Renewing your IT Contract

All contracts have a start date and an end date. As contracts near their end it is sometimes common for clients to approach a contractor with the proposition of extending, especially as there is often a shortage of specialist skills in the UK and plenty of

If a contractor decides to extend their contract then an opportunity will arise to renegotiate both terms and potentially higher rates.

Renewal Considerations

• A contract renewal for any contractor is very important when applying for new jobs. A renewal on a CV demonstrates that not only do you have staying power but more importantly you were valued by your last client
• Salaries and daily rates vary year on year according to market demand. Websites such as www.jobstats.co.uk will give you a good idea as to your worth and can be used in contract negotiations
• If you find that the market has fallen since the start of your new or renewed contract then asking the client for a rate rise is likely to be unsuccessful. If however the market rate has risen then there is a strong chance that a client will amend the terms of the contract in conjunction to your new requirements (within reason of course!)
• If you are currently inside the IR35 then renegotiate your contract terms to get yourself outside of IR35. This will probably result in giving you a better net return. This can be more financially rewarding then negotiating a small rate rise.

Negotiation Advice

The purpose of negotiating, whether it is for the price of a house or for the renewal of a contract, is to maximise your return. The strength of your negotiations and chance of success is dependent upon your bargaining position and your sales skills.

In an ideal situation your strongest bargaining tool would be to have another contract already lined up. Unfortunately this is not always the case. If you have not got another contract to go to and you feel that your current client is unlikely to agree to your revised terms then it is best not to make an irrational decision. By calculating the cost of downtime if you leave and have nothing to go to, you might find that the cost of the sale is more then the rate rise you were looking for.

When renewing your IT contract keeping your cards close to your chest is advisable when negotiating terms. If you are happy to stay with the client for the same money and terms it is best not to broadcast this fact since the client may have already decided to give you a rise should you agree to extend.

If your negotiations with the client fail to produce the result you were looking for and you decide not to extend the contract, by ensuring a smooth departure it is likely that you will maintain a good relationship with the client. This is very important for gaining good references and a possible source of work for the future.

Always make sure you are prepared for your client negotiation meeting. It is important to have a clear idea of the following in advance:

• What you have already successfully undertaken
• What you can still achieve, ideas for the future and what value you can add
• Length of the contract you desire
• The job market state for your skill
• The daily contract rate you want

When renewing your IT contract it is always worth insisting on a face-to-face meeting. This gives you a good opportunity to receive feedback and to show your value and demonstrate your existing knowledge of the company and job role.

To search for

Contractor UK has guides on dealing with recruiters at renewal time in an article entitled IT contract renewal - what to expect of agents plus guidance on how to negotiate a rate rise.

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