Wednesday, 04 March 2015 21:15

IT Contracting - is it still relevant?

By Andrew Matler

The question of whether IT contracting is still relevant today is a common discussion point between IT contractors and large IT shops who are big users of contractors or consultants. The answer may be a surprise to some.

The fact is that IT contracting has been around for over 40 years and has been the preferred way to get hold of short-term IT skills. It competes with permanent recruitment and Consulting firms and provides a different service to the market.

The current demand for contracting is always a bit of a guess given its nature as a somewhat hidden labour market. Sure, there are statistics, but CIOs are not always certain how many contractors they really have working on-site at any point in time, given the method of approval and payment is often outside HR process.
The demand for IT contracting always has peaks and troughs obviously caused by IT budgetary constraints and the economic climate, but not necessarily for the reasons you think. When there are spending cuts the IT shops and vendors generally cut their contractors first and later on when there is no choice, then the internal staff.  As a result IT Contractors are always a little jittery of "not being renewed" thus they are always a bit on edge, as fear is always a great motivator. Consequently they focus on their work, giving it their all, and the majority have very high output and project milestones / delivery success.

During tough times the mega vendors get rid of IT staff and IT Contractors, while conversely, the smaller IT firms ramp up. This is because the smaller firms have already cut costs 6 to 8 months earlier and now the big vendors are consumed by organisational cost cutting upheaval. During this chaos the smaller IT firms make their move to win work at IT shops/customers that were previously too large for them to be a contender.  In this next phase of improving economic conditions many IT Managers use contractors to ramp up their projects again and find ways to by-pass HR via POs and fixed priced contractors (not consultants).

Consultants are harder to hire and hide, as in many cases they can make lots of noise about their arrival and, beating their chest with their successes. They also make sure that they get to know all the executives who work above the manager who hired them.  I heard a CIO once refer to Consultants as being compared to couch grass - "they spread into the garden bed and then up the fence". In other words they will be talking to your boss and not always to help you, as the modus operandi of the big consulting firms (and how they train drive their staff) is to spread the message that they are needed, hinting that the customers’ managers and staff are incompetent.

This trend means the best contractors and the best prepared people get the work, by working hard to market themselves to the right recruiters and to the IT shops that are starting or ramping up new projects. Some IT shops have a policy that contractors are given the boring work on legacy systems, while permanent staff do the fun and exciting projects. Many contractors don't mind this as they see being paid as the fun part. Contractors generally leave corporate life because they don't want to be involved in organisational politics and chasing the next promotion. Instead, they want interesting work and to be paid well to do it.

"I think that IT contracting is very healthy and that's why I am in this business. It is also a part of the market that is not researched as much as, say, permanent recruitment,” says David Hickleton, General Manager Alitis Recruitment.

“Sure there is data, but not the same amount. My view is IT contracting is on the rise again and it is a somewhat hidden labour market as it’s often done outside HR and people budgets. It’s a good game to be in."

According to David Field, Technical Services Director, NGAGE Technology Group, IT contracting is still relevant, although it is changing.

“I think this is because it is often used for back-fill positions or where there is a team requiring additional people at a lower on-cost such as leave, annual leave etc,” says Field.

“With that said many customers are looking for more than just a body. They seem to be looking for a combination of the right technical skills and experience, but also be focussed on delivering an outcome to a budget, not just an hourly rate assignment.   Is IT Contracting on the increase or decrease at present and why is that they case. Traditional hourly IT Contracting seems to be decreasing as customers wish to achieve more with less, while ensuring that the projects they get up, are delivered successfully and on budget. Therefore any increase in IT contracting is via a set budget model."

Contractors who get their contact terminated have a reasonable chance to get that back within 4 to 6 months and therefore coffee and emails with their old boss is crucial.  People who are retrenched are very unlikely to be reemployed, but sometimes as a contractor, this comes with a little backlash from the staff that remained. “He got the cash and now the contract, lucky devil”. Some contractors are enticed to become permanent whilst others are given a very draconian ultimatum.

Once you convert to from contractor to permanent it is very difficult to become a contractor again. You can call their bluff but in 8 out 10 cases they will let you go, so be confident you can get other work before playing that card..  To safeguard against this many contractors start looking for new work 6 to 12 weeks prior to the end of their renewal or contract. This approach is the best way to keep you in work.

Position yourself first by your CV, dress, personal communication as customers will make up their mind in the first 3 minutes, so give yourself the edge.  Personal referral is 10 times more powerful than being the unknown quantity.

From our investigation many IT users use large numbers of IT contractors but this fact is not widely known.  This is because they may not want their management to know as it may be outside of policy, or even customers to know as they like them to think its a 100% in-house development team.

To be successful it is important to understand what’s in demand, the economic situation, and the top 10 sites relevant to your skill-set, as well as keeping in contact with the top contractors in that space.  Still network with customers when they are not hiring so you are front of mind when they are.

Keep your ear to the ground, if highly skilled people decide to leave permanent employment then that is an opportunity for you.

According to the IT Managers and Contractors we spoke to, IT Contracting work is definitely a significant part of the IT services market. Customers will continue to position themselves to get the best contractors and contractors will position themselves to be the contractor of choice. At the end of the day its all IT matchmaking of the temporary kind, remember to have attractive skills.


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Contact Andrew on 0412 390 000 or email [email protected]




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