In IT? People are fighting to get internal to have more security. Externals have most of the time higher salaries, except for upper management.
This statement is true only at technical expert/programming levels. At all levels starting from junior Managers, Internals are paid higher than externals.
I am in a similar situation. I am an IT PM/Scrum Master and work for a consulting company which has allocated me 100% to a Pharma/Medical company in Basel.
There are no internal technical resources. They are all based in CZ or IN.
Internal resources based in Basel only start at PM/Senior PM level and above. The starting base salaries for the internal PMs are approx. 145 KCHF + up to 20% bonus. Position of internal Senior PMs is secure, however, the work load is crazy. The benefits are good tho.
External PMs like me have a similar (or slightly lower) base salary but max. 5% bonus. No overtime or extra hours (except if on Sunday/public holidays).
I have a contract with the client Pharma company on a 3 to max 6 month basis. Every 3 or 6 months, the contract is renewed. The client can cancel the contract at any time with a notice period of 1 week. If that happens, I go on the bench for max 1 month and if I am unable to find another project in that 1 month, then my consulting company gives me notice for 2 months.
All excellent inputs, my view:
The differentiator for a consulting firm (with a reputable name) on the market is much higher than a payroll company, and as such they can command higher margins. I would say it is not unusual for such companies to have a 20% or more markup on the rate they pay to the freelance (Iâm using the term freelance loosely here, as often they become employees of the Payroll entity - you guys may correct me on this one). On the table they put the value add of their name, experience, blah blah, and especially they put their âreputationâ on the freelanceâs work and bear most of the risk.
Payroll companies are performing only an administrative task between the client / consulting firm and the âemployeeâ, with little value add in between, so the lack of differentiation and the competition drives prices down, Iâd say they probably can get by with 5-7% margin. Itâs different if the payroll company is also the recruiter and/or they placed the consultant, then itâs a bit higher.
All told, to make an easy approximation, if Client pays 1â000 / day to Consulting Firm, the latter pays 700-800 / day to Payroll Company, which in turn pays 650-750 to Freelancer.
Would Client be better off hiring Freelancer as Employee and/or contracting him directly? Depends, you may not have the same access to the market, experience in sourcing and evaluating Freelance or you may want the Consulting Firm to be your only point of contact. The best course of action for Client is to either build the competencies internally (see thread on internal vs. external) if itâs a long-term skill they want to retain, or better even evaluate Freelance during the project and then make an offer.
Going back to the previous topic, oftentimes Consulting Firm has led the bid / sales process to get the deal and once won finds itself in need of immediate resources to fulfill the project. They may have a bench as @Sirob mentioned but market is seasonal so itâs likely that when you need people also others need them too, leaving you with only the Freelance route. Thatâs why I believe itâs not overly difficult to find a project where they would âdiscountâ the experience required to be considered.
To increase your salary and also your âemployment ratioâ, it pays off to develop a relationship with Client and Consulting Firm when possible.
External:
With 10 years of exp, an external PM can bill 1100.- a day. 220 *1100 = 242â000
Letâs remove 11% for the payroll company and for the employerâs social contribution = 215â380
Internal:
145â000*1.20=174â000
Letâs assume the company pays 10% of BVG/LPP =191â000
1100 chf per day for an external PM resource is not going to get thru internal procurement and finance review, unless the PM comes from a specialty niche product company.
Typical rates for external PMs are around 950 chf per day.
Internal PMs are billed at around 1350 chf per day
A big Swiss telco used to have a 1200.- Fr. hard limit for any external consultants per day 7 years ago.
Pedro, if that is your real name, I would risk to say you are not Swiss⊠Did you come here only because of your love for the nature and the mountains?
I donât think there is nothing wrong to try to improve and develop your career in a path that will yield you more wealth. One can like many things in your domain, so why not pick one where you are more likely to be better rewarded.
Donât think anyone here will be switching from IT Dev to Financial AdvisorâŠ
Iâm a bit with pedro on this. Also with you apparently No one will switch to a completely hateful job just for the money.
Itâs good to remember that you canât just suffer for x years just because you make 10k moreâŠ
Btw we are not in the 70ies, Pedro can be a swiss name