Finding contract work

When network engineer Barry Katzman decided to become a consultant in 1994, cash envy had a lot to do with it. "All these guys used to brag, 'I make twice as much as you do,' " he says.

Katzman didn't get mad; he got even. He asked a friend to put him in touch with a contract recruiter. Before long, "I basically doubled my salary," says the Long Beach, N.Y., independent who specializes in networks for financial-trading floors.

If contract agencies brought him such lucrative work, why did he cut them out of his consulting practice about four years ago? Katzman says it was simple: He didn't need them to get the work, and without the middlemen he could make even more money.

Indeed, a dynamic strategy for choosing channels to obtain contract work - through an agency or via your own professional network - is critical to the business plan of anyone who wants to quit his job and start an independent consulting practice.

For consultants, the primary advantage of contract agencies is that they find work for you. "We start marketing people [for new projects] three months before their contract ends," says Christine Warren, CEO of ITProfiler, a placement firm in West Chester, Pa. So you've got to be honest with yourself and ask, "When was the last time I started planning a career move that far in advance?"

Some believe that agencies also offer a quality advantage. "A lot of the more interesting work will only come through an agency," says Jai Shekhawat, a former contract programmer who is now CEO of Fieldglass, a Chicago company that makes software for managing contingent workers.

Many employers prefer to have a recruiter prequalify candidate contractors. "When we have a candidate dropped in our lap [by an agency], 80% of the work is done," says John Runnels, CTO of WebSite.ws, a domain name registrar in Carlsbad, Calif. For this reason, and to avoid legal exposure, many Fortune 500 companies prefer to hire contractors through agencies, according to Brian Newkirk, vice president of recruiting for Comsys Information Technology Services in Houston.

So why not get all your consulting work through agencies? For one thing, in many arcane niches of network engineering, recruiters just won't appreciate what you have to offer. Many network consultants do work that is "far more specialized than any staffing agency could begin to understand," Shekhawat says.

Are you a "top gun" Unix specialist with a lot of experience in VPN and PKI? Many recruiters will just scan your acronyms into their databases and hope for the best. "I've never used an agency, and I don't know of any network integration agencies in the San Diego area," says Matthew Strebe, owner of consulting firm Netropolis and author of From Serf to Surfer: Becoming a Network Consultant.

But network consultants say the biggest reason to avoid agencies is the bottom line. "The main difference between contractors who find their own clients and those who use a third-party firm is that the rates of the latter group are lower," says Janet Ruhl, owner of the consulting-rates database RealRates.com, and author of The Computer Consultant's Guide: Real-life Strategies for Building a Successful Consulting Career.

Katzman's experience bears this out. He says he might bill a client $170 per hour for a job that would pay him $130 per hour through an agency. Even ITProfiler's Warren acknowledges a contract through a third party paying $70 per hour would probably earn $100 per hour for an independent contractor billing a client directly. If you can keep busy with billable hours - and that's a big if - you've got a whopping incentive to go it alone, even assuming you must buy your own benefits and pay the self-employment tax, as many agencies will force you to do anyway.

If agencies are not a desirable end, they may certainly be a stepping stone toward independence. "You should absolutely be plugged in with some agencies," Shekhawat says. "There is no downside, especially in the early days of your venture, when you need a hedge."

Agencies may come in handy when your own marketing efforts come up dry. "After a certain amount of time has passed, working is always better than sitting on the bench," says RealRates.com's Ruhl. "It is foolish to consider one way of working superior to another."

Katzman concurs. "To get to the point where the referrals just come in, you need to go to these third-party agencies," he says.Even when you work with agencies, "it really boils down to who you know, who you've worked for," Katzman says.

So whether you go it alone or depend heavily on recruiters, you've got to be good at networking.

Rossheim is a freelance writer in Providence, R.I. He can be reached at john@rossheim.com.