For one reason or another I've been interested in the topic of independent IT consulting or contract work lately (I use these terms interchangeably but the differences between each can be found here). The subject is one that I've learned a few things about in the past but never did it myself fulltime. A few things about it are still kind of strange in my opinion but that happens sometimes in a free market system I guess.

An example of what I consider strange is the fact that recruiting or "bodyshop" firms can take up to a 30% cut off the top of the hourly rate a consultant or contractor makes. Obviously the value proposition still works for some folks but that seems like a large amount to me. The firm a consultant works through normally handles paying the consultant and finding the assignments. However, sometimes a consultant may already know of an assignment and needs to work through a firm. There are no benefits of any kind offered and if the company the consultant is working for wants to terminate the contract they will pay something like two to four weeks worth of time the consultant would have spend on the contract and the consultant looks for more work. The consultant is taking all the risk in this situation.

Going a bit deeper... when I look at RealRates.com and after talking with a firm and some associates it turns out the best rates Senior Java consultants are making these days in the Boston area is $65 an hour. That is a good number but I starting playing with a Consultant's Rate Calculator that a small firm named InfoDyne provides on the web. Based on a 40 hour week over the course of a year a bodyshop taking up to a 30% cut can make up to $40,000 (USD). That is amazing to me and when I saw that I immediately thought the bodyshop business model is pretty profitable. However, the consultants working with them are getting screwed as far as I'm concerned. But again, the value proposition still works out for some folks. I'm just not one of those people right now.

Another thing that I should add is that many large companies will only work with recruiting firms or bodyshops. This pretty much forces those folks who would like to work as independent consultants to instead work through a firm and get killed on whatever rate they can get.

This is a bit strange to me but please don't send me any nasty emails because here is why. The firm a consultant works through simply performs an interview the same way a company that hires any individual would. The firm also asks the company that hires a consultant to sign a contract. That contract will say something along the lines of "XYZ Consulting Firm is not responsible for the actions or performance or Mr. Joe Consultant." Where is the value added to the large company hiring the consultant for a job? Someone may say the one-stop-shopping but that sounds like a skinny answer to me.

This may be old news to some folks but I needed to get that off my chest.