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    Power to the Contractor!
The IT worker gets star treatment and more options than ever.

by Michael Nadeau, Andrea Haynes, and Lynn Geiger
Copyright ©2000 Contract Professional Magazine/CPUniverse. All rights reserved. Used by permission.

It's Java instead of RBIs and batting averages. C++ instead of touchdowns and interceptions. SQL instead of Jodie Foster or Tom Cruise. Free agency isn't just for sports and entertainment anymore. IT contractors and consultants are the free agents of the New Economy -- highly skilled and highly sought after -- and the demand for that talent is creating a lot of play in how you can work.

Simply put, if you have high-level skills, you are in control. As the market creates unprecedented demand for your technical agility, you can pretty much name your game if you've got what clients need and possess the soft skills to make them realize it.

To many in the IT staffing and services industry today, you are "the talent," and they are "the agent." Much more than just lip service, it's a reflection of where the contracting workstyle is heading. With more than 850,000 new IT jobs expected to go unfilled in the coming year, IT services firms are scrambling to give you top treatment.

Just consider who's speaking at this fall's annual National Association of Computer Consultant Businesses (NACCB) conference in Miami. A California talent agent, Carl Bressler, is booked to talk to members about the talent-agent relationship. Bressler, president of Montana Artists Agency in Santa Monica, Calif., sees a convergence in thinking, if not lifestyle, between Hollywood and the IT world. "The marketplace has changed. People have gone from feeling lucky to have a job to asking, 'What are you going to do to keep me?'"

The IT services landscape is changing rapidly in response. Don McLaurin, CEO of the NACCB, expects to see a lot of experimentation as firms add services for both contractors and clients. The industry is revolutionizing the way it's doing business as a result of tremendous market forces, says McLaurin. "Our industry has been a fortunate recipient of the 'you don't have to take care of me' attitude," he says, "instead basing success on one's own skills, initiative, and drive."

But as you well know, Uncle Sam is very mindful of "how" you work -- we're talking tax status here -- and this factors in to what services and benefits you can receive. Nonetheless, the demand for highly skilled IT pros is mixing in a lot more flexibility -- to your benefit.

To help you sort out the options in this fast-changing industry, CP staff interviewed numerous IT services firms and eight contractors who represent the range of help you can choose -- from none at all to soup-to-nuts.

Matt Simmonds

First, let's talk about total independence. AS/400 and RPG consultant Matt Simmonds goes it alone. As a Boston-based developer with a finance degree specializing in the financial services arena, he is in demand and doesn't need someone beating the bushes for work. Simmonds has incorporated his own company, Simtech Solutions, and has established the infrastructure to provide benefits and handle administrative functions. "Training is a cost you have to absorb," he says.

A former salaried consultant for Whitman-Hart, Simmonds appreciated the comfort level the job provided, but "the autonomy wasn't there.

"I had to learn the ropes [going independent]," says Simmonds, "but I never looked back." Working independently isn't for everyone, Simmonds believes. "It does take the soft skills," he says.

Dianna Moses

Dianna Moses also likes the idea of being an independent contractor, but doesn't much care for some of the administrative overhead associated with it. As a financial services application developer with more than 10 years' experience, her reputation is such that work tends to come to her. "A staffing firm is a great way to start out," says Moses, but she feels that her income is higher working on her own.

For the past four years, Moses has used MyBizOffice.com (a service of Contractor's Resources, Inc., a subsidiary of The Netplex Group, Inc.), a Web-based firm that provides business management help, such as financial, payroll, insurance, and other services, to independents earning a minimum of $60,000 a year. The cost is 4 percent of the gross billing. "There are 95 to 100 tax law changes a year," says Moses. "That in itself makes it difficult to plan." As an example, she cites the fact that last year she could deduct 100 percent of the cost of computer books. This year, she can deduct only 80 percent.

Although she still has her own accountant, Moses, a W-2 employee of MyBizOffice, relies on the company to handle tasks such as payroll, invoicing, and taxes. The firm is flexible in how it delivers its services. For instance, if she decides to take five months off, she can pay MyBizOffice in advance for health insurance to maintain coverage during that time.

"We provide infrastructure support for contractors looking for a successful professional and personal life," says Gene Zaino, chairman and CEO of The Netplex Group. "We're creating a new industry, and the contractor is the priority."

Tim Sullivan

Contract Web designer Tim Sullivan hated having an accountant do his taxes and dreaded the possibility of an IRS audit. Although a contractor for less than two years, Sullivan was getting plenty of work through personal recommendations; a staffing firm seemed unnecessary. Then by chance he heard about ZeroChaos.com, a Web-based W-2 employer for independents, located in Orlando where he worked.

The services that ZeroChaos.com offered would ease his concerns about taxes, but he was also impressed by the benefits. He pays $175 a month for health benefits and participates in the company's 401(k) program. As a W-2 employee of ZeroChaos, he receives another benefit: greater access to credit. "Banks and creditors like a steady employer of record," says Sullivan.

One worry that Sullivan had about ZeroChaos was that the company was responsible for collecting late payments from clients. "I wanted to be very careful," he says. "I didn't want ZeroChaos to interfere with my client relationships." In the one case where a problem might have arisen, Sullivan worked with ZeroChaos to handle the situation appropriately.

The company offers two service plans to independents. After a setup fee of $125, the charge is $274 a month for an option that covers all administrative paperwork and access to benefits, compared to a back-office-only plan for $139 a month.

The site has a cartoonish look and an irreverent tone -- "Independents: We cover your backs by doing your administrative paperwork, filing your taxes, protecting you with group-rate insurance, and pampering you with raw freedom." Adds John Riley, president and director for ZeroChaos, "We cater to the 1099 professional, without them having to lose their tax efficiency."

These "profit centers" or "business units" from which contractors can manage their business revenues and costs "empower the independent," according to Michael O'Connor, president of Independent Professional Services (IPS), a back-office support organization. At IPS, maintenance costs run 3.5 percent of an individual's gross billing and cap at $4,000. Contractors interested in joining must bill a rate of at least $45 per hour.

As for contractor requests, O'Connor says ease and a fair price for paperwork is the top request, followed by marketing intelligence. "They want to know how we can help them with the market," he explains. "The Internet has taken the human contact out." He anticipates a major backlash against services that "commoditize" contractors.

Establishment of this service for independents, generally known as the "employer of record" concept, served to neutralize the effects of the 1986 Tax Reform Act, or more specifically, Section 1706. Essentially, the legislation took away the federal tax code's "safe haven" for technical services firms, making it a difficult and risk-laden process for businesses to hire independent contractors and prove that they were, in fact, independent.

O'Connor recalls the day he was told he had to become an employee while working as an independent IT pro in New York City following the passage of the legislation. O'Connor responded by launching his "profit center" model, allowing contractors to work independently.

Adding job search services to the mix, at FreeAgent.com contractors can search and bid on available projects, as well as obtain back-office services through its "e-office," according to Wendy Reveri, senior vice president and general manager for FreeAgent. A monthly e-office fee of $274 is assessed after an initial setup charge of $199. You can bank on a regular paycheck and access to benefits that include a 401(k) and four options of health insurers as long as revenue is flowing. FreeAgent will process your business expenses, and not just the ones involved in the assignment you are currently on. IT pros working as 1099s can find work through FreeAgent, but don't have access to e-office services until they change to a W-2 status.

The people who rely on full-service staffing firms to find work tend to fall into one of two categories: they are just starting out as consultants and are looking to build a clientele and a reputation, or they want to focus on their work as much as possible and let someone else do the job hunting. However, other consultants who usually find their own work often turn to staffing firms during dry spells.

Michael Beyer

Michael Beyer runs his own consulting firm, System Dynamics, but turns to The Computer Merchant, Ltd., in Norwell, Mass., in some situations. For example, after recently completing a year-long project in California, Beyer found that some of his contacts at his East Coast clients had moved on. The Computer Merchant found him a project in a week. "[It was] a lot faster than I wanted to go to work," says Beyer.

Beyer also values the network of consultants that he meets through The Computer Merchant, not to mention the new clients he reaches. Some have later asked Beyer to bid on projects. Beyer returns the favor by referring the firm when System Dynamics finds a project that doesn't fit with its capabilities. "The company usually gets the right person [through The Computer Merchant]," he says.

Since 1996, The Computer Merchant has been the only firm that Beyer uses. The company respects his abilities and requirements. "Computer Merchant is one of the few firms where there is no issue of what the rate will be," he says.

Sheila Maguire, director of national accounts, says contractors will find the assignment they want in today's marketplace. There is a lot of competition for qualified talent, Maguire says. "[Contractors] get to choose," she adds, noting that 90 percent of The Computer Merchant's business is contract placement.

The firm's main focus is on relationships -- matching the right candidates with the right opportunities -- although it does offer comprehensive benefits and perks. The rate markup varies depending on the tax status of the contractor, the volume of work done with the client company, and the difficulty of the candidate search. The company works with corp-to-corp and W-2 contractors, but doesn't currently serve 1099-status contractors.

Adds Maguire, "There are a lot of Web-enabled services, and contractors are going to want help muddling through. No way this business is ever going to be commoditized. People are still going to call me seeking personal understanding."

Nelson Johnson

Except for a four-year stint as an employee in the early 1990s, software developer Nelson Johnson has been a consultant since the mid 1980s. He currently is working on a W-2 basis through California-based staffing firm Hall Kinion, which does about 20 percent of its business with independents, including 1099s. "Agencies do all the work: Talk to the client, set up contracts, collect money," says Johnson. "It's a big convenience when coding."

Johnson ran his own incorporated business for six years, but "it wasn't my cup of tea. The business issues interrupted my programming," he says. The decision to change his working status was difficult to make. "It takes honesty with yourself," he says. "Your ego gets involved; you should be in charge."

Working on a 1099 basis had no appeal to Johnson. "You might get paid once a month, or you might not." The amount of time he would have to spend on the phone dealing with potential clients was another turn-off, as he is serious about maximizing his coding time. "It's sort of like being in a cocoon. You can navigate easily as long as you are uninterrupted," he says. "Programmers very often need to have agents getting the next gig."

Representation seemed to offer the best option for Johnson, although he believes his income would be higher as an independent contractor. He's happy with his choice of Hall Kinion. "When I want a rate change, they go to bat for me." He also takes advantage of the firm's 401(k) plan. He's not complaining about pay, either. "We're almost like movie stars; we make almost as much as they do," he says. "I'm having fun."

Hall Kinion supplies the vendors of technology, including Microsoft, Intel, and Hewlett-Packard, not the users, says Rita Hazell, executive vice president, contract services. "Our people are developing technology, not implementing Oracle at Wells Fargo, for instance."

While staffing and services companies are honing their people skills, online job tools are becoming more sophisticated. Tools being developed now will enable a resume to go out on the Internet in search of just the right job, and job postings could also search for the right resume, according to Zaino of The Netplex Group. Online services increasingly are adding the human touch, while the traditional staffing firms are melding the human element of the business with the streamlining capabilities of the Web.

Dick Bramel, vice president of organizational services at the national service center of kforce.com in Tampa, maintains that even though the industry is swinging more toward an online presence, the human touch will always be necessary. Kforce, with a Web site and more than 100 offices, is taking a hybrid approach.

Scott Conley

Consultant Scott Conley believes kforce gives him the best of both worlds: old-school staffing firm and Web-based e-cruiter. In other words, he has a recruiter who "has a rapport with what I can bring to the table and what I'm interested in," and he has the convenience of the Web to browse through opportunity listings.

A contractor since 1997, Conley says he "doesn't want to be troubled with the mechanics of consulting," although he admits that he would probably take home a bigger paycheck by going independent. "I don't have the ability to attract a diverse range of customers," he says. "I'm willing to pay for that."

Conley tried project boards such as Guru.com and "played the field," calling six staffing firms before settling on kforce. "Kforce does an exceptional job of being proactive," says Conley. "I'm confident I'm going to meet my goals." He also praises kforce for paving the way with clients. "Contract work comes with a stigma. The prejudices are subtle, but there. I don't feel any of that [with kforce clients]."

"Traditional staffing is still our bread and butter," says Bramel. "Advocacy best describes what we do." Salaried consultants represent the largest group of kforce's contractor workforce, followed by hourly pros. "More and more permanent-minded folks are open to doing consulting work today, but want the warm fuzzies of W-2 status," says Bramel.

Kforce offers its contractors, who work on a W-2 basis, full benefits and stock options, which Conley takes advantage of. However, they are just "icing on the cake" to him. The relationship and quality of assignments are what keep him loyal to kforce.

Dean Bliss

Network/systems engineer Dean Bliss likes to work through staffing firms with "recruiters and salespeople that take the time to know me and what kinds of assignments I would be interested in." He values good communication: feedback after interviews, ongoing assistance during assignments.

His current assignment is through Kenda, headquartered in Salem, N.H. He has used the firm for three years. He sees Kenda primarily as his marketing department. "I stay focused and apply 110 percent of my abilities to the client's goals during the course of an assignment," he says. "When the end of an assignment is approaching, I do not like to spend time and energy looking for the next opportunity. Marketing myself either cuts into my work time, which the client is paying for, or my personal time."

Earlier this year, Kenda became a client of HireAbility.com, a Web job site for IT contract and permanent pros and recruiters, for its job and resume board. Contractors will be able to conduct "database-like searches" based on criteria including their skills, activities, and location, says Elias Israel, technical project manager for HireAbility. This service, available in October, will enable contractors to maintain their resume and profile, and announce their availability for jobs.

Looking beyond just the next assignment, IT staffing and service companies are owning much more of the consultant's career progression, adds Paul D. Silvio, Kenda's chief operations officer. "Consultants are looking to us as a consultant," Silvio says.

"I enjoy working with Kenda because they know me and represent me so well that I have a sense of security in knowing they will find my next opportunity," Bliss says.

Also important to Bliss are Kenda's resume preparation and review services. "It ensures that my resume effectively represents my achievements," he says. He also takes advantage of the firm's 401(k) program.

Bliss assesses staffing firms based on a few criteria. "The integrity of the agency's personnel is probably the most important asset," he says. "After that it's their communication skills, their patience, and then do they have the client base that suits my skills."

Kelly IT Resources, a business unit of Kelly Services, Inc., emphasizes its "hiring to retiring" services for contractors. Vice President Mike Sheback, Jr., says this philosophy of providing good continuous assignments is an attempt to repair the social contract between employer and employee.

Sheback says Kelly offers consultants alliances with some of the top companies in the world. "A contractor can move from customer to customer with the best assignments in the industry," he says.

Kelly IT offers "everything from payroll to career development training," says Sheback, with the aim being retention of its contractors. The number one desire of contractors is a paycheck that's on time and commensurate with their skills, he says. "They also want to be recognized for what they do and have access to challenging assignments and training,"

In addition to conventional benefits such as training, contractors working through a staffing firm in today's high-demand market may find themselves with a free pizza for dinner, movie tickets, or a weekend trip to Tahoe. Recruiters at Hall Kinion have a budget that allows them "to be creative on the floor" with their high-end talent, says Hazell of her company. Echoing the parallel to the entertainment industry, "We view our contractors as stars, our recruiters as agents," she says. "That's the relationship we have with our contractors."

Hugo Bernier

Hugo Bernier started contracting at age 16 as an object-oriented programmer in Quebec. Now 30, he built a reputation based on word of mouth. When he moved to Toronto early this year, however, no one knew him. He decided to find a staffing firm, but was put off by what he describes as "resume sharks" more interested in filling a job than making a good match.

Eventually, he hooked up with eTalentGroup.com, a staffing firm that uses more of a pure talent agent model. There, Bernier found "somebody who represents you and takes the time to find out about your interests and goals." He was also impressed by the company's claim to place the best of the best.

ETalentGroup takes a "solutions staffing" approach, meaning that it assembles teams of professionals and presents them to potential clients. Bernier, now an e-commerce specialist, likes this because it allows him to form a network of people who work well together.

"Relationship is the key word," says Bernier about why he stays with eTalentGroup. "[The relationship] is much closer than with a usual staffing firm. I would have no problem inviting someone like [eTalentGroup founder] Jonathan Ward to my wedding."

The firm stays in touch to find out how things are going and to offer assistance if needed. "They take care of everything not related to doing what you do best," he says. That includes handling expense reports, invoicing, and in some cases booking travel or dealing with course arrangements. Bernier says this approach allows him to bill more hours.

Bernier knows that to stay on top of his game, he needs to keep his skills current. The company helps out with a program whereby Bernier can earn credits toward training. He accrues credits according to the number of hours he bills and by other means, such as interviewing peers on behalf of eTalentGroup.

Ward says he founded the company so he could focus on the contractor. When he worked for an IT staffing firm in Toronto, he remembers many contractors feeling like a commodity. "That's the way the market is, and that model just doesn't make sense," he says. "In this model, it is much more about taking personal interest in their careers. We sit down and talk, and then market their skills to the clients."

Another talent agent model is Boston-based Aquent. "I definitely see others latching on to the model," says Matthew Grant, minister of enlightenment at Aquent. "What is going to differentiate them is who they represent." Aquent is a niche firm specializing in creative, Web, and technical staffing. The firm's "Partner Program" has 300 "full-time" contractors who work a minimum of 80 percent of the time and then receive benefits year round. "The concept particularly appeals to those looking to move into contracting," says Grant. "It is not order-driven and puts more responsibility on the agent" in terms of the contractor's career.

So there you have it. A small yet representative sample of the ways contractors are working today, the services they use, and the satisfaction they gain from concentrating on what they love to do.

Perhaps Hollywood agent Bressler sums it up best when he says, "It's a knowledge marathoner's world." Technology led the way to the contingent workforce. Now, IT workers are reaping the benefits.

Michael Nadeau, Andrea Haynes, and Lynn Geiger are CP editors.
Contract Professional/CPUniverse, Dec. 21, 2000.