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The Cash Sucking IT Consultant

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Running it consultantIn this post I will tell you how to become a highly specialized and paid freelancer in your field.

Most of my career has been in the IT business. In my last 9-5 job I worked as a Microsoft Solution Architect for a Swedish company in Denmark. The company later got bought by the UK giant Logica and is now known in Denmark by that name as well.

When I found out that I wanted to change my life and work less, I of course started out by leveraging my knowledge by using the skills I knew. To begin with this still meant working all year long as an IT consultant but this time as a founding partner in a small consultancy company.

So my salary went up but I still had to work on other people’s projects all year long in the 9-5 grind.

In the end I knew I wanted a better control over my time and mobility and in 2010 I sold my shares and left the company I helped start.

Again I knew that I could use my skills but this time I had no clients of my own and a very small network to use. So I started freelancing and in this post I will tell you all about how to make good money as a freelance IT consultant.

Now I know that most readers of my blog are probably not in the IT space but some (if not most) of these tips can also be used in the case that you want to start freelancing in other markets.

This could be that you wanted to start as a freelance CPA, a freelance journalist or something completely different.

I don’t usually disclose my earnings or income reports like some other people in the blogging world, but in this post I will make an exception.

My “never revealed before” income report

income reportNow I don’t really like the idea of selling my hours and it has certainly been my focus to build up businesses that would not depend on me trading my time for money. But it can still be a lucrative business and at least for me it has served as low risk income – remember that I have a girlfriend, two kids and two homes (one in Denmark and the other in Hua Hin, Thailand). So having a steady paycheck for at least my expenses has been valuable for me as I ventured into building my lifestyle businesses.

So I normally don’t advocate that you sell your time, but it can certainly be a great step on the road to the life you want for yourself and those around you.

Last year I worked six months as a consultant, this year the plan is to work just 3-4 months. Each month I work as a consultant I typically bring in $20,000 (rough numbers as I’m paid in Danish “Kroner”)

I could probably bring in even more if I spent more time looking for the right types of jobs, but I’m a little lazy and don’t want to spend too much time in the “sales phase” as I will also discuss later on.

Why someone would pay you an insane amount of money

Now if you are already a business owner you already know this. But if you’re currently in an 9-5 job you might wonder why someone would pay $20,000 for a single developer with no management responsibility at all.

I got just one word for you, well actually it’s two words: Business case

If the stuff I’m creating for my client will help them save $2,000,000 over two years, paying me $60,000 for three months is a no brainer.

This is really true about how most businesses spend money. If you got knowledge about any market or segment you will most likely be able to identify these kinds of business cases. If a business owner can see that they can double their money (or save them) then it’s an easy choice to simply buy whatever you’re selling at whatever price you’re asking.

But as you will see later I don’t actually do these kinds of client/business case analysis, I get someone else to do all the hard selling while I’m relaxing by the pool in Thailand.

The IT consultant winning mindset

IT Consultant mindsetNow being a freelance consultant you’re really just leveraging your knowledge for your own gain. You might be a highly knowledgeable person in your area and you should of course still use this. But you might need some changes in your mindset coming from the typical 9-5 “salary man”.

Actually I still see a lot of other freelance IT consultants fall in these traps.

On a project I was on, I indirectly managed to get the other freelance consultant on the project fired simply because his mindset was totally off (that and I performed at least double as good as he did). He was out after the first month.

Don’t be a programmer, be a consultant

Now if you’re not in the IT industry the headline might not make much sense to you. But you could substitute the word “programmer” with “geek in my industry”.

Now I’m going to be a total generalist now and say that a lot of people in my industry are programmers who are detailed oriented and focus on creating the 100% best technical solution each time. See more about my thoughts on different personality profiles here.

It is of course a good thing to want to create the best technical solution each time; the issue is that the software application you’re developing is most likely being created to solve some kind of business problem. This means that the application is existing in a business environment with constraints like money, time, deadlines, legacy systems, politics etc.

I have tons of stories of well meaning developers who spend way too much time on something that is really not needed from the business perspective. Again remember that this is about the business case not who can create the most stunning piece of art, ahem… software design (or got the biggest dick – pardon my language…;)).

So does that mean that I advocate creating crappy products, NO – actually I’m really good at my trade and typically deliver better technical solutions than what I see in the industry, it just means that you need be able to balance all these different stakeholders and interest groups.

While working for a big financial institution here in Denmark I saw one guy spend close to three months on a task that wasn’t really needed from the business side of things. Actually he was just creating “a framework” in order to solve the actual task that was assigned to him. Shortly after I left the project (I tend to keep my projects short because I don’t want to work all year) the client found out about this and asked the company in charge to replace him.

Be better

If you come out on a project and are paid considerable more than your employed piers then you need to be able to perform. If you are not able to perform better than most of your piers then you should really consider if this is for you.

Is it a lot of hard work to become really good? Of course it is. But luckily you have a few things going for you.

When you make more money you can also set aside more money to training and events and generally invest in yourself.

You also have the upper hand over “normal employees” that you don’t have any old projects you need to maintain and don’t have to spend a lot of time going to tons of meetings. Basically you have a lot more time to be productive that the regular employee, so use it well.

And this brings me to…

Don’t act like you work there

You don’t take long lunches and hang out for hours by the coffee machine. You are paid by the hour so don’t give the client the impression that you are not doing anything for your salary.

With one client the other developers (employees) usually went down to shoot a little table tennis or pool after (a rather long) lunch. They would often invite me as well. But in the 3 months I was there I didn’t go with them once. So even though they invited me, it would still be a little hard to explain to the people paying for my time.

It all comes down to that you need to act like a professional.

You are not their buddy so you don’t sit and whine about your relationship. You don’t brag about the new car you just bought (for their money). You don’t tell inappropriate jokes even though everyone around you does.

After hours socializing? Of course you should attend but remember still behave like a professional. Don’t run around drunk and but naked. I usually tend to be “good company” but prefer to be the one making the least noise (and I’m not usually like that at all ;)).

You are a professional hired to come in and solve a job. So don’t act like you work there!

Specialize and get more high paying jobs

Be specialistThis is a big one. A lot of people think that they need to know all kinds of technologies and products in order to be a good consultant. The opposite is actually true. The more you specialize in a given product the easier it will be for you to get jobs and the more you will get paid.

The thing is that when you are a freelancer you are mostly sold on your resume. And if a client has three resumes in front of him and he needs to hire a person, then he will choose the person with most experience in just the field that relates to the job/project.

Most of the times it’s the opposite case when it comes to being an employee. Here it’s good to know a little about everything so you can jump from chair to chair and solve every problem thrown at you.

So specialize, niche down. You should of course specialize in something that there is actually a market for, but when you are working with the right technologies there is almost no limit to how much you should specialize.

Don’t just be a .net developer

Now this is going to be a little technical and I apologize in advance. I know the programming language C# and as a C# programmer you are typically working with something called the Microsoft .NET Framework. Since this is Microsoft stuff, there are a lot of people around the world doing the exact same thing.

There are thousands and thousands of developers working with C# and the .NET Framework. So why would I want to compete with all of them?

There are being spent billions on Microsoft technologies and licenses by big corporations each year so I don’t need to be a “broad know all”-developer. I can niche down.

So my main area of expertise is the Microsoft SharePoint family products. Actually I could niche down even further and make more money, but I really don’t want to invest any more learning time on something I’m cutting back on. But I have people in my network who are ONLY working with the search engine in SharePoint or just working with deploying (moving an application to the production environment) SharePoint applications. Now that’s specializing and they are both being paid more than I am.

This is all very Microsoft centric, but it’s what I know. However it’s the same on other platforms like JAVA or SAP.

Enough with all this technical mumbo jumbo.

Go after the money

Now a lot of people work with open source tools which is great. I also use free open source stuff like WordPress for this blog and pretty much any other site I produce, but when it comes to working as a freelancer you need to go after the money.

And let’s face it, most money are still being put into the big software supplier’s, like Microsoft, pockets.

There is a saying in the IT world. “No one ever got fired for choosing Microsoft”. Also if a big company has a “Microsoft strategy” they are simply not going to implement some free open source PHP (PHP is another technology) project even though it’s better from a technical standpoint (not saying they are, it depends on the project). Remember the business case argument again? If the entire operations organization is used to handling Microsoft servers (perhaps thousands of them) they are not suddenly going to be installing some weird other kind of server that they have no experiences with.

So specialize in the technology/ecosystem where the money is.

I usually also advice to specialize in a product over a technology. A technology is a very broad thing while a product is more narrowed. It will have new versions that needs to be upgraded to and so on.

Industries that will rock you

Now I’ve mentioned that I usually work with Microsoft SharePoint, but there are other great industries/products to get into. such as…

  • Microsoft’s Business Intelligence line of products
  • SAP (I don’t know much about this, but there are tons of opportunities to specialize here)
  • JAVA is used in a lot of enterprise size organizations and there are a ton of opportunities of specialization.

But again my background is with Microsoft technologies and though I often curse over SharePoint, it’s still a great paying ecosystem.

Why agencies totally rock

Serious looking manRemember me saying that I didn’t want to do the selling my self? Getting jobs is not a trivial task and since I only have one or max two clients per year it would be a rather big task to network and build up a big client database. Even if I managed to get relations to 10 potential clients I could only work a couple of months for them every 5 years.

This is not the way most companies hire help.

Your very own selling machines

No I use regular selling machines that have all the contacts, that eat lunch with potential clients, that meet people on the golf course etc.

Now agencies take a cut out of your salary to help you find a job, typically from 15-25% of the agreed price. Most of them are pretty transparent about their price structure and will happily tell you how much the client is being charged and how much your cut is.

Most of the time you can even bargain their percentage a little.

Some people don’t like some other party taking a cut of “their earnings”. I pay this with a smile. They struggle to find me jobs and I can spend my time between clients the way I like.

Also remember that these agencies typically have framework contracts with all the clients. Big companies will almost never hire in just one freelancer without an agency. They don’t want to go through all the hassle of agreeing on an individual contract with yet another company. Instead they simply write these framework contracts with the consultancy agencies that can then deliver any number of consultants (freelance or not) under that contract.

So I pay the percentage with pleasure and I always find my jobs through agencies.

Do what you do best

When leaving the selling up to the agencies you can also focus on what you do best. You don’t have to be that outgoing, lead seeking, cold calling super sales executive. You can focus on being you, an expert consultant in some specialized niche.

You can do what you do best and focus on becoming better instead of trying to do tasks that don’t really resonate with who you are.

Focus on projects

Now a lot of freelancers that have their own clients usually work a few hours here and a few hours there. Every time the client has a little problem – typically after delivery of the main project – the freelancer will come in to help. This is of course “good customer care” but it’s also just a few hours here and a few hours there. And it’s hard to bill all hours during the day like this jumping from one client to another.

The good thing about the agencies is that they will book you for a projects spanning X months full time. Once the contract is over you don’t have a further responsibility for that client. The agency is the one having the responsibility to deliver a new consultant or hire you again.

So you can bill all your time for those months (for me that is typically 7.5 hour per day).

I don’t have any wasted time jumping between clients and I don’t have any responsibility to the client once the contract is over. You can bill all your hours. That alone is worth going through an agency.

But what about places like elance and odesk?

You might think that you can find work through elance and odesk, and as a freelancer you probably will be able to do just that. But remember that when you are on one of these sites you are also being compared to people in lower cost countries.

I’ve never worked through one of these sites (although I find a lot of people there for my own projects). The problem with the sites is that there is a focus on price and people almost expect bids from freelancers in lower cost countries.

Also projects on here tend to be smaller in size and I generally tend to be “project based” with you being responsible for the success.

So I recommend that you specialize and then find jobs in your own country. Of course if you are already based in a low cost country then it can be a good idea to go on elance or odesk but that’s an entire different story and not one I have the most experience with.

Money but no responsibility

You of course need to do a good job, but as I briefly mentioned, the client’s contract is with the agency and therefore you don’t have much responsibility. The types of projects I get out on typically involve a lot of developers, so I can just focus on doing my job and sending invoices.

In this day and age with a lot of complex IT systems going over time and over budget, I can relax because it’s not me having the overall project responsibility (as it would be if I had the client directly). Of course if I were in some kind of project manager role I would have more responsibility even as a freelancer, but contractually the responsibility would still be with the agency that hired you.

When all this is said I of course still recommend that you have some sort of consultancy insurance policy to cover your ass, just in case.

So is this for you?

This is a post I’ve been a little hesitant to write on this blog because I know that most of my audience is not potential freelance developers, on the other hand I do feel that going the freelance route is a great way to remove yourself from the 9-5 desk job and instantly get more control over your life.

So I would love to hear from you in the comments if this is relevant to you or not. Or any other input for that matter.

And thank you for reading through the entire post, I think it’s one of the longest I’ve ever written on this blog :).

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24 Responses to The Cash Sucking IT Consultant

  1. Robert says:

    Care to share specifics on what agencies you use for finding work?

    • rasmus says:

      Hi Robert. I guess that it’s a bit too specific for this post (as I only operate in the Danish market :)), but throw me an email through my contact form if you’d like some names.

  2. Halfdan Timm says:

    This is an incredibly interesting read. I didn’t realize untill now, but you, Rasmus, actually represent a lot of what I’m hoping to accomplish in the future. Being able to only work a little every now and then and enojying life with the people around you who actually matter (why I’m spending my time creating a passive income).

    Post has been bookmarked and tweeted. I’m looking forward to your future posts!

    • rasmus says:

      Hey Halfdan, thanks for your kind words and tweet :).

      You have a fantastic blog as well (it’s in Danish but I would recommed it to everybody who speaks – well reads – this great language :)).

      EDIT: And by the way… You’re working super hard at this so I’m confident that you will reach your goals. Just keep doing what you’re doing!

  3. Thomas Astrup says:

    Hi Rasmus.

    Can you refer to any agencies that’ll find you jobs?

    Nice read. Thanks 🙂

    • rasmus says:

      Hi Thomas, I’ll shoot you an email later. Just out running some errands. Not that this kind of information is a secret, but it’s a bit too specific for this blog 🙂

    • rasmus says:

      Hi Thomas,

      I tried to send you an email to the address you given here, but it bounced back. Please contact me through my contact form instead.

  4. Hi Rasmus,

    Nice blog post. Followed your blog for some time now, and i think its cool what you are doing!

    I’m also doing IT consultant work, while im trying to start my own projects on the side. I have been doing it the other way around and actually said no to the agencies, and found my own customers. Found a niche where, some companies want high qualified programmers with business insight, but cant afford to do it fulltime. So im having between 1 and 3 customers on the same time. After a tough year with to much work in 2011 and because i had the pleasure to be a dad in nov. 2011. I only work for 1 customer 2-3 days each week, and the last days go on my own projects and really small projects for old customers, and thats pretty cool for now. But im starting to think about how to get even more money out of my time, so i can get some more sparetime with the family, and also get more time to make passive income.
    I worked a few days with a consultant that took around 250$/hour – and he had some ideas to get that high, but its hard to implement and to change your own mindset about it. (are we worth that large amount of money?).

    That agencies i have been in contact with only paid around 80$/hour, and it looks like your up around 125$/hour, so if you can send the list of agencies your working for, it would be great. Its good to know if i need to go up on hours again.

    Can i ask what your girlfriend are doing?, is her job as flexible as your “lifestyle” is? If you are in Thailand for 6 months each year, it would be hard if she is a normal worker? What about daycare and school when the children gets older?
    It would be cool to get a few blog post about that subject. There is really many blogs out there, about changing your lifestyle and travelling around the world, but its not often there is children involved. So thats why i think your blog is interesting.

    Thank for a great blog!

    • rasmus says:

      Hi Casper.

      I’ve gotten quite a few comments about what agencies I use. Up until now I’ve just said that I would mail people because I think it’s a bit too specific for this post, but perhaps I should change my standpoint on this 🙂

      For the last couple of jobs I’ve used the consultancy agency 7N. They require little more experience that most other agencies but they also pay better for the right profile.

      Regarding my girlfriend (and kids) we’re currently only in Thailand a couple of months each year. I would like to stay longer but my girlfriend misses her family if we’re away for longer periods than that.

      She works as a HR consultant but has been on maternity leave for the last couple of years (we got two kids just after each other) and because she really wanted to stay home with the kids while they’re small I also hired her in my company and paid her a small salary for “administrative work”.

      But at some time she needs to go back. I’m trying to push her into working for herself but let’s see how it plays out. Once the kids have to go to school and it becomes harder to travel we might find something closer to Europe.

      And congrats on becoming a father. It just makes you take control of your time even more 🙂

  5. Tiberius says:

    Hi, This is the best blog ost i have read in a while. I have been contemplating about if this line of business is for me. Right now i am a full time .NET architect/developer – but thinking about getting to know the SharePoint and giving you a bit of competition 🙂

    Whats blocking me is the same thing you mention, house, wife and kids. I think i need to get a kick in the right direction and discover my qualifications (.NET development / Business Intelligence development – done it for 10 years now). But im torn between building muses and working for other people and making them money – minding THEIR business.

    I think i need a clearer view on how to get started – mapping my skills, benchmarking my skills against others, getting the first (second and third) assignment done, etc. Any recommendations on that one?

    • Rasmus says:

      Hi Tiberius, thanks for the compliment 🙂

      You don’t write if you are currently employed or working for yourself, but the strategy I used was to start freelancing and for the extra money I bought myself time. I could make much more money if I freelanced all year long (and I know several that do so). But selling your time doesn’t scale, products on the other hand do.

      So if you want time for building muses, I would recommend only freelancing part of the year. Last year I freelanced 6 months, this year it will be 3 months. In the rest of the time I can focus on being with my family and building products/muses.

      As I also write being a freelancer is all about your CV so start creating a CV that is more focused on projects (and the skills/technologies used in those projects) rather than what companies you’ve been employed in.

      Then send this resume to 3-5 different consultancy agencies. They are usually really happy to take a meeting with new candidates since they want to grow their database. If you have poor CV they will tell you and help you how you can make it better.

      There has been a good response to this post from my Danish visitors, so perhaps I should do a product (in Danish) on how to leave the 9-5 programmer job and become a highly paid freelancer?! It’s hard to come around everything in a simple blog post 🙂

  6. Tiberius says:

    Im working a 9-5 job but have a company on the side making a standard software product (not selling hours, hate the idea of how poorly it scales). Thats why im spending time on building muses so that one day…. you know 🙂

    My approach to this is that im otherwise going to spend time getting freelance jobs etc. and not living in our capital – I think its quite difficult (how much of your freelance time can you actually spend from home on a VPN or the like?) – this taking time from muse engineering…

    A thorough guide on how to get this started (in danish:-)) would sure be nice 🙂

    Please tip the agencies then about that article/e-book so they are in on it too, and they will in return get a lot of new profiles to their database.

  7. Rasmus says:

    Hmm too bad an idea then 🙂

    Regarding onsite and offsite. Most of my consulting gigs are (unfortunately) onsite, but I have a couple of people in my network who has been able to land some gigs where they could work off site and work through VPN.

    Most of the time however you need to work with the client’s existing team and you therefore need to be onsite.

  8. AJ says:

    I’m not a programmer, but an accountant but still in reading this post, it has given me a couple of ideas as to how I could probably package my skills better with regards to moving to freelance positions when the time comes. They key part for me was pinpointing the key area of expertise – I’ve worked with one Accounting platform for the last 4 years so I guess that would be the key specialism for me, it could be an area for me to focus on as my niche from a technical point of view. The only part now is to try and increase the value I can provide in this area to increase rates to much higher levels than they’re going at now.

    The kind of lifestyle you enjoy is definitely similar to the one I’m looking to build for myself and my family, your blog has been bookmarked!

    • Rasmus says:

      Hey AJ

      Thanks for your comment. It’s good to hear that you could also use this even though you’re not in the IT industry. Fact is that I’ve a little bit hesitant to write this because I didn’t knew how well it resonated with my “usual” reader base 🙂

      But since this is still a big part of my business I really wanted to let people know about this opportunity. You can also see this as a strategy to leaving the 9-5 as I’ve used it like this.

  9. Laurits West says:

    Hello Rasmus

    What a great post! Really puts things in perspective for me, to see what things I have to focus on to end up where I want to.
    For 1½ year ago I was told Sharepoint is a good career move because it is hard to find people with that skill, and with even harder with good experience. One month ago I was reminded about it, and now I found this post. Didn’t think of that end goal, but some sort as well with doing something else than 9-5 jobs, but this has really given me some very useful insights.
    For the time being I will focus on trying to get more specialized but this has given me a further vision for myself and the opportunities I can make for myself.

    Untill now I saw my retirement plan to brand myself and make my name bigger and better through projects to get my salary risen, and then make personal projects to make the extra on the side. Eventually make those my way of living as they grew, but perhaps this isn’t the endroad. Only time will tell, and see what is right for me.
    But again thanks for your post and showing me other possibilities.

    • Rasmus says:

      Hi Laurits

      Thanks for commenting, if you want a “normal 9-5 job” being a generalist might suit you well, but if you want to become a freelance (and your own boss :)) I will really recommend that you specialize. SharePoint might not be the most interesting platform from a developer perspective (and can on top of that be very complex) but the market is screaming for people who know it.

      My advice would be (if you would go that way) to see if you could find a SharePoint project that could go on your resume while you’re still in your normal job. Once you just have a little SharePoint experience on your resume, you should be able to go out and find a great paying freelance consultant gig rather easily.

  10. Bettina says:

    Hey Rasmus

    thanks so much for the post. I came across your blog through Rob and Mish at makingitanywhere.com and am finding it really helpful. Thank you for your tipps!

    Currently, my husband works as an IT freelancer (java, so no competitor ;-)) in Germany while I am a stay-at-home-mom with two little kids. I’ve been inspired by the 4-hour-work-week and would love to create my own lifestyle business and live a freer life with my family, but am finding it a tad bit challenging since I also don’t want to put my children into daycare right now (I’m even thinking of homeschooling/unschooling them).

    Your ideas could really help us get on the right track since we could work on our own projects part of the year and life off the money my husband makes during the other half of the year. Just need to find a good inexpensive location with lots of internet entrepreneurs to do that! Are there a lot of expat families with young kids in Thailand? I’ve also heard a lot of good things about Bali, have you been there and if so what made you choose Thailand over Bali?

    Thanks again for posting and helping people!
    Best wishes
    Bettina

    • Rasmus says:

      Hi Bettina

      Thanks for sharing your story 🙂

      Thailand is perfect for families with kids. If you still want to work you should probably not go out to the remote islands although it’s fantastic there. The problem is typically shaky internet connections.

      I know a lot of entrepreneurs are settling down in Chiang Mai up north. Actually right now I’m trying to secure an interview with a family who have just settled there with four kids (age 1 – 9).

      I haven’t been to Bali myself but I know that it’s the preferred location for Project Getaway. I like the fact that they are primarily Buddhists in Thailand, so everyone are super friendly and everybody loves kids!

      After the first trip with my little girl, she was literally waving at everybody in the supermarket when we got home, and couldn’t get used to not being the center of attention when out shopping (everybody wanted to come over and talk with her in Thailand).

      Thailand has great food and it’s super cheap to live there (but I guess that goes for most of the Southeast Asia region)

      • Bettina says:

        Hi Rasmus

        Thailand does sound like a great place to live. Thank you very much for the information! Really looking forward to read your interview with the family in Chiang Mai.

        Best wishes
        Bettina

  11. Ramesh says:

    Hi Rasmus,

    Very interesting article. May i know your company name or linkedin profile. I am living in Denmark & working in IT as Test manager for last 8 years. Now i am thinking of becoming freelancer.

    Regards,
    Ramesh
    +45-60277085.

    • rasmus says:

      Hi Ramesh

      I’ve used several consultancy companies in Denmark, however over the last couple of years I’ve only worked through the company 7N.

      – Rasmus

  12. TC Norwood says:

    Great read. In the US going to try and put some of these idea to work.

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