Hi everyone, my name is Hamza and I’m an IT consultant based out of the U.S. I talk about IT consulting and Tech related things on my YouTube channel, so be sure to subscribe if you’re into that sort of thing.
Today, I want to talk about the different options for starting a career in IT consulting. Everyone has a different idea of what it means to start IT consulting, so let’s look at a few options.
Option 1: Work for an Existing Consulting Company
- How it works: There are many large and small consulting companies, like IBM, where I worked as a consultant for many years. Businesses are looking for IT companies to come do the work for them, whether it’s web development or migrating to the cloud. Consulting companies hire IT professionals and put together a team to solve the client’s needs.
- How can you do this? Companies look for technical and non-technical professionals to join their company. You can search on job recruiting sites and directly on company websites. You can also do a Google search or check out LinkedIn.
- Time it takes to make money (paycheck): It’s fast. You’re a salaried employee, so you get paid right away as soon as you’re hired. (5/5)
- Ease of getting work: Someone at the company is responsible for finding you a project and assigning you to a team. Sometimes they encourage you to network and find something on your own. (4/5)
- Flexibility in type of projects: A company most likely hires you because they have a demand from new clients, expanding their team, or backfilling a position. So you might not always have a choice on what work you want to do. They’ll assign you to a role your skillsets kind of match. (2/5)
- Business knowledge: You don’t have to know much about how to run a business and can focus on doing the technical work you really like. This means you don’t have to do much of these functions: (Not worrying about non-technical stuff – 5/5)
- Marketing
- Finance
- Sales
- Accounting
- Legal
- You don’t have to do much of these business functions but you certainly should do some of this at the personal level and focus on your “personal branding”. Make sure you’re subscribed so you don’t miss that video.
- Money you take home: As I mentioned, you don’t have to worry about marketing, finance, sales, etc. but someone does and their salaries have to come out of somewhere. So let’s say a consulting company that hired you charges the client $100 an hour for your hourly rate. That means from that $100, the consulting company might keep $60 dollars for all these other expenses and your salary might only be $40 an hour. But aside from all the costs of running a business, they also have to pay for your benefits and vacation. The numbers are irrelevant because larger companies will have a bigger overhead cost compared to small companies. 3/5
Option 2: Work for a contracting company
How it works: You can make more money in this option but there is a catch!! But let me explain how this option works first. Businesses that already have an IT system up and running will sometimes need additional help temporarily or need to backfill a position. But they might not want to have to go through the hassle of creating a job posting, looking through resumes, screening candidates, interviewing and background checks. So they reach out to a “middle man”, in this case – a contracting company. This middle man company will create a contract and supply a professional. How do they get that professional? They do the job posting and interviews and all that stuff. So they connect an IT professional to the client that needs one.
How can you do this? Sounds good right, so how can you do this? You can directly apply for positions with these companies on their job postings. In the past when these types of companies have reached out to me, they told me who the client is and what type of work they’re looking for. After they do an initial screening call, they setup an interview with the client.
Time it takes to make money: You get paid when you start working but you’re not a salaried employee. I’m going to say this again. In all the cases I’ve come across, you’re NOT a salaried employee. You work at an hourly rate as a contractor. So if you need a day off or are feeling sick, you are not getting paid that day. If you want to go on a vacation, you’re not getting “Paid Time Off”. (5/5)
Ease of getting work: This is ideal because you’re getting hired for a specific opening so you start soon as your contract starts. (5/5)
Flexibility in type of projects: There isn’t much flexibility. You work until your contract is done and you move on to another contract. While you’re not on a contract, you’re on your own. No PTO. But at least you can choose your own contracts. (4/5)
Business knowledge: You don’t have to know much about how to run a business and can focus on doing the technical work you really like. This means you don’t have to do much of: (Not worrying about non-technical stuff (3/5)
- Marketing
- Finance
- Sales
- Accounting
- Legal
- Before I talk about what you get to take home, a couple of things you Must consider:
- You might have a little more tax stuff to think about at the personal level
- Also think about building in your vacation and sick days to your hourly rate
Money you take home: Let’s say you start working for one of these contracting companies, what is the amount of money you get to keep? The answer will depend on the types of roles of course, but also how much you can negotiate. Maybe if the client is paying $100 an hour, the contracting company might keep $30 and give you $70. Whaaat!? before you get too excited, remember you have to calculate your own expenses out of this money. The benefits your employer in option was providing are no longer going to be applied here. You have to calculate in your own PTO and benefits.
Option 3: Work for yourself
How it works: Are you tired of taking orders from the management and having to come on the weekends? Then this third option is the one for you. You can be your own boss and set your own hours and name your price.
How do you do this? That sounds great but how do you do this? I’m gonna let you in on the secret, ready?
At a high level it is pretty straight forward.
- Step 1: Define your core skills or services
- Step 2: Find out who needs those services
- Step 3: Create an agreement with them to work together
- Step 4: Provide your services and get paid
Ok, I know that is an oversimplified list of steps but that is essentially how a business works. And if you’re working for yourself, then you’re starting an IT Consulting business. If you’re marketing yourself as a freelancer then you can provide those services on platforms like Fiverr and Upwork.
Time it takes to make money: Time it takes to earn money is going to depend on the agreement you have with your client. You can agree on getting paid on monthly basis or it can be when you provide a certain deliverable. Could be a Functionality, feature, database tables. or capability… Freelancing could be fast on an existing platform (4/5) or starting from scratch (1/5)
Ease of getting work: Getting ****started could be as easy as signing up for a freelancing platform or as time consuming as setting up your own business. Assuming you don’t want to be on one of these platforms – this will be time consuming (1/5)
Flexibility in type of projects: When you’re first starting out, you might have to take whatever you can get to build up reputation but once you’re an expert in the field, You can take on whatever project or client you like. I’ll give it a (5/5)
Money you take home: Money you take home depends on so many factors like location, specialty, supply & demand, and so much more… The more you’re specialized and higher the demand for your specific skillsets, the more you can charge. (5/5)
Business knowledge: You’ll be running a business and need to know basic things about all of these business functions. In the beginning you’ll have to do a lot of this yourself but you can setup systems to make your life easy and automate some stuff (2/5)
- Marketing: How will your customers know about your product or service?
- Finance: How will you fund your business? Equipment, tools, and software cost money.
- Sales: How will you sell your product and services?
- Accounting: Need to know how much money you’re making vs. spending. For yourself and taxes.
- Legal: Have to deal with contracts and laws.
- Before I talk about what you get to take home, something you must consider:
- Hiring professionals to take some work off your plate will help you from not drowning.
- Outsource the things that are low value work so you can focus on making more.
Money you take home: Before I give my rating just know that the money you take home depends on you. You’re calling the shots! You can charge hundreds of dollars an hour if you want. There is no middleman you have to go through so you get to keep all your money. There are a few caveats I’ll talk more about in my next video on this topic. (5/5)