When IT contractors should quit

It's not often in the last few years that IT contractors, the UK's best-paid IT staff, have been forced to seriously consider whether to ditch their contracts for services.

Even if contractors could bring themselves to ponder 'resignation' – a process more befitting permanent staff, the smell of other contracts over the hill would make it a quick decision.

But these are changing times: still reeling this month from the credit crunch, six City banks told IT contractors to choose between pay cuts of up to 11% or immediate termination.

In a separate but high-profile aside that followed, a bullish shadow home secretary, David Davis, demonstrated it was right to stand by your principles at work by taking the rare decision to quit as an MP.

Despite one IT contractor sounding like the Tory MP by going on the offensive, saying the decision of his client, RBS, to cut his pay was "appalling," he declined a speedy exit from the bank.

"I disagree entirely with the contractor...who states that RBS's approach is 'truly appalling'," blasted Steve Pragnell, a practicing IT consultant with 15 years' IT contracting under his belt.

"The fact is RBS exists to make money, times are hard and the inevitable cost cutting is taking place. If such an attitude is detected on-site, it is entirely feasible that the contractor will not be offered back".

Rather than quitting when the IT jobs market is "truly awful," he said contractors should use pay cuts as a chip to bargain for recompense for future cuts or better terms and work.

"Contractors have to accept that rate is our primary weapon in the bad times," said Mr Pragnell, who is the managing director of PM3, an IT project manager supplier.

"Domain experience is extremely important, qualifications add a little weight but ultimately the first criterion clients are judging CVs by right now, is rate.

"This is a simple case of supply and demand. The successful contractors that retain work throughout this downturn will be those that are flexible and willing to accept that even a 25% rate reduction is preferable to sitting at home waiting for the phone to ring."

But other areas of their work, other than the headline rate, which pre-credit crunch surveys have shown is a lesser priority, are causing contractors to consider their positions.

"The most common reason for quitting a contract is probably late payment," said John Kell, a policy officer at the Professional Contractors Group.

"The key message is not to let a late payment slide - when that becomes a matter for walking out is, however, down to the individual contractor."

The problem of delayed payment is now so prolific that the PCG has issued fresh guidance on what to do if an agency or client is late paying or has become insolvent .

Besides pay, concerns about unfair or restrictive clauses and worries about the MSC and IR35 tax laws are factors that typically motivate contractors to refuse a contract.

"[But] I've never heard any great concern expressed by contractors about those [a client's global development and corporate ethics]," Mr Kell added.

"As for when contractors should consider quitting, that's a commercial consideration and really depends on personal circumstances."

Personal circumstances were the most important criterion for William Knight, a monthly columnist for CUK, who was forced to consider pulling out of his former job as a contract software developer.

"In 18 years as an IT contractor I never had cause to quit a contract mid-term. That's not to say there weren't times when I considered it," he said.

"In one contract [I had] 'a perfect storm' of personal tragedy - my seven-year-old nephew died and then my father followed soon after- and stressful working conditions-… led me to consider leaving. Yet I still stuck it out, and eventually conditions improved."

If a situation is becoming too stressful, sooner rather than later the contractor needs to decide to quit or stay; though making the right choice is not easy, said Derrick Cameron, the managing director of IT-business consultancy Eximium Ltd .

"When I worked as a freelance IT consultant, I was less inclined to walk away from a project just because I didn't like it.

"I always felt that reputation was everything, and didn't want to burn any bridges, upset my customer or create the wrong impression amongst colleagues," he said.

"Of course, the crux of the matter is that if you don't truly believe in what you're doing, you may actually be sacrificing quality of service and creating a poor impression."

For most IT contractors, Cameron said their quandary is whether to fulfil their contract and "go along with things as they are", or listen to their instincts, speak out and potentially vote with their feet.

"The act of resigning itself can be a positive move, acting as a proactive force and a catalyst for change," he said.

"It may even force a change of direction from management. On the other hand, are you simply taking the easy way out rather than making the effort to effect change from within?"

Having weighed up the pros and cons of quitting, Cameron believes all IT contractors should pose themselves five key questions before deciding either way.

1. Does the situation compromise either your core values or your belief system?

2. How bad is it really going to be if you just put up with what's going on?

3. If you walk away, what are the implications for colleagues and the project itself?

4. Does being involved in the project cause you more grief than leaving it?

5. Is resigning defensible – and can you justify it to future customers or employers as doing the right thing?

But as Mr Davis is finding out, particularly from some of his critics, 'doing the right thing' isn't always easy, not least because it normally involves personal and professional sacrifices.

"However, the ability to feel pride and satisfaction in what you do is an important part of any job – whatever role you may have," Mr Cameron countered.

"For me, the message is clear: if you aim to stay true to your professional and personal principles, sometimes you have to take the more difficult path - and challenge the status quo."

But sometimes, like when the jobs market is not afloat with opportunities, it may be just as advisable to sit out the fight and see out the contract.

"The joy of IT contracting is that bad contracts come to an end, usually after just three or six months, and you are free to leave without terminating the contract or soiling your reputation," said Mr Knight.

"I would recommend not signing up to more than three months at a time if the client is questionable, and your conduct as a professional should mean the trivial personal and political worries that plague 'permie' jobs do not unduly affect your mental health. Always remember your contract has an end date. You are not permanent!"