Can freelancing in IT damage my technology career?

I’ve spoken with aspiring technology contractors who have been concerned that making the move from permanent employment to freelancing in IT could have a negative impact on their career prospects overall.

To the veteran, independent computer consultant, probably nothing could be farther from the truth, writes Matt Collingwood, managing director of IT recruitment agency VIQU.

IT freelancing provides fantastic opportunities. But…

And we tend to agree -- freelancing in the UK’s information technology industry can certainly provide some fantastic opportunities.

But yes, freelancing in IT can have its drawbacks and to sympathise with those wondering if they’re mad to feel ‘going it alone’ could damage their prospects, let’s explore how freelancing could -- COULD -- hinder your successful career as a technologist.

What does a successful technology career look like to you?

First things first, however. We need to start by considering what we mean by a ‘successful career.’

For many technology candidates we place, a successful career likely means:

• Fruitful earnings

• Increased responsibility

• Good career growth

• Getting into leadership positions

• Making an impact / difference

• Having the flexibility to do what you want

• Having stability and security for you and your family 

So my recommendation? Think about what truly matters to you, and then assess how the potential snags of IT freelancing, outlined below, and the potential benefits of IT freelancing, outlined by us next week on Free-Work, apply to your circumstances. And to your ambitions.

Four ways IT freelancing could hinder your tech career

1. Limited financial stability

 You might think that IT freelancers have huge earning potential. And that’s pretty much the case, for the majority we know.

However, the reality is you’re not going to achieve 100% utilisation -- you won’t invoice for EVERY single working day of the year.

If you get sick, you won’t get paid. You can’t invoice between assignments. And if the market gets volatile, or it’s a quiet time of year, temporary tech opportunities suitable for you could become few and far between.

Additionally, you have to take into account the time it takes to bid for work; to go forward for contracts, and/or to talk with us agencies. Then you must factor-in the day-to-day tasks of running a business (assuming you set up for IT freelancing as a limited company). So that means administration, invoices, director responsibilities. All such activities, while crucial, take time, and the hours incurred are non-billable.

You also need to consider that if you’re operate through your own PSC as an IT freelancer, you’ll be paying corporation tax (at 25%), dividend tax, employer’s national insurance and other associated costs. Yes, you can claim some expenses as a limited company tech freelancer and yes, you can appoint an accountant to assist you (another cost to bear). But you also won’t have access to staff benefits – so no paid holiday leave, nor any employer-provided pension scheme, for example.

In short, if you’re the sole income provider for your family, or you have a very high mortgage, my recommendation is that you think very carefully about whether freelancing as a techie is right for you -- at this stage. If you’re insistent on going it alone in such circumstances, then consider your financial planning extremely carefully.

2. Lack of organisational responsibility/career growth

Opportunities to expand skillsets and leadership opportunities are often given to permanent members of staff. This is because the employer wants to invest in them, in the hope they will stay with the business long term.

By contrast, freelancers are used for their skillset and then they leave. Therefore, if your career is mentally framed around you being on that upward trajectory -- into leadership and management, freelancing might not be best for you.

3. Lack of credibility can damage your reputation

 Freelancing can be damaging if you do it too early on in your career!

I’ve spoken to freelancers that have regretted making the move prematurely, acknowledging that they hadn’t grown a strong enough knowledge-base to secure the higher value contracts, freelancing gigs and clients that they were hoping to land.

If you ‘go it alone’ too early without enough 9-to-5 experience, you won’t have had a sufficient amount of time to establish your skillset; develop industry knowledge or refine your skills into a specialism. Go into freelancing as a ‘jack of all trades and master of none’ and you run the risk of clients thinking you’re not qualified or niche enough to support them. That reaction could damage your credibility.

Additionally remember, being an IT freelancer often means that you’ll be running your own business. You might be the best software engineer in the world, but if you can’t juggle your work with the day-to-day aspects of running a commercial business, you could damage your reputation.

For instance, if you fail to send out invoices to your clients for months after you completed the work, you could rub them up the wrong way, and risk them choosing not to work with you again.

4. Yo-yoing between tech perm and tech freelancing

Some freelancers choose to jump between permanent work and freelancing gigs when the technology market’s conditions aren’t as good. Sometimes the IR35 status of an IT role also incentives techies to operate as a limited company (for outside IR35 roles) or as an umbrella company (for inside IR35 roles).

However be aware -- moving in and out of freelancing can cause some businesses to have reservations.

From a permanent staff-focussed employer’s point of view, if they see from your CV that you only work in permanent roles for a year maximum -- before taking a freelance IT contract, and then going back and forth again, it can signal you’re not going to stick around, long term.

Likewise, from the standpoint of a business that utilises freelancers, the engager might be sceptical regarding your ongoing availability. They might doubt your ability to help them when needed. If you’re constantly going in and out of different types of employment, it can be off-putting to a client who wants an IT freelancer to see the project or programme through.

The adage “If you want to look to the future, look to the past” rings true here.

Of course, there’s nothing wrong deciding one type of work isn’t right for you at a certain moment in time. And choosing to do something else, is fine too. But I would highlight the reason for this on your CV to avoid employers -- or engagers -- getting the wrong end of the stick.

Last tip: ask as you evolve as a techie; is full-timing or freelancing right for me, right now?

In conclusion, freelancing in the UK IT industry can be a great option for many individuals, but it all depends on your individual situation and what you want from your career.

Of course, your outlook probably won’t remain exactly the same throughout your professional time as a technologist! Life events could change your situation and how you view freelancing which, like many things that are rewarding, comes with some risks. So whether you’re a techie whose currently a permanent employee, or a freelancer, it’s important to reassess your situation throughout your working life, as what’s wrong for you today might be right for you tomorrow.