In the last month or so, I have received a lot of inquiries about why I am a consultant/contractor through my own company. After a discussion this weekend with a very good friend, I thought I would try and get it down on paper for those of you possibly considering making the same move I did.
It started back when I graduated from college and moved to NC. I got what I thought was my dream job teaching Math and Computer Science at Athens Drive High School. My salary was 20k per year with a cost of living adjustment of $1340 per year for living in Wake County. At the time, I thought this was a great deal for only working 10 months of the year. Unfortunately, being a Math teacher and Computer Science made me analyze everything. So I wrote a simple Turbo Pascal program that allowed me to enter all of time I gave to teaching and divided it by the amount of money I was making. So to break it down:
- daily teaching activities – 7:15 to 2:15 or 7 hours
- pre-teaching activities (student makeup exams and stuff) – 1 hour
- post-teaching activities (student makeup exams and clubs) – 2 hours
- nightly planning – 2 hours
- nightly exam and homework grading – 1 hour
- coaching baseball – 3 hours for 4 months of the year
So when I wasn’t coaching I was working 13 hour days and when I was coaching, I was working 16 hours a day. There are approximately 200 hundred days in a school year to make the math easy. So if I was making 20k per year, I was making $100 per day. This comes out to roughly $7.50 per hour when I wasn’t coaching. This would have been fine because I could work over the summer and make the money up doing some side work. Well, I found out that I needed to take continuing education courses if I wanted to keep teaching. So this was $1500 per 3 credits and I needed 8 credits per year. So now my salary is $15500 and my hourly is just over $5 and hour. So after doing this self appraisal, I asked one of my students how much she got paid to babysit. She responded “$10 an hour for 2 kids and $3 dollars for every extra kid.” WHAT! So for 30 kids, I should be making $91 an hour. And I actually do lesson plans and provide activities for them to do. So I have always been looking at an hourly cost for my time probably back to when I mowed lawns for $5 an hour.
So that takes me to today. I am now a consultant billing my time at an hourly rate that provides for myself and my family. The work is done on a contract basis and is usually done in increments of 3, 6, or 12 months. If my work requires travel, I bundle my expenses into my rate so I can manage that myself rather than having to take receipts week by week and sending them to the client for approval and having to fight over a $51.87 dinner. The projects I work on usually have some level of offshoring component to them. This is usually driven by the project managers who think having 20 people working on something will get done quicker than doing doing it locally with 4. I had a great mentor in the early 2000s named Peter Coad who told me for every 4 workers, you needed 1 manager. Weird as it may seem, this has been proven by my experience to be true. So sending work offshore to 20 people will require 4 managers and 16 coders. The second thing is, it amazes me that people equate time to be more valuable than quality. As an example, 10 people working offshore at a blended rate of $70 per hour for 6 months is “cheaper” than 5 people working for a year at $140 per hour. This goes back to the golden triangle where you need to manage time vs. scope vs people. You can only manage one of those variables at a time. Therefore, if you want to shrink the time, you need to shrink the scope or increase the number of people. Unfortunately, there is a fallacy in this methodology that does not include complexity. Don’t get me wrong, there is a time and place for offshoring, but the complexity needs to be managed onshore. We can think of these onshore resources as “just in time R&D”. They are the Architects stubbing out the integration of different components and working with the business analysts to bridge IT and business requirements. When we don’t do this effectively, we are taking valuable time from the project and teaching offshore resources how to do our jobs. This is where I think corporations have an opportunity to make significant change in how we hire and train the future of our country from a technology perspective. If more people, with less skills, that require some level of training will make your project manager feel better, then hire a qualified architect with 10 years or more of experience for $140 an hour and 4 high school students or technical college students at $15 an hour for a blended rate of $50 an hour. This gets students excited in the STEM curriculum knowing they can find a job while going to school and don’t need to worry about working at McDonalds. They would get real world experience while achieving the academic requirements for high school, associates degree or bachelors degree. If you follow a progression model from high school through college, you could help offset their college tuition while training a future employee that would come to work for you with 6 years experience under their belt with direct business knowledge. There are some concessions that we would need to make.
- Students need to have the opportunity to work remotely
- We need to teach people what it means to be a contractor
- A company needs to take responsibility for teaching the soft skills required to be a consultant
- A training platform needs to be created to provide an on ramp to cloud technologies
This is where my company comes in. We are a learning facility, mentoring company, and consulting broker. We can provide everything for your company just like an offshore team would at a cheaper hourly rate but employ people in our country. We already have a pilot program kicking off in Raleigh to perform a results based contract that could grow into a $500k business per year. One of the other programs we are working on, is to provide cloud based, operations expensed set of applications to local and state government agencies as our training platform. We want to expand our training and mentoring facilities outside of just high school and college students and start to incorporate re-entrant military personnel and career changers. I know this is a lot of work and will take time to develop, but in the end, this is taking me back to my roots as a teacher and allowing me to raise my hourly income to a level that I feel all teachers should be getting paid!