Just when you thought you had IT resourcing sorted, the long-accepted wisdom of working with a few big companies (think: economies of scale, convenience, reputation) is being challenged and disrupted. A move away from traditional labour hiring agencies, technology vendor infiltration and over reliance on consultancies from the big end of town is not surprising. Here’s why.
Tried and true is tired. We are seeing six drivers of change.
1. Time Constraints
IT projects today require speed and agility in resourcing. Hiring direct, or through an agency labour firm, moves through phases – job/role definition, criteria-setting, advertising, interviews, selection, offer etc. Four to six weeks later there is a chosen candidate. We all know project sponsors who would be a little prickly about waiting that long while the clock is ticking! Of course, if the selected candidate then declines, the client may have to settle for second best, or you’ll need to start again. This all makes perfect sense for permanent roles but costs a packet when a project is in flight with a high burn rate, and in situations where specialised knowledge, skills and speed are critical to solve pressing technology challenges
Direct contractor engagement or temporary labour hire agencies can falter when recruiting for complex or extensive projects, particularly where specialist technologies or skills are required. The hiring manager, usually skilled in HR disciplines rather than technology, may find it challenging to discern the true skill value behind the buzz words/key words of CV analysis. Yet, the buying company must trust that the IT resource the agency selects will be up to the task and carries the risk if they aren’t.
3. Transfer of risk – no SLA
A key issue when resourcing via a labour hire firm is that the risk of their performance sits with the buyer alone and this form of resourcing takes time and effort to get right. This approach can be useful for simpler technical roles in well-known technologies and job types, where the risk is relatively low. However, in complex environments, working with complex programs, with many interdependencies and deadlines to meet, delays such as those caused by IT resources, who don’t have the right skills and are working slowly or making mistakes, are very costly. Increasingly, project managers within big organisations are de-risking by pushing for more control over IT engagement, trending towards smaller, value for money consultancies that not only deliver appropriate personnel, but also provide the value-add of expert oversight and risk management.
4. Question of Value
In a business environment focussed on cost efficiency, there is less appetite for handing over the keys to the treasury to the big end of town consulting firms when smaller, agile and independent consulting firms can deliver for less. There is no doubt that monolithic consultancy firms can deliver results and they have some great people. They also offer senior partner support, which differentiates them from Labour Agency hires, but this comes at a significant cost. Similarly, technology vendors that provide a technology solution plus full project delivery services and can also act as Systems Integrators typically charge rates that are usually one and a half to two times higher than other resourcing options.
5. Politicking and scope creep
Some of the large IT companies are well known for their strategy of getting close to business execs and lobbying for pure revenue-raising purposes, often aligned to specific technologies in which they are heavily invested. Clients have suffered over the years from vendor lock in combined with high rates and unnecessary over-resourcing and are now beginning to push back.
6. Quality Control
Similarly, there is a growing desire to keep technology vendors in check through independent reviews and expert knowledge oversight. Recently we have seen some clients de-risk by sprinkling independent consultants throughout the SI or vendor team to bring in specific skills or expertise and sometimes in order to “keep them honest”. We see many clients that have a clean handover from development or configuration by the vendor to an independent test team. Along with independent testing, having internal staff or independent consultants manage deployment and implementation prevents surprises and creates clear management lines and transparency. Having independent project managers (internal or from an independent consultant) oversee or provide governance or assurance over the vendor / systems integrator simplifies issue resolution and creates focus in the right areas.
Rapid advances in technology, changing methodologies and the benefits of working with smaller, independent consultancies are challenging established practices and relationships across organisations. The outdated economies-of-scale processes of procurement and HR departments will continue to be disrupted, driven by the needs of project sponsors, project team managers and the people on the ground delivering the technology transformation.
David Robinson is Consulting Director at Envisian