The Pros and Cons of Agency Contractors
Although the economy isn’t quite the disaster it was two years ago, many businesses still aren’t ready to staff up in the IT department. Instead they are relying on IT talent agencies to fill the gap with contract workers for both short- and long-term projects.
And that's not all. Vendors and solution providers looking to expand their geographic reach are doing it by hiring local talent through these agencies as well.
Maybe that's why a few new IT talent marketplaces have recently joined the scene -- Work Market and IQ Tech Pros -- joining more established players such as OnForce and SmartSource.
"Due to the fluctuating economic climate, I think that companies are more open to pursuing new ways of doing business – such as on-site outsourcing -- to grow their businesses without the burden of incurring additional operational costs," Diana Ermini, director of marketing at OnForce told Channel Insider.
But while these IT skills marketplaces are showing demand for contract work is on the rise, full-time employment opportunities also seem to be recovering.
Data from Dice shows that the percentage listed full-time IT staff jobs has grown from 63 percent of Dice’s listings, up from 57 percent a year ago, whereas contract positions have declined to 43 percent of the positions listed from 48 percent a year ago. Some positions are listed as both staff and contract, with the employer and professional making the decision as to which route is best.
"What we’re seeing overall is tech employment markets continue to improve, albeit slower than people like, but they’re still doing well," said Tom Silver, senior vice president of North America at Dice.
According to Dice, full-time staffing opportunities are growing again, but according to IT staffing firm SmartSource, the number of freelance contract IT professionals is increasing – and so is the demand by the channel. SmartSource launched its TecDirect community to connect clients and field service technicians a year ago. TecDirect makes it easy for solution providers to find field technicians for break/fix maintenance in every state, negotiate a rate and contract them to do work on the solution provider’s behalf, company officials said. TecDirect has grown large enough that SmartSource has spun TecDirect off as its own company.
"It’s amazing how many are out there that need this type of support," said Joe Iovinelli, CEO of SmartSource.
Many solution providers have cut back on the service side of their businesses and no longer have a staff capable of going out on customer calls. Services like TecDirect give them the benefits of having an ample supply of talent to choose from, and IT professionals have the benefit of choosing which projects they wish to accept.
Jeff Leventhal, CEO of labor resource platform provider Work Market, noted that many professionals choose the contractor’s lifestyle, and that it’s a choice that works for both contractors and solution providers. According to Leventhal, there’s a macro trend where businesses want variable workforces and a different work model from the traditional one.
"People are more comfortable today using outside resources and using platforms to go and find those resources," Leventhal said. He added that businesses can engage good people and get a high outcome level by hiring contractors for projects, in part because outsourced workers know they have to do a good job or their services won’t be used again. There’s no slap on the wrist for outsourced skill.
Whether it makes sense for an individual business depends on the business, said Geoff Mair, CTO of Partnerpedia.
"My view of it, as a company that does a lot of recruiting, it’s quite a bit more expensive to go that route and you don’t necessarily get better results than if you were doing it yourself," Mair said.
Using contractors does provide a benefit to organizations that have project fluctuations, Mair said. It provides a way to increase the workforce without actually having to hire full-time staff, but contractors are more expensive on a per hour basis than full-time staff, he noted.
"This is a new way of doing business in the IT services world," said Kashif Aftab, CEO of IQ Tech Pros.
According to Aftab, IT talent agencies like IQ Tech Pros can manage human capital for the IT workforce more efficiently and cost-efficiently.
"I think in today’s world where good human capital is hard to find, we are systems and processes in the human capital network and are able to go and perform for some of these vendors out there," Aftab said.
The trend towards using contractors changes over time, Silver said. Once employers feel more confident in their business, they find it’s less expensive to hire full-time staff than pay contract rates.
It may not be quite over for all businesses, though, and hiring contractors still makes a lot of sense because of the questionable economy.
"They just don’t have the headcount they used to have on staff. And the way the economy’s been the last two years, there’s been these peaks. All of a sudden you have a lot of work and then you have nothing," Iovinelli said.