The Upside of the Downside

It’s hard not to be terrified when you see friends laid-off. But software developers have a historical advantage even in rough times: A bad economy is good for consultants and contractors.

Getting old in this business has relatively little going for it. You (or at least I) find oneself in the Old Geezer category, waxing nostalgic over the way things used to be, such as for programming techniques that are now irrelevant (see my Old-school programming techniques you probably don’t miss) or rejoicing in the death of some computer hardware. The thrill of doing an all-nighter to get a project finished is gone. And body parts begin to fall off.

On the other hand, my long experience means that I’ve seen the industry’s ebb and flow—several times over. I’ve lived through several economic downturns, both within the industry and across the country. There are many pendulums (pendula? surely that isn’t the word) in the software development field, from “Everything executes on the client! No, on the server! No, the client!” to the Silver Bullet of the Month club. Among the important business swings is this: sometimes they want you on staff, sometimes they want contractors.

Or to put it bluntly: When the jobs go away, the contracting work appears. If you’ve lost your job or you fear that you will, you can take heart. Developers probably won’t be out of work for long.

I’ve seen it several times over. Companies lay off workers when money gets tight. The old employers scrimp and save for about three months while they try to “do more with less.” Then they realize that they have work that must get done — and they bring in contractors to do it, or they outsource to consultants. The consulting rates may be less than your salary was — for six months or so, anyway — but gradually the rates will increase, and so will your income. Plus you’ll have gained a new set of skills (or at least buzzwords) which you can market to your next employer… assuming you want one. By then, you might decide you prefer the freelance life.

I first saw this when I was one of the sysops of the CompuServe Computer Consultants Forum in the late 1980s (it’s depressing to realize I was embroiled in flame wars about H1B visas before some of my readers were born). I saw it again in the early 90s (when, at the worst of the programming market, Ada programmers were offered $10 an hour). And again after the dot com collapse. That was worse, because everything had been vastly inflated during the boom; it was possible to find a job flipping burgers that paid better than a serious IT position. In other words: At first there’s no work to be found. Three months later, there are contract and consulting jobs, though sometimes for appallingly low wages — but the work is there. Three months after that, skilled developers can find 6- to 12-month contracts that will get them past the worst of the bad times.

So if you’re laid off and desperate for a “real job” (by which I mean a regular salary and benefits), don’t tell yourself that you won’t take a contract gig because you’re sure a full time job will come along. Take the contract gig. In hard times, that’s where the work is going to be. The big companies will go through their period during which they like the tax advantages of contractors and the fact that you can be let go without notice (contracting is a different budget than salaries and shows up in different column to Wall Street). Then the business Powers That Be suddenly realize that their most important software is being written by people who have left the building; they’ll start hiring again.

It doesn’t take a bad economy for companies (particularly large enterprises) to hop on the internal/external development roller coaster. In the early 1980s, when I was first programming professionally, American Express (which was then a major employer in the Phoenix area) regularly went through a phase where first they’d hire every mainframe programmer in sight; then, a year later, they’d lay them off. Like parents say of their teenage children: It’s a phase. It will pass.

I’m not pretending that any of this is easy. I just lurked on a conversation where one hiring manager wrote, “We have had more than 200 resumes come in in less than 36 hours of a position posting.” But I’ve seen this behavior in our industry for more than 25 years, and I see no sign that it’s going to change.