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IT industry relying more on contractors

When Gordon Davis calls himself "a pirate in the sea of capitalism," he's not talking about plundering trade secrets. He's an information technology contractor, charting his own course in search of gold.

Changes in the way companies do business _ looking to outside talent to tackle IT projects _ create work for independent contractors such as Davis. As a result, more IT professionals are learning the ins and outs of contracting.

At CareerConnection, a Dallas support group for job seekers, Lisa Miller fields inquiries from companies seeking IT professionals. At least 70 to 80 percent of those job inquiries are for contract positions, she said.

Miller calls the contractor arrangement a "dating game" in which both company and worker are spared commitment.

She understands the value of using temporary workers for seasonal employment, she said, but IT pros are not like summer lifeguards. For starters, they work on longer projects; some contracts last for years.

Veteran contractors such as Davis say they don't get attached to the projects or to the companies.

While working on a three-year contract at Micrografx Inc., he went in every day as if it could be his last. "I did the best job I could, but in the back of my mind I knew if they told me today was my last day, I would walk out with no disappointment."

Compensation is one difference. As an hourly worker at Micrografx, Davis was paid for overtime, which made the position more lucrative for him than for some salaried employees, he said. But he had no benefits. Vacation and holiday pay, as well as sick leave, are virtually nonexistent for contractors.

In a contract position for the Federal Reserve Bank, he did receive medical benefits. The project lasted one year but was supposed to be longer, illustrating another vagary of being a contractor, he said.

Just as they withhold loyalty to a company, contractors also jump from one placement agency to another as standard practice.

Davis advises contractors to stay in contact with "a dozen or more" placement agencies, because when the assignment is over, there's no promise of another one waiting.

And save money for contingencies, he said. "You have to see yourself as a small-business owner. Sometimes you're going to be living on the edge. A lot of people aren't prepared to do that."

He networks "voraciously," a requirement for any successful contractor, he said. Reading job boards alone won't get you the job, he insists.

John Dyer, a software developer, has been working as a contractor for most of his career, "long before it was fashionable."

"The only difference between an employee and a contractor is loyalty to the company," he said. "As a contractor, you have a loyalty to yourself first, to your profession second and to the employer third."

Some assignments are clearly advertised as "contract for hire," meaning the company can try out a worker before deciding whether to make an offer. One of Dyer's six-month contracts turned into five years as an employee. Either side can walk away at the end of the contract, though.

Companies use brokers to find temporary workers for several reasons, but efficiency and legal concerns top the list.

Hiring managers would rather deal with a small number of contracting agencies than sift through several thousand resumes. Also, the Fixed-Term Work Act of 2003 requires companies to treat fixed-term workers equally with permanent employees in terms of pay, pensions, benefits and other considerations. Temporary agency workers are exempt under the federal act.

To find contract jobs, Dyer studies job boards. Sometimes the placement agency won't want to divulge the name of its client, but Dyer is particular about where he works. "They are obliged to tell you where they are sending your resume," he said.

If the company's hiring manager likes his resume, he goes for an interview. If selected, the company signs a contract with the placement agency, which in turn signs a contract with him.

Contract placement agencies may hire the worker directly, issuing paychecks and taking care of tax and Social Security withholding. Other companies pay contractors as if they are self-employed, using a 1099 form, leaving the worker to pay estimated taxes and Social Security.