You make a lot of decisions when you start your own IT business. They can range from what font to use on your business card to what business insurance policies to buy. But you also need to consider what to call yourself: an IT contractor or an IT consultant.
The two terms are often used interchangeably, but clients perceive them differently. The title you choose can potentially impact not only the type of projects you land, but how much you can charge.
We spoke to several IT professionals about the differences between IT consultants and IT contractors so you can choose the title that best matches your business goals.
Contractors: The Hired Guns of the IT World
Whether you call yourself an IT contractor or an IT consultant, you are essentially doing the same thing – assisting companies with their IT needs. The difference is whether you're selling yourself as someone who invents IT solutions or implements them.
"Contractors tend to be used for tasks and projects that are specific, that are well-defined, and that have a clear duration," says
Othmane Rahmouni (@OthmaneR),
founding partner and lead consultant at
, a boutique consulting firm. "The nature of the work tends to be non-strategic for the company, [and] the majority of roles can typically be performed by someone who is more junior."
If you are still new to the IT profession, it might make sense for you to start out as a contractor as you build your knowledge and skill set. A typical workday for a contractor might include performing tasks such as…
- Installing a firewall.
- Handling a data migration to the cloud.
- Installing a computer for a company's new employee.
- Fixing a computer with a virus.
These are all valuable skills that your client doesn't have (or they wouldn't have hired you), but it doesn't require analysis. They just need you to come in, get the work done, and get out.
Consultants: The Big-Picture Strategists
While IT contractors are often hired for short-term projects with clear deliverables and deadlines, IT consultants are the choice for more long-range, strategic projects. For example, if a company wants to find a solution to safely migrate their data, they might hire an IT consultant. The consultant can evaluate the amount of data, the type of data, and who needs to access it. From there, the consultant can research options, weigh the pros and cons, and present the client with a recommendation.
"Consultants are typically used for projects and initiatives that are more abstract and complex or that require depth of knowledge in a specific industry or area," says Rahmouni. "The majority of consultants tend to have more experience and more depth of knowledge."
If you call yourself a consultant, you should have several years of IT experience under your belt. You should also be comfortable working in a strategic, analytical role where clients expect you to have all the IT answers.
In many cases, you may start out as an IT contractor and transition into the role of IT consultant. If you are a new consultant, read "Small Business IT Consulting: What to Expect in the Field" to learn what you may encounter once you work directly with clients.
Sometimes You Might Be a Contractor AND a Consultant
Occasionally the work you perform for a client might blur the lines between the two roles. For example, a client might hire you to come up with a solution and to implement it. As long as you can pull double duty, it's okay to embrace both roles.
"The terms IT consultant and IT contractor have a fair amount of overlap, and it has become common to use the terms synonymously," says
a full-service IT consulting firm. "In strict definition, an IT consultant provides advice and uses expertise to inform the client on what decisions to make, as well as engineering IT solutions. However, IT consultants tend to also play the role of IT contractor."
If you prefer to function strictly as a consultant, make sure your clients know that they will have to look elsewhere to find someone to put your recommendations into practice. If there are IT contractors that you know and trust, recommend them to your clients. Those contractors may repay the favor when asked to do a job that requires a consultant's insight.
Let's Talk Money
So does your job title impact how much you can charge? In many cases, yes.
"Because of the more involved role, IT consultants do tend to carry a higher price than IT contractors," says Miller. "IT consultants tend to have a wider focus in their expertise and take responsibility for all resources involved in a project."
But the amount you charge isn't completely dictated by the title you choose.
"Typically, consultants are able to command a higher rate than contractors but that is driven by the nature of the work performed for the client and their level of experience and knowledge rather than on the choice of title one decides to use," says Rahmouni.
Ultimately, your background, experience, and level of expertise, can dictate what you charge.
"[It] doesn't matter what you call yourself or your services, as that will be determined by what the market is willing to bear for the experience you are bringing to the table," says
Walter Stanton (@scgincus),
president of the project management and consulting company
Stanton recommends researching what others in your industry are charging so you don't sell yourself short.
"Know what your competition charges for the same level of services you are offering and never, never undersell your value," says Stanton.
If you need more inspiration as you embark on your contractor or consulting career, check out "6 IT Consultant Tips for When You're Just Starting Out."
About the Contributors
Mike Miller has been in the IT consulting industry since 1987. The president of Team ITS, he has enterprise experience ranging from supporting large environments of 1,200 servers with 20,000 concurrent users down to small businesses with two to three users, and understands the concerns of small businesses very well.
Othmane Rahmouni is a technology entrepreneur, startup executive, and consultant with extensive experience leading product management, growth marketing and engineering teams at large and early stage companies. He is the founding partner and lead consultant at Lovop, a boutique consulting firm.
SCGI Corporation was formed by Walter F. Stanton, PMP, a professional project manager with over 29 years of technology industry experience. SCGI was founded in 2002 based on the belief that people, processes, and technology can work together to provide efficient operational improvement in corporations and governments across the globe.