Contracting Downsides at Big Tech | Generated by AI
Common Downsides of Working as a Contractor for Big Tech or Banks
Working as a contractor (often through agencies or as a 1099 independent) for large tech firms (like FAANG) or banks can offer flexibility and higher hourly rates, but it comes with significant trade-offs. These issues stem from the temporary nature of contracts, which prioritize cost-saving for the employer over long-term employee support. Based on experiences shared across forums, articles, and social media, here are the key drawbacks:
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Lack of Benefits and Perks: You typically miss out on employer-provided health insurance, dental/vision coverage, 401(k) matching, stock options/RSUs, and paid time off (PTO). In tech, this can mean forgoing equity that’s a huge part of full-time comp; in banks, it hits harder with no paid sick leave or holidays. Contractors often pay 100% for their own insurance and retirement, which can eat 20-30% of earnings.
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Job Insecurity and Short-Term Gigs: Contracts last 6-18 months at most, with no guarantee of renewal or conversion to full-time. Layoffs or project shifts can end things abruptly, leaving gaps in income. This is amplified in volatile sectors—tech boom/bust cycles or bank regulatory changes can kill roles overnight, forcing constant job-hunting.
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Lower Effective Pay and Hidden Costs: Hourly rates might seem lucrative (e.g., $100-150/hr in tech), but after taxes (no employer withholding), self-employment taxes (15.3% in the US), and covering your own benefits, take-home pay often nets less than full-time equivalents. No overtime pay or bonuses either, and in banks, slow payments from clients can delay cash flow.
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Limited Career Growth and Visibility: No promotions, mentorship, or internal networking— you’re often siloed on one project without access to company tools, docs, or leadership. Resumes suffer too; “contractor at Google” looks less impressive than “software engineer at Google.” Conversion to full-time is rare (under 20% in many cases), and you miss out on building institutional knowledge.
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High Pressure and Isolation: Expect intense workloads without the safety net of full-timers—deadlines are tight, but you’re expendable. There’s little sense of belonging; contractors report feeling like “ghost workers” excluded from team events, company culture, or even basic resources. In banks, bureaucracy adds frustration with compliance hurdles; in tech, it’s the relentless pace without work-life balance.
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Fewer Protections and Legal Risks: No unemployment benefits if laid off, limited workers’ comp, and weaker labor law safeguards (e.g., against discrimination). Disputes over scope creep or non-payment require self-funded legal fights. Broader issues like outdated tech stacks or unethical practices (e.g., offshoring via contractors) can trap you in frustrating environments.
These pain points are widespread, though some contractors thrive by stacking gigs or negotiating better terms. If you’re considering this path, factor in building an emergency fund and side hustles for stability.
References
- What are the pros and cons of being a contractor at BigTech
- What are the Pros and Cons of being a Tech Contractor?
- Pros and Cons of Contracting in Tech
- A Broken Career Ladder: How Contract Work Hurts
- Contracting vs. Full Time Dilemma
- Being a Consultant, Freelancer, or Contractor: Pros and Cons
- We need to issue a real apology to the people who were destroyed by “contractor” status thanks to Big Tech