As we're going through this off-shoring trend, our jobs are getting less and less secure. If you're a contractor/software engineer, you may be analyzing your long-term career options. Perhaps you've decided to fight this trend by writing letters to the government. Perhaps you've looked into working for local contract firms that don't have an off-shoring practice. Perhaps you've decided to be one of those engineers that are going to support off-shoring by being one of the “local“ people on an off-shored team (good luck BTW).
I want to try to relate some of my experiences with another option: Being a self-employed independent contractor. Chances are you've considered becoming an independent contractor and working for your own company. Chances are you've wondered if it's possible to do this with a client you are already working with current company.
Welcome to Going Direct 101. By going direct, I'm referring to working as a contractor for an existing client directly, bypassing your placement company. This is admittedly hard to do and has some thorny issues, but also has some great rewards.
I should mention that I'm not advocating that anyone attempt to go direct. Doing so should be a decision that you make with your family, professional advisers, and possibly a good lawyer. I have looked for other sources that discuss the whole issue and I really couldn't find any. In fact, at least in the US, the subject is largely taboo. You won't find people talking about it in the open, but that may be and should be changing. Think about it this way: If what we do has been commoditized to such an extent that it can be sent overseas, we should have the right to trade our skills on the free market.
So, I thought I'd offer up some advice. Now I'm not a lawyer, so take everything you read here knowing that I'm really no expert. However, I have gone direct with a client and know people who have done so multiple times. So for what it's worth, I thought I'd give some pointers for anyone interested.
Going direct isn't for everyone. First of all, if you're a full-time employee of your placement company you should stop reading this right now. Full-time employees usually have a non-compete clause in their employment agreement legally prohibiting a going direct to a client. Ethical reasons also come into play when you're full-time. Being full-time implies a two-way commitment between you and your employer that often supersedes going direct.
If you have moral and or ethical problems with any of this, then it's not for you. This should not be read as a general advocation of everyone “cutting out the middleman.” What I am trying to get across is that it is legal, and often perfectly fair. It all depends on the situation at hand.
So, is this possible for you? Can you offshore-proof yourself by being self-employed? If you can answer yes to the following questions it may be more than possible, it may be relatively easy.
1) Does the client you are looking to go direct with think highly of you and your work?
For an client organization to go through this process, they've got to be willing to go through some uncomfortable discussions with your placement company. To do this, they've got to see you as a unique and hard to find resource.
2) Is the client free to hire any contracting company?
Often a client will only be able to hire from a select few “preferred vendor“ consulting firms. If this is true, forget it unless you want to work for one of the other preferred companies. In order to be independent, you're going to have to set up a C-corp, LLC or use a pass-through company. You'll never get your company on the client's preferred vendor list.
3) Is your client willing to shake up the water with your placement company?
This is key. You've got to have the support of your client manager 100%. Is the president of your placement companies buddies with the client's CEO? If so, they may value their relationship over and above anything you would want to do.
4) Can the client manager make big decisions?
You need to find out if your client manager can get contracts signed. If you're working for someone lower on the totem pole, chances are they'll have to go up the chain to get something signed. The more people that get involved, the more chance there is for something to go wrong.
5) Have you checked your employment agreement to make sure there are no prohibitions?
Hopefully you still have a signed copy of your latest employment agreement. Often placement companies update their boilerplate agreements, so key is having the exact copy you signed. Have a lawyer look it over.
6) Does your client have a contract with your placement company that prohibits them from hiring you direct?
Chances are, they have a non-solicitation clause specifying a finder's fee for hiring direct. This may only apply to them hiring you full-time and it can be overcome in two ways. 1) There's usually a pay off amount finder's fee that the client may have to pay to the placement company. A typical range would be $15,000 to a max of 1/2 the employees salary. 2) If the company has multiple people placed at the client, they may agree to such a flip without the payoff, just to keep from rocking the waters.
6) Are you willing to look for another job if the deal goes south?
This has to be the most important question you ask yourself. If you're confident in your job finding abilities, no worry here.
7) Do you have a plan for lining up your next contract if the deal works out and your contract ends?
As you know, contract jobs can be short-term. Are you willing to beat the pavement looking for a new client to go direct with? Do you think you'll be able to? Remember they'll be no existing client next time!
If you answered YES to all these questions, you should, with the right finesse, be able to go direct. Stay tuned for Part 2 : Getting Your Ducks in a Row
Brendan