Ask HN: Is it better to be a consultant in a time of layoffs?

But they are often called in when the cuts were too deep, or to help with the cuts.

The advantage that a consultant has is that they're used to being "laid off" multiple times a year, so they should have a customer base they can use to level out.

I am a consultant. And my firm focuses on clients where we have short engagements and focus on specialty work that you can't easily hire for.

The type of work I do doesn't get you cut, because you're in and out and try to deliver a great value to your clients, and you keep them for years in repeat engagements because you do it and can prove it beyond a shadow of a doubt.

As for the former type of consultant, you'll get cut, and you'll get cut so fast your head will spin. And the reason you'll get cut is because your client wishes it could just hire employees, but sometimes they can't and they find consultants instead.

If a project is equally discretionary contractors will get cut first and without warning but I don't think that makes as much difference.

By discretionary I mean that cutting back won't cause immediate damage to the bottom line or easily visible long term damage to the company.

It wasn't until a few years ago, when tech companies started their massive hiring sprees that contracting gigs really started to dry up. So while yes contractors tend to get the axe first in a downturn, at the end of the downturn it can be a lucrative business.

If you want stability, get on a project with ample funding from an org whose profits are consistent even through recessions. Whether you're a contractor or not your position is probably safe. I wouldn't want to be in a startup going through a recession.

Personally, doing staff augmentation type “consulting” is the fifth level of hell. You’re treated like crap, are easily disposable and it really does nothing for your career. You’re also not paid all that much.

On the other hand, “consulting” where you are bringing in specialized knowledge is great. You can charge and arm and leg is great.

Which is better in slow economic times is just the opposite. Companies hire staff augmentation type “consultants” because it doesn’t increase headcount and they are easy to get rid of.

Companies hire true “consultants” when they are going after new initiatives which they do less often during slow economic times.

I’ve done a couple of staff augmentation type projects early in my career. A couple of true independent consulting projects later in my career and I now work as a permanent employee as a cloud consultant at $BigTech.

Middle market, yes and no. We get more 'steady state' type labor from them, whatever it takes to get the business running day to day. However, new projects are way harder to sell. To wit, my firm is currently unable to keep up with MSP work, but the project selling side is starting to get pressured on utilization and it seems like clients are scaling security stuff down to just the barest regulatory requirements.

Also, if you are at a blingier outfit your clients are going to start price shopping. They'll be back when they realize the quality isnt as good or if it turns out you CAN put a price on tribal knowledge... or maybe you'll meet an old contact at a trade show and they'll tell you the new upstart competitor is taking your lunch after all.

tldr we are not just sitting on our hands. the firm as a whole will do well but every consultant has to prove their worth by billing and that is not guaranteed to be easier.

Massive layoffs are happening for some companies, but the market is still extraordinarily great and it's currently incredibly easy to get a better job than you had when you were laid off. As long as the general environment doesn't tip over into higher unemployment, I wouldn't worry about this too much (but still make plans just in case).

Any negative economic blip is used as a recruitement/headcount freeze where employers can cut out the 'deadwood' without market/customer/shareholder/staff negativity. In that environment, consultants and contractors are valuable because the work needs to be done, but they can't hire the staff (hiring freeze + normal churn + "it's the economy" layoffs)

On the other hand, if projects are being canned, products aren't being developed, apps aren't being launched, that sort of thing then contactors and consultants are not in demand. It does take a lot to stop projects at that scale, and they tend to be focussed on a particular sector. I can think of 2008/2009 in finance (obviously), and 9-11 in the insurance industry (travel recovered very quickly).

I guess, that some companies will want to retain their essential contractors, but might choose to shorten contracts to a rolling month-on-month or something similar.

I started in '09 in the midst of the Great Recession, and did well. Companies were laying off, but still had projects needing done. Between 2010-2020, I also did well. 2020-now, I'm doing OK, but half the work, with regular (non-tech sector) clients have been worried about the economy, holding back on non-essential projects.

The biggest intangible though is how hard you're willing to go out and sell yourself. You have to have more than just knowledge, you have to have belief in what you're selling--which is yourself. If you can sell yourself, you'll do ok.

I am not an expert, but my understanding is that sometimes accounting makes it so cutting headcount looks great, lower overhead, but stuff still needs to get done so consultants are brought in to actually do it.

Later boom-and-bust cycles I barely noticed, things stayed pretty steady.

It's a very different industry than it was 20 years ago, though, so I'm not sure how much predictive value that anecdata has. This time around I expect companies to be more willing to experiment with the low-cost offshore options than they might have been last year; offshoring wasn't really a well-established option back then.

Not super surprising - contracting is a feast or famine business, but after a few years into the early 2000's doldrums I ended taking W2 jobs and never looked back.

I’m not 100% clear on the law, but I think if you work more than 20hrs for a company or derive a large portion of your income from a single client that California might consider you to be an employee even if you have a corporate shell like an LLC.

I know that back when the law passed I was asked to share copies of invoices to other clients so I could continue to do work as a CA contractor and keep my client protected from any employment claims.

(Lots of firms need good engineers willing to work on (not always, but often) less sexy tech that are willing to travel. This is hard to find (see also: every thread about WFH) but pays well. Not bull-market-FAANG well, but well.)

I was a consultant during 9/11 and the ensuring economic meltdown, made worse by major Y2K projects wrapping up. Consultants were let go en masse. It was extremely difficult at the time to get new work because so few people were hiring either employees or consultants and for those that were there were hundreds of candidates trying to get that one job. Contrast that to a couple of years earlier where they were literally throwing around tens of thousands of dollars in sign-on bonuses.

Once you've been around this industry long enough you'll see this cycle repeat every 7 years or so (1987, 1994, 2001, 2008, 2015 - not so much, and now 2022). It's the IT boom-bust cycle.

The golden rule is to build and maintain a strong network. Easier said than done. Your client contacts could also get laid-off.

Small sample size, so pinch and sprinkle.