Why accepting contract work from an IT staffing firm is risky

IT workers who’ve recently been laid off are lining up at staffing agencies in search of temporary and contract IT work that will provide them with a paycheck as they look for full-time, “permanent” IT jobs.

Spokespeople for Technisource and Robert Half Technology report a sizeable increase in inquiries from IT workers over the past three months. They say that unemployed IT professionals and tech workers who are concerned about their job security concerned about their job security look to staffing agencies for leads on jobs and to help market themselves to prospective employers.

IT professionals agree that working for a staffing firm can be an effective way to connect with employers, to broaden their skills and gain new experiences working in different environments. Contract work may seem like a stop-gap for tech workers who’ve been laid off, while they figure out what to do next.

But working for a staffing firm has serious downsides, too, they say-including drawbacks that down-on-their-luck IT professionals may not consider, to their disadvantage.

For example, working for a staffing firm isn’t always a quick financial fix: It can take staffing firms a long time to find appropriate work for their contractors (especially in this economy), and IT professionals may not get paid by the firm when they’re “on the bench” between client engagements.

Moreover, IT professionals who work for staffing agencies may not get a lot-or any-benefits, and whatever benefits they do receive may be docked from their hourly rates. Hired guns can also easily be taken advantage of by less reputable staffing firms and their clients.

“You have to be very, very careful when working with recruiters and staffing firms,” says Walter Poe, an SAP systems engineer for The Timken Co., who’s gotten temporary and contract work through staffing firms in the past.

“Some recruiting companies are more interested in quantity than quality. That’s what you have to be looking for. You want a firm that invests in you, that trains you and builds your knowledge because that makes the staffing firm look good.”

What follows is advice from seasoned IT professionals who’ve worked with staffing and consulting firms on what to watch out for and how to avoid difficult situations.

Temping isn’t always a quick fix.

When Marty Reymer moved to Phoenix, Ariz. from the east coast in the summer of 2005, he contacted several IT recruiting companies to find a job. Nearly two years passed before one of the recruiting companies found a contract position for him, he says.

“I was looking for a network/systems administration position, and they found me a PC support position,” he says. He took the job even though he was over-qualified because he needed the money and because the recruiter was willing to pay more than the market rate of $10- to $15 per hour. (He got $20/hour.)

When the client terminated Reymer’s contract just before Thanksgiving 2007, he says the recruiting firm, which he declined to name, did “very little” to place him in a new job.

Reymer is currently working on a three-month, contract-to-hire opportunity with a company outside of Arizona, doing network/systems administration research and development from home.

The staffing firm may over-sell you to a client.

Just as Reymer was put on a contract for which he says he was over-qualified, some IT staffing firms place IT professionals on contracts for which they’re not qualified just to get someone on a job-so that the staffing agency can start billing the client.

“You may be put in a position with a company that you’re not really comfortable with,” says John Bojonny, business continuity planning officer for AIG Advisor Group. (Bojonny obtained contract work through IT staffing firm Comsys in the late 1980s.) “It’s not commonplace, but it has happened where the contracting firm wants to make money, so they’ll stretch your abilities and tell the client you can do the work they need.”

That could turn out to be a no-win situation for the IT pro who gets caught in the middle. On one hand, if the IT professional calls the staffing firm to ask to be taken off the contract, the staffing firm will not want to tell the client that it has to find a replacement because it oversold the contractor’s abilities. So the agency might place the rap on the IT worker, says Bojonny, which doesn’t endear the IT worker to the client.

“This doesn’t happen often, but the staffing firm will protect their reputation and say the heck with you. They may tell the client you wanted to leave the contract,” says Bojonny.

On the other hand, if the IT professional decides to stay on the job even though it’s a struggle, the client may realize the contractor doesn’t have the right skills and may ask the staffing firm for a replacement anyway. The end result is that the contractor may be out of work yet again.

The staffing firm may spread you thin.

Bojonny says if an IT staffing firm bids you out to different clients while you’re working on an engagement, the firm may take you off your existing project to put you on a higher paying one for a different client.

The staffing firm has to invent a reason why they need to take you off your existing client’s project. And, as in the previous situation, they may put the blame on the contractor. For example, they might tell the client that you wanted to work on a different engagement, instead of admitting they’re switching your position to make more money.

The client might also try to spread you thin. Contractors may be required to work extra hours or weekends, says Bojonny. For that reason, he says, IT professionals looking for work through staffing agencies should ask if the contract assignment requires weekends or overtime before they accept the assignment.

If the answer is no, get it in writing. And build in a contingency and pay rate for situations where the staffing firm-or more likely the client-changes their mind.

Contract work isn’t always flexible.

Many IT professionals seek contract and temporary work because they think it gives them flexibility. Sure, they can decline engagements that they don’t think are right for them, but if they’re desperate for work, they may take anything.

Once they start an assignment, it can be hard to get out of it if they don’t like it.

“When you get an engagement, you have to stick with that engagement, especially if you’ve been out of work for a long time,” says The Temkin Co.’s SAP Engineer Walter Poe.

If an IT professional needs to get out of a contracting engagement, there’s a right way to go about it, says Bojonny. He recommends being specific about the reason you want to leave the engagement. “You can’t just say because you don’t like it, because the contracting firm will tell you that you knew what the engagement was,” he says.

He also recommends asking the staffing firm to line up someone to replace you on your existing contract before you leave as well as find a new contract for you. “Don’t just walk away, because then that contracting firm won’t hire you, and word will get around that you don’t stick out your contracts,” he adds. Then you may not get placed anywhere.

You can be cut loose at any time.

While IT professionals might not have as much flexibility as a contractor, the clients for which they work have a lot of flexibility: They can tell you to take a hike at any time. After all, that’s why they look to contractors when they need to scale their in-house IT staffs up or down, especially when the economy is bad.

“What everybody has to remember is that if a company brings you in as a contractor, you can leave just as fast as you came in. Most companies can kick contractors out that day,” says Poe. “I’ve seen that happen to a lot of my friends.”

Rommel Pangan, an SAP business intelligence expert, experienced being laid off from a consulting firm last month. He had finished a project for one of his employer’s clients in September, and he was “on the bench” waiting for a new assignment.

After warming the bench for six weeks, his employer told him that it couldn’t assign new projects to him. “Because of the economic situation, they couldn’t afford me anymore. They had to let me go,” he says.

Pangan is currently looking for more stable employment.

Benefits are scarce.

Experienced IT professionals who are used to a steady paycheck and good benefits may be shocked by how little they get from staffing agencies.

“Be aware that you are going to be paying or covering your own expenses, like medical and leave,” says Bojonny. “Most people forget about that, because it seems like a lot of money.”

Some contracting firms will pay for or cover your benefits, he says. But they’ll do so by, for example, putting a portion of your hourly rate toward your benefits. That’s why it’s important to understand what the staffing firm includes and what expenses you have to cover when you’re looking over a contract, says Bojonny.

Other contracting firms make Silas Marner look generous. When Pangan worked for staff augmentation firm Z3 Technologies, he had just five vacation days each year. If a client he was working for was closed for a holiday, Z3 docked him a vacation day since he didn’t work, even though not working wasn’t his choice. He only got paid when he was actively working on a client engagement. He didn’t get paid when he was on the bench.

Flexibility is Key

To be successful working for an IT staffing firm (read: to get lots of gigs and make lots of money), IT professionals need to be ready to accept different assignments and working conditions, and they need to put the client first, says Bojonny.

“As long as you are very competent in what you’re doing, only take on the jobs that you can do and provide great service, contracting firms will want to keep you on their payroll because they’ll make money off of you,” he says.

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Jim Love, Chief Content Officer, IT World Canada

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