Over the past year I have seen

• Permies going contracting (including myself)
• Contractors going permie
• Contractors joining consultancies

After reading a blogger's views on "Coding the markets"

http://etrading.wordpress.com/2006/05/31/permie-vs-consultant-vs-contractor/

I thought I would add my own views. I have worked as both a permie and at a consulting company, and am now contracting. I agree with the majority of what has been written, but thought I would add a contractor's viewpoint - these are based on working in London's financial sector, and I may be biased towards contracting as I've yet to experience a downturn since becoming self employed.

• Contractor
  • Pros
    • Money: As a rough guide, you daily rate will be around 1/100 of your basic permie salary. So if you are on £50k as a permie, you can expect to earn around £500/day. Assuming you work 200 days of the year (more in a good year, less in a bad year), this works out at £100k/year.In addition to this, assuming your contracts are outside of IR35, the amount of tax to be paid is significantly less than as a permie. Of course, this ignores permie bonus, which can be significant if you are working in front office development. The following link has some real world bonus examples

http://magmasystems.blogspot.com/2006/02/data-point-senior-net-archdev-salary.html

Interesting salary survey link below (not IT so bonuses not relevant, but interesting nontheless).

http://www.napierscott.com/salarysurvey2006.htm

• Lack of politics: No more being unhappy and frustrated with your bonus or what other people may be getting.
• Freedom: Typical contracts are from 3-6 months duration. If you don't like what you are doing, move somewhere else (assuming market is reasonably buoyant).
• Being your own boss: You can decide what your company's targets are for the year, and what will be spent on training/invested.
• Cons
  • Job security: The biggest downside. However, the risk can be mitigated somewhat by making sure your business and technical skills are up to date (a good skill set to have at the moment is C# and Credit Derivatives).
  • Paying for your own training: Both in terms of cost and lost revenue. However, some companies run training courses out of work hours (I'm starting the CQF tomorrow - evenings only).
  • Administration: Running your own company does require more paperwork than as an employee, but if you employ a good accountant this can be minimised.

Comparing the other two options to being self employed

• Working for consultancy: As mentioned in the link, permie pay with contractor security. I believe if you want to get the best work you need to work directly for the banks, either contracting or permie. The lack of choice as to where you get sent is frustrating. For me, I would prefer to go back to being a permie than work at another consultancy (maybe there are good ones out there)
• Permanent: Offers greater job security and can offer more interesting work (although I don't think I could find anything more challenging than what I am doing at the moment).

Of course, I think everyone's dream would be to start their own consultancy and have others working for them.