The state of the IT contractor job market in 2017

Trends toward higher pay and demand for specialized skills continue apace, creating opportunities for contractors across the industry.

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In 2017, strong demand for IT talent will continue in several roles and industries. Understanding how to wring business value from vast stores of data, knowing how to protect that data from increasingly sophisticated threats and navigating the murky waters of freelancing will characterize the tech job market.

Searching for pins in the data haystack

Low-cost sensors and digital storage have made it easier than ever to accumulate and store data. But is that data adding any business value? That’s where data scientists and business intelligence analysts come into play. “Recently, I’ve seen high demand for individual contributor contractor roles for professionals specialized in ERP and business intelligence,” says Keeran Persaud, senior fulfillment manager at CDI Global Staffing Services. In terms of specific technologies, Cognos and SAS are seeing increased demand. The potential to reduce expenses or gain new customers with better data continues to drive demand.

Cybersecurity commands premium rates

Demand for cybersecurity talent continues to favor IT professionals with these skills. According to a Center for Strategic and International Studies report titled “Hacking The Skills Shortage,” cybersecurity positions pay almost 10 percent more than other IT jobs in the U.S. The center’s research across several countries found several skills in particularly high demand: intrusion detection, secure software development and attack mitigation. Based on a survey of IT decision makers in the U.S. and other countries, inadequate government action on cybersecurity was a concern. In the survey, 76 percent of respondents said their government is not investing enough in developing cybersecurity talent.

Faced with continued high demand for cybersecurity talent, companies are experimenting with new ways to engage cybersecurity specialists. In late 2016, Qualcomm announced that it will pay up to $15,000 to cybersecurity “bounty hunters” (read: independent contractors) who detect problems in the company’s products, which include semiconductors and cellular modems.

Consider contractor marketplaces

Marketplaces for talent continue to become more popular in the corporate world. Comprehensive platforms such as Upwork facilitate payments, ratings and project management tasks such as setting milestones. “My business focuses mainly on ecommerce development on the Magneto platform with occasional Wordpress development,” says Stephen Kidwell, a contractor based in Cleveland, OH who has freelanced full-time via Upwork since 2013. With over $250,000 in revenue in 2016, Kidwell has kept busy.

“My typical project is three-six months in duration; I tend to avoid projects less than a month long,” he added. “Compared to a few years ago, I find that clients on Upwork are more and more willing to commit to end-to-end development projects today compared to smaller projects,” Kidwell says. Prior to starting his business, Kidwell held a full-time management role in the ecommerce field. Kidwell originally started his business on a part-time basis. After working part-time for about a year, he made the transition to a full-time business.

Industry spotlight: Healthcare IT

Several long-term trends support high demand for talent in the healthcare sector, starting with the aging U.S population that will demand greater healthcare services. Consulting firm PwC estimates that 2017 medical costs will grow at a rate of 6.5 percent, similar to 2016’s growth rate — far above the Federal Reserve’s two percent inflation rate estimate for 2017. Governments, employers and insurers are aware of this trend and the potential to deliver improved care at lower costs with technology. In particular, increased use of sensors, data and delivery services may reduce the need for visiting clinics and hospitals for extended stays.

“The overall healthcare IT job market has high demand in system optimization, data and security roles according to our research,” says Robyn Melhuish, communications manager at HealthITJobs.com, a job search website. Professionals that report holding multiple certifications tend to earn higher incomes, according to the company’s 2016 Healthcare Information Technology Salary Report In particularly high demand are Epic certifications, which signal proficiency with the company’s electronic health records (EHR) software.

Aspiring contractors and freelancers will find opportunity in the healthcare IT industry. Independent contractors (“1099s” for tax purposes) in healthcare IT reported earning an average income over $108,000. In contrast, traditional employees reported an average income of approximately $92,000. (Although it should be noted that once taxes and business expenses are considered, that pay gap may disappear.) Alternatively, consider taking on a full-time role at a consulting company. Consulting jobs reported the highest pay in the HealthITJobs.com survey.

Challenges for new contractors

In today’s hot job market, the promise of higher pay and technical skill growth are compelling many individuals to consider leaving full-time jobs behind and moving to contractor roles. Before making the leap, however, you’ll need to think through the expenses and risks you will take on.

“New contractors need to remember that they are in business for themselves. That means addressing risks and responsibilities that don’t apply to employees. For example, many clients expect their contractors to hold general liability insurance. Contractors also need to plan for their own benefits and plan for vacations,” says John Lewis, managing director at CDI Talent & Technology Solutions. In developing your pricing, keep in mind the cost of such overhead expenses. In the corporate environment, fringe benefits often cost 25 percent or more of salary (e.g., a person with a $100,000 salary may have benefits costing the company over $25,000).

Scope management and pricing are typical challenges for IT contractors. “I prefer to use an hourly pricing approach for my work with clients because it is a good way to handle unclear scope,” says Ron Zvagelsky, a Los Angelesbased freelance Wordpress developer. “On Upwork, I have done plenty of projects as a subcontractor for agencies who have been a great source for repeat business,” he added. As of late 2016, Zvagelsky priced his services at approximately $75 per hour, an increase from the $50 per hour when he started on the platform several years ago. 

This story, "The state of the IT contractor job market in 2017" was originally published by CIO.

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