Whether companies require specific tech talent for a project or need extra help meeting a business uptick brought by the recovering economy, corporate IT departments depend on the contract workforce.
For CIOs, temporary staff offer the experience required to complete a specific task without the need, and cost, of permanently keeping them on the payroll. IT staffing firms see contractors as helping companies stay flexible and meeting the work peaks and lulls that accompany a recovering economy. In either scenario, contractors have been, and will continue to be, in demand for enterprise IT, according to CIOs and hiring experts.
Moving to Salesforce.com’s CRM platform a few years ago meant that Inside Track, which offers academic coaching services to college students, required specific personnel who could build custom applications. Without the proper “internal knowledge or expertise in how to leverage” the platform, the San Francisco company, which counts Columbia University and Florida State University as customers, wondered “how do we develop on top of it?” said CIO Derald Sue. Hiring and training workers didn’t fit the company’s budget or schedule, said Sue.
“The thought of trying to build those competencies internally was really a large expense upfront with a long ramp up time,” he said. “And that’s just not what we were looking at doing.”
In fact, Inside Track turned to cloud computing because it offered fewer IT demands than on-site software, he said. The company is a “strong user of technology,” not “a development shop selling a product to an end user,” he added.
With full-time developers not fitting into Inside Track’s business plan at the time, the company decided to hire contractors, vetted by IT consulting and services firm Bluewolf, for the development positions, Sue said.
Now, after using contractors for two years, Inside Track uses part-time labor to supplement the full-time developers it later hired. Having the development expertise on-demand allows the company to complete work with less lead time since Sue doesn’t have to “find all these people, build an entire department and then get moving on the project.”
With the contractors “it is very much like they are an extension of Inside Track employees,” said Sue, adding that part-time staff participate in weekly meetings that include the technology and business departments. The full-time workers don’t view the contract staff as brought in to “fix” a broken development process. Instead, he said, regular staff view temporary workers as a way for the entire company to get “where we want to from a tech and process perspective much faster.”
And judging from Inside Track’s software release cycles, contract labor paired with a new development platform has made the company more productive. According to Sue, Inside Track has four major software releases each year as well as six smaller updates compared to the one large annual release it issued when it used Microsoft’s .Net development platform.
Sue’s view on temporary labor has evolved from five years ago when he would have hired and managed a development group instead of turning to part-time help.
Supplementing full-time staff with contractors is “just a much more cost-effective and faster way to grow our own internal workforce,” he said.
And freelancers are happy to take on contract work and see real benefits to joining the flexible workforce, said Michael Kirven, co-founder and principal at Bluewolf.
“They do it because they want to, not because they have to,” he said, noting that freelance work clearly offers flexibility not found in full-time employment. Also, training and financial benefits accompany contract work.
“They always get to be on the bleeding edge of something sharp,” Kirven said. “It keeps their skill set sharp and billing rates high.”
With the bigger paycheck, though, comes the expectation that contractors match regular employees in technical, application and communication skills, said Jack Cullen, president of IT staffing agency Modis. Over the last five years, and especially in 2011, freelancer salaries have increased and are now comparable to full-time salaries, he said.
“They’re looking at that individual with almost as much scrutiny as they would a full-time hire,” he said. With some companies restoring staffing budgets, “hiring managers today are looking for that candidate with just about everything” and are cautious about whom they hire, Cullen said.
At BI Incorporated, which develops a range of monitoring and tracking devices for the criminal justice system, “there are definitely some similarities” between the full-time and part-time employee interview process, said CIO Andrea Young.
After staffing firms suggest candidates, BI conducts its own interview to assess soft skills, such as handling the tight deadlines that accompany BI’s agile development process, said Young.
“We do releases every three weeks,” she said. “They have to be someone who has a good workflow under pressure.”
In rare cases, temporary work can serve as a potential gateway to full-time employment at the Boulder, Colorado, business, said Young. However, “you never know. If some of those individuals were a great resource on the team and they fit in well, so if we needed to have a regular employee they might be a candidate,” she said.
BI turns to contractors when the IT department is expanded beyond its normal capacity or a particular skill set is required, Young said.
Since the company doesn’t always know what its workload is going to be, a variable workforce allows the company to handle “a burst that we have to scale up for,” she said.
A burst in work accompanied a project that involved updating proprietary software that handles the location function on some its hardware. Previously, users logged into separate portals depending on whether the monitoring was done by GPS or radio frequency, Young explained. The new software aimed to consolidate both UIs into a single portal.
The project required some work to modernize legacy application architecture and Young used contractors for the job. The company didn’t have a firm idea of how the revamped application would impact its business and staffing needs, she explained.
“On an interim basis, we have the ability to use contractors until we know what that long-term workload is going to look like,” Young said.
Young also turned to contractors when BI worked on a mobile development project: “That was a specialty that we didn’t have on the team.”
Young noted that BI is “also mindful of the whole co-employment issue” and makes sure that the third-party that located the workers handles freelancer management.
While the company wants candidates who fit the team and stay for at least five months to justify BI’s training investment, they’re ultimately not her company’s employee, said Young.
“They are an employee of the staffing agency,” she said. ” So there are some clear differences that you have to make sure that you outline.”
For example, BI contractors don’t participate in departmental events or receive any of the company’s human-resources benefits, she said.
Beyond using contractors “to get [a] project off your shelf,” Modis’ Cullen has seen an increase in demand for temporary workers as businesses, especially financial firms, look to complete IT projects that may have been fallen victim to budget cuts during the recession. And, Cullen said, greater IT job growth, even if it is for temporary positions, can hold positive news for the overall economy.
“Demand for contractors really is the first step to a post-recession recovery,” he said. “If you’re looking for sign when are we going out of [the recession], you can typically look to the tech markets and see if you’re seeing some pick up.”
This pick up in business is exactly why some companies are looking to temporary workers, according to research from Bluewolf. Improving economies bring increased labor demands as customers have the capital to buy products and services, the firm said. With the recovery’s strength still uncertain, businesses need a flexible workforce that they can scale up or down to meet the changing workload, the research said.
While BI’s use of part-time work to modernize a platform wasn’t tied to economics, Young has heard anecdotes from colleagues about businesses using more part-time labor due to economic demands.
“In conversations with my peers and vendor partners that provide contract staffing, they have identified that hiring demand is up,” she said. “Peers have been dealing with a long-term reduction in budget that has caused them to have to catch up.”