Speaker 1: So, the term software contractor is a bit overloaded. What does it mean to be a contractor and what should I expect? What are the different types? These are some of the questions we hope to answer in this video.

Speaker 2: There are different types of software developer contracts and you will need to choose the ones that suit the kind of work you want to do at any given time. Generally speaking, there are three types of IT contracts you will experience. The contract employee, sometimes referred to as an independent contractor, or time-based contracts. In this form of contract, you are participating as a form of staff augmentation. You will be working exclusively with one client at a time, and you are embedded in your client's development team. In your day-to-day activities, you look and act almost indistinguishable from your employee teammates. You come into the office each day, get assigned tasks and responsibilities, and work a 9-5, 40-hour week.

Speaker 1: As a freelance or project-based contractor, you look for projects to work on. These can take the form of a website, a mobile application, or general consulting. During the negotiations with your client, you determine the requirements, deliverables, and on-warranty periods. Based on this information, you determine the price for the project, and if the client agrees, you must build the deliverables by an established deadline. The project is generally fixed-priced, and you are responsible for eating any unforeseen cost yourself. But if clients make the changes from the original requirements, they are usually required to pay for the additional changes. Unlike the time-based contracts, you will traditionally take on more than one client at a time, and therefore have to schedule when you work each project. The client only cares that they get the deliverables by the deadline, how you get there is entirely up to you.

Speaker 2: Many organizations do not want to deal with dozens or even thousands of individual contractors. Therefore, they establish a relationship with a few selected vendors. These agencies then supply their clients with the required staff. In this form of contracting, you are one of the agency's subcontractors. You will still be interviewed by the agency's client, and if you get the job, your day-to-day work will be very similar to that as an independent contractor. One big difference comes during your invoicing period, when you invoice the agency and not the organization you are working at. The agency will turn around, mark up your rate, and bill the client. As a contractor, you need to specialize in a particular technology or skillset, and usually cannot be a generalist. Contractors are hired for a specific reason, and you will be brought on to solve a problem using a specific technology. For example, you may be brought on to augment a Java development team's knowledge using a specific set of frameworks, databases, and servers. Therefore, you will need to be good in a specific in-demand skillset. When companies hire contractors, unlike employees, they are not looking for people who can grow and learn their tech stack, but instead looking for people who already have a high level of experience in their technology and can start contributing right away.

Speaker 1: It's important to note that many time-based contracts are non-guaranteed. Even though the contracts may state a length of time, many have termination clauses allowing an organization to end the contract at any time for any reason with minimal notice. This may happen for a number of reasons. Sometimes scope of work on a project is cut back, and in some cases, projects are cancelled entirely. These losses can be costly due to the time and effort put into obtaining a contract and additional opportunity costs incurred by passing on other opportunities. We'd like to know your thoughts. Are you a contractor? Do you enjoy it? Leave a comment below. If you like this video, please share and subscribe. It helps us out a lot.

Speaker 2: Also, if you haven't seen it yet, check out part 1 of our contracting series.

Speaker 1: Thanks for watching.