From September 2008 to March 2010, contract work increased 2% and part-time jobs increased 16%, while temporary, permanent and full-time positions decreased significantly (-19%, -36%, – 4% respectively). Read on to find out why a software engineer contract job can be a safer and smarter career change for you.

Software engineer contract work offers many benefits over permanent positions, although it has its drawbacks. Here are some characteristics of contract work that can help determine whether or not it is right for you:

Pros of contract work:

Money – Generally, the salary will be better than permanent positions, since the employer has less overhead.

Flexibility – since you are paid at an hourly rate, you are not required to exceed the established weekly hours. In many cases, it is in its own time. Also, taking contractual positions allows you to work on several different projects with different companies.

Experience – Contract jobs allow you to gain experience and training in different areas of expertise. This can be a great resume builder, however you want to avoid being labeled as a job, so show some focus on specific areas.

Work from home opportunities – many contract employment opportunities are work from home. While some employees feel the need for a structured environment, many love the freedom that working from home offers (and its gas-saving benefits!). If you work from home, you may qualify for a home office tax deduction.

Tax deductions – Contractors can claim tax deductible business expenses. Be sure to keep track of all the money you spend on office supplies, phone calls, and anything else related to work expenses. Also keep track of the number of miles you drive to and from your hiring job, as this can be another deductible expense.

Cons of contract work:

Less profit – This is not always the case if you find a generous company that is willing to negotiate the terms of your contract.

Uncertainty – During the economic downturn, the average job seeker was primarily looking for job security. Now that things have settled down, contract work is regaining its appeal to those who enjoy its benefits.

Taxes and health insurance – While full-time employees have taxes withheld from their paychecks, contractors must bear their own taxes. Contractors are responsible for paying self-employment tax, which covers Social Security and Medicare. Additionally, they are responsible for paying estimated taxes, which consist of self-employment and income tax in quarterly installments based on what they expect to earn for the year.

Contract work can be very beneficial for some, but not as appropriate for others. Since much of the work of software engineers is project-based, many of you in the field should be comfortable with this type of position. In many cases, the contract work of a software engineer will be the most sensible option for those in the industry and I highly recommend experiencing it at some point in your career. It can always be used as a gateway to a permanent position and is a great way to test whether the company is a good fit for you. Always remember, more than 70% of contract jobs are converted to permanent positions, so there is a good chance that it will open up opportunities in the future (Source: IBISWorld).

Employment agencies are often a good resource for finding contract work. Another option is to use separate resources.