Use of IT Contract Workers Falls

October, 2014

The use of contract workers by IT organizations as a percentage of the IT workforce dropped in 2014 after rising somewhat dramatically over the previous three years. The reversal in this trend provides strong evidence that IT organizations are increasingly willing to hire regular, full-time employees and reduce dependence on contingency workers.  

The rise in the contract worker ratio from 4% in 2011 to 6% in 2013 at the median reflects a significant upward trend, as shown in Figure 4 from our study, Current Use of IT Contingency Workers. However, the retrenchment to 5% in 2014 represents a return to a more typical level.

Contract labor Fig 4 - Use of IT Contract Workers Falls

A reluctance to hire full-time employees due to economic uncertainty no doubt played a role in the rise in contract worker ratio from 2011 to 2013, as did skill shortages that coincided with the renewed investment in business systems, mobile applications, and business intelligence solutions. Today, IT organizations are beginning to hire regular IT staff as well as they expand IT operational budgets.

Contingency workers (contract workers and temporary employees) provide flexibility, variable cost and, in some cases, hard-to-find skills for special projects. They can reduce the need for overstaffing by working on an as-needed basis. Some organizations rely on their temporary workforces as a way to try out workers before making a full-time commitment.

On the downside, a temporary workforce will have higher turnover, be less committed to the organization, and require more training in the organization’s processes and procedures. The use of IT contractors also may create continuity issues, and they lack the institutional knowledge that organizations require to function. Unless properly screened, they also can increase security risks.

As such, managing the contingency workforce of contractors and temporary workers is a balancing act. Staffing agencies and vendor management systems for placing temporary workers have made the job easier, but IT managers still need to determine the proper balance between regular full-time employees and contingency workers. The full study assesses the use of contract workers by organization size and sector to enable IT organizations to benchmark their use of contingency workers against industry norms.

This Research Byte is a brief overview of our report on this subject, Current Use of IT Contingency Workers. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).