Are Contingency Workers Driving Your IT Project Over Budget?

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More and more enterprises are turning to contingent workers to power their IT projects. For many, it’s a relatively simple way to temporarily increase staff resources and meet project deadlines. It’s also an easy way to go over budget, and thwart IT cost management.

Companies should make sure their current workforce isn’t capable of handling the load before reaching outside for help (which can drive overspending). Whether a project will last two weeks or two years, companies need to evaluate all options before investing in contract resources. The companies that do the best job of managing these costs have processes in place that ensure they consistently consider the following questions EVERY TIME they are about to spend on contingent IT labor:

  • Does this project need the skills of an outside consultant? Or, does a current employee already possess these skills? If so, is that person a better choice for the work?
  • Do the business owner and other stakeholders all agree with the decision to bring in outside help?
  • Does it make more sense to pay the contract worker’s hourly rate, to establish a fixed daily rate, to establish a project fee, or to make them an employee?
  • What is the fair market value rate for contract labor for this type of IT project/skill set?
  • Who will make sure IT contract workers are adhering to the enterprise’s internal policies?
  • Today’s businesses are under tremendous pressure to run their operations as lean as possible. Contingent labor may seem like a silver bullet, but most companies don’t fully understand the long-term cost and effect it has on the bottom line. There are third-party providers who offer Vendor Management Systems that are designed to streamline and optimize the management of your contingent workforce. This type of software will centralize the hiring process and will provide reports and analytic capabilities that outperform manual systems and processes.

    At NPI, we have seen too many companies make a habit out of bringing in contract IT workers for every job and then wondering why the projects went over budget.

    Once it becomes part of the day-to-day routine of the business, it can be difficult to stop. If you’re expecting to increase your IT contract labor force in 2014, benchmark and analyze how much you are paying outside workers across the business, and ask yourself if that cost could be managed and controlled in a more efficient way. The answer is most likely YES!