IT departments to get smaller and less technical

The Register ^ | 5-27-2005 | Gavin Clarke

[KarlInOhio]

Now, they also have a strict policy against "rent to own"; they absolutely refuse to transition a contractor over to a full-time employee spot, no matter how good or useful the contractor is.

What an immensely stupid policy. One of the primary benefits of contracting work is the ability to try out many temps and only hire the one which works out well instead of relying on only interviews and references.

[SandyB]

Is this the "IT" model; or, the future of all technological and professional services in the US? We are being reduced to a nation of cash register operators.

In todays global economy with free trade, we simply dont need or want american workers in jobs that can be done more cheaply offshore.

Any job that "CAN" be outsourced, "WILL" be outsourced.

Instead of American workers being employed in the old outdated jobs that anyone can do like IT, computer programming, software developement, engineering, research, lab studies, durg testing, oil refining, steel, mining, ship building, aircraft building, factory work, manufacturing, accounting, law firm legal research, radiologists, medical transcriptioning,financial analysis, call centers, billing, collections, etc, they all should retrain to take jobs in higher paying 21st century jobs where the United States has an advantage.

[MikefromOhio]

they have been saying this for nearly 5 years now....I think the trend will reverse itself here sooner or later too...

that said, since I am a contractor for the Air Force now, I dont really have to worry too much :)

[Nick Danger]

This is actually good news for people who are any good. In any field of endeavor where the difference between the best people and the second-best people is large in terms of returns, out-sourcing becomes the rule.

Law firms and ad agencies are like this. Saving money on a second-best lawyer who loses your case is stupid. So even though the biggest companies have their own in-house lawyers, they use outside firms for the Serious Stuff.

Same thing with ad agencies; the money isn't in producing the ads, it's running them. So the 'creative' is a stupid place to try to save money.

Programming is definitely like that. The observation that the best programmers are ten times more productive than the second-best programmers goes back to at least David Brooks in the 1970's.

[Lazamataz]

My experience tells me that this is nonsense. I have never seen a successful offshore outsourced project. I have, however, seen successful US-based outsourced projects. If they are referring to US-based outsourcing, then the REAL American IT placement will RISE, not fall.

[Lazamataz]

Your cycle description is accurate, and in your model, the offshoring outsourcers are -- as they are in my experience -- bona-fide incompetent morons and gap-jawed fly-traps.

[machman]

For most companies, IT is a joke and a very big hit on the corporation's bottom line.

At my company, you could have a ticket open for days for something as minor as an e-mail problem. A few years ago, I found it was much easier just to fix my own issues and those of my co-workers. Now everybody in the office comes to me while the IT guys sit around doing who know's what.

When I took a new job in 1990, it was the first place I had worked that really used PCs. We were all networked together of course, but used real PCs. God forbid you had a hardware or software problem. It could be days until they got around to you and you could actually work again. We had one guy who was a PC expert, but really was an accounting/financial guy like the rest of us. He was our tech support. We never had to call the IT staff with him around. But about 2 years later he transfered to a different area, and we all freaked out. This is when I first really started to learn PCs. I got my own at home, and then I was the "real" department IT guy. Since then, in 3 different companies, I have always been a bit of the tech guy on the side, but less and less over the years as companies did realized that you actaully had to have somebody around that did know what they were doing in case things went wrong.

Several years ago I worked in an investment area of a bank. I thought the most important person in our entire area was the young IT guy. He wrote the code for our models, did all the back office stuff, PC tech hardware/software, networking, everything. And for a couple of years, it was just him, and he was worked to death. They did finally get a guy to help him tho. But the same attitude was at my last job, no respect for our department IT guy, but he basically was the one who made our area work.

[LAURENTIJ]

Opening a ticket takes days.. Compared to the user that doesn't know how to copy a file from C: to S:\whatever

When S: is down, some Indian with a script isn't going to help. It takes someone to get that server info and to let them know it might take awhile to get that problem fixed by a local IT pro.

[Mrs. Ranger]

"...they all should retrain to take jobs in higher paying 21st century jobs where the United States has an advantage."


And these would be?

[Southack]

"Gartner's latest prediction is that IT staff numbers will fall 15 per cent by 2010 as companies realize the potential efficiencies of bringing in external suppliers."

Gartner is a consulting firm. It makes money telling CEO wanna-be's what fad to follow. These are typically golf-course conversations, though they sometimes happen at gyms, too. Gartner itself has no stake in these decisions.

If your company outsources your data warehousing to Asia, and you suddenly get hit by lawsuits from those of your customers whose personal data was stolen by the rampant IP piracy thefts over there, it matters not to Gartner (so long as your firm pays their expensive consulting bill, at least).

Pause

Gartner thrives because it has a most amazing niche; there is a certain level of corporate America where mid-to-high level management (i.e. CEO wanna-be's) has some amount of institutional power, though has no real personal wealth (e.g. would never be on the pages of Architectural Digest).

Gartner is perhaps the best of them all (since Andersen failed, anyway) at schmoozing with that level of Management.

...And that level of Management typically makes up for its lack of personal wealth by wielding its corporate decision-making power...precisely the sort of power that Gartner thrives upon.

This decision-making power is typically used to make Management's daily routine easier, or more "hip," or to get noticed (target audience varies widely). Such Managers at that level structure their staffing levels so that personal whims and desired customizations (in everything, but this is particularly relevant to IT) in operation are constantly being made.

But customizations and personal whims are by definition neither the most efficient nor the least costly way to operate a business...much to the utter delight of Gartner...

...Because Gartner can *always* find cost-savings by making suggestions to cut out, outsource, or otherwise adjust just how much of said personal (for the Director) customizations are being performed.

The Director who wants custom Presentation changes to be made to software, for instance, is using IT staff in a very expensive way. The more efficient solution is to buy off-the-shelf retail software and live with it rather than to always be customizing everything.

Gartner isn't going to tell the Director that, however. Instead, Gartner is going to say "outsource" those desired customizations to some 3rd world coding sweatshop to save money.

Keep in mind that all of this applies to non-IT areas, too. The difference is that MOST companies have a core profit-making center that is *NOT* IT.

In those companies, IT is viewed merely as an overhead expense (quite a different view than how MicroSoft and Adobe view their IT departments). So all that Gartner is doing, in the minds of the Directors at the level that I'm discussing, is giving consulting advice that amounts to "cut overhead expenses."

This is very effective...at least for continuously making money from "consulting."

Sadly, because this is corporate *cultural* phenomenon, non of the above is likely to change significantly in the near future.

On the other hand, there is something that you can do, whether you are in IT or not.

Whatever your skillset, from programming to accounting to zoo-keeping, you will avoid the above-mentioned forms of outsourcing dangers to your job if you go to work for a firm that makes its money directly off of your area of expertise. Programmers working for software firms, i.e. those companies that sell software to make their earnings, would fit this bill. Zoo-keepers who work at for-profit zoos rather than for a casino that just keeps them around for show would likewise fit this bill.

But if you are a programmer at a bank, knowing full well that the bank makes its earnings from loans, not from your software, then you are at risk.

...And now you know...

[snowsislander]

they absolutely refuse to transition a contractor over to a full-time employee spot, no matter how good or useful the contractor is.

If the learning curve is two years, then it's poor management to not allow contractors with valuable (and expensive) knowledge not to stay on or transition at the two year point.

Unfortunately, that's not unusual -- it appears to me that poor management is a problem in many American companies.

[Nick Danger]

it's poor management to not allow contractors with valuable knowledge not to stay on or transition at the two year point.

Before you can make that claim, you have to know how big the ransom is. The ransom that must be paid to hire a contractor consists of two items.

One, a direct bag of cash that must be paid to any contracting agency that might be in the middle of the deal, i.e. "In the event that you hire our employee, you owe us two years' salary" or some such.

Two, the potential penalties that might be levied by various government agencies that 'help' contractors, i.e. "In the event you hire a contractor after X months, we will decide that he has been an employee all along, and you were just trying to get out of paying him benefits, so we will sock you with some huge fine." Both the Department of Labor and the Internal Revenue Service can be helpful in this regard, as can state Workers' Comp agencies.

[Nick Danger]

Gartner is a consulting firm. It makes money telling CEO wanna-be's what fad to follow.

You know, you're probably right. It had never occurred to me that there are actually people who follow their advice. I had always assumed that the function of Gartner was to provide backup for whatever BS you were trying to sell with your Powerpoints.

You go pitch some venture capitalists for money, and you tell them that the industry you are in will grow by 64% per year from now until eternity (Source: Gartner). That kind of thing.

Or you want to get rid of Microsoft and put in all linux boxes (or vice versa) so you make a slide full of bullet points from Gartner (or Forrester, or whomever supports your cause) to show the Big Suits that you know your stuff.

But you're right, I forgot that there are those people who don't know anything and can't think. The ones who figure stuff out by running around and "talking to people" to see what they think. Those people might actually believe the crap that Gartner tells them!

You have ruined my day by telling me this. I had assumed those consulting guys were reasonably harmless. But you're right, there are probably people right now acting on stuff that Gartner tells them.

No wonder things are so screwed up.

[Southack]

Your reply made me laugh!

But perhaps I should have been more diplomatic...