With all the talk about companies becoming more “agile” and outsourcing their IT operations to service providers, there’s an interesting counter-trend starting to develop. While technology companies appear to be holding off on hiring because of economic fears, companies in sectors like healthcare and retail are moving to build their IT teams, in some cases reversing course on a strategy of outsourcing as much of their IT operations as possible.
Earlier this month, Best Buy announced that it would triple the size of the company’s in-house IT staff by hiring 200 more tech professionals over the next year. Best Buy had largely outsourced IT operations, but the company’s recently-hired CIO Jody Davis has reversed course. Davis told Retail Info System News, “We now want [to hire] talent as Best Buy employees. We need to develop a strategy of what we’re going to build. We like to take control of our destiny.”
Yes, many companies have shed services like e-mail, data center operations, and even desktop support to managed service providers, and have moved toward hiring IT contractors to handle application development and maintenance tasks—opting to focus on their “differentiators” to be more competitive. But over the past year, competition for IT skills has become increasingly fierce, and many companies are realizing that IT isn’t just a support service—it’s core to their business’ future. And to take control of that future, HR professionals and recruiters say, more companies are looking to lock in IT professionals with the golden handcuffs of statutory employment.
Dheeraj Bharadwaj , human resources vice president at Atlanta-based IT solutions provider NIIT Technologies, told Ars that more companies are building up their internal IT staff and insourcing projects because they’re looking for a more reliable and predictable pool of talent. Having a stronger internal IT team to lead projects “drives a high percentage of predictability in success,” he said, because “dependability, understanding of organization in quick judgments and knowledge of where to tap for resources are big advantages.”
For companies that have outsourced new projects or deferred projects entirely during the recession, the core IT staff “get hit by a feeling of saturation or stagnation due to repetitive work,” Bharadaway said. “Due to the economy, very few organization have invested in new technology and projects, which are a great internal opportunity and tool to develop and retain talent.” By insourcing new projects instead of handing them off to contractors, companies can boost internal skills and avoid losing staff to the increasingly hot IT jobs market.
Scott Gordon, a partner at Vaco LLC, a Nashville-based tech recruiting firm, told Ars that there’s a lot less discussion about outsourcing among his clients, and much more of a focus on internal hiring. He says he has seen an threefold increase in positions to be filled over the last 18 months. While he works primarily in developer recruitment, he says his firm has seen the same trend both with developers and with infrastructure IT positions.
“It wasn’t this busy during the dot-com boom,” Gordon said. “The demand now is at the point where the candidates are more in command of the process than they know. They hear that the economy is about to tank, and assume there are hundreds available for their position, when it’s exactly the opposite. I have candidates who’ve gotten seven to ten phone calls in the same day.”
Scott Swift, an IT recruitung consultant for IT recruiting firm TriNet, echoed Gordon’s experience. He told Ars that finding IT talent “has become much more difficult over the last 6 months, as the demand for these candidates is high and competition is fierce among employers.” That’s good news for IT job seekers, but it’s also a problem for companies that used to be able to rely on contract talent to fill in the gaps.
With talent in high demand, Gordon says most of the companies he deals with are now opting for permanent hires or contract-to-hire arrangements rather than looking for fixed-term contracts. And the companies looking to do contract hires are having trouble filling them. “It’s much more difficult to find people for those because people not looking at short term opportunities because of fear over the economy,” Gordon said. “And the interview process for those is much longer.” He also says that some companies aren’t moving fast enough to make hires and losing candidates as fast as he can deliver them. “Some clients are interviewing four or five times, not understanding the market. It’s like putting rabbits in a box—I can put five in, and four will jump out.”
Gordon said that the shift from outsourcing has even led to overseas outsourcers sending him candidates for full-time positions in the US. “They call me, wanting to send me candidates from India and Ukraine,” he said. “It may be an indicator of how their business is doing offshore.”
Much of the insourcing growth is happening at small and medium businesses. According to market research data from SpiceWorks, a professional social networking site for IT professionals, 31 percent of SMBs planned to add to their IT staff this year. Finding that talent locally, however, is increasingly hard for small companies.
“SMBs are facing tough competition from companies such as Google, Facebook and LinkedIn who are aggressively hiring the best IT people available,” said Swift, and the efforts to fill positions are taking longer and longer—and costing companies much more money to fill, regardless of the salary.
So to get the stability of dedicated staff without fighting the local market, some SMBs have shifted how they work with overseas IT, according to Rick Ramos, CEO of TeamLauncher, a company that specializes in hiring offshore talent for SMBs. TeamLauncher does traditional outsourcing arrangements, but it also acts as an agent for small and medium companies looking to hire overseas developers and designers—what Ramos calls “insourcing overseas”.
“We’re getting a lot of midsized companies coming to us because they can’t find labor locally, and want to have control over what people do,” Ramos told Ars. While TeamLauncher’s business used to be mostly outsourcing, “the numbers have flipped” recently, he said, with 60 to 70 percent of the company’s business now being remote staffing. “What we do is we allow people to develop teams within our office—we set up the space, and do everything to manage the hiring, but it’s their employees.” With offices in the Philippines and India, Ramos says his company now helps manage about 460 overseas employees, mostly in small teams for small and midsized clients. “Our largest team is about 20,” he said.
Source:http://arstechnica.com/business/news/2011/10/now-hiring-companies-move-away-from-outsourcing-to-control-their-it-destiny.ars
