering.