Research: IT Contractors At Odds With Contracting Budgets

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Over half of business think they are paying too much for contractors at a time when IT budgets are shrinking

IT services company Morse claims it can provide UK companies with a more flexible way to meet gaps in technical skills than hiring long-term contractors.

In a statement released this week, Morse claimed that around 71 percent of UK companies surveyed had brought in contractors to help with specific projects. But according to the survey, conducted by independent research company Vanson Bourne, around 52.5 percent of companies said they were paying too much for contractors.

The research found that around 46 percent of companies would prefer additional in-house staff but couldn’t afford to hire them because of financial commitments to contractors.

“Employing contractors can enable organisations to fill skills gaps quickly, but on the other hand it can make the IT department less flexible and unable to respond to the changing needs of the business,” said Mike Devlin, director at Morse.

According to Devlin companies still face skills shortages in some areas – despite rising unemployment in the UK – and have to pay significant amounts for staff with those skills.” Organisations now have to pay a premium for their skills and experience. Unfortunately, this expense comes at a time when many businesses need to make the most of every penny,” he said.

According to a study released by e-skills UK late last month, demand for IT staff in the UK dropped by 10 percent in the third quarter of 2008, compared to an overall average fall in demand across all other job sectors of just 5 percent. Demand for contract staff was down by 13 percent, according to e-skills UK.

Morse, unsurprisingly given it is an IT services provider, sees greater use of IT services companies as the answer to the problem of expensive contractors. Specifically Morse is pushing the idea of “flexible resourcing” as one solution for companies to acquire help with IT projects without being tied to using contractors for a fixed period.

“Flexible resourcing can be an attractive proposition for many businesses as they can turn on and off resources when required rather than committing to a costly contractor for a set amount of time,” said Devlin. “There is now a strong argument suggesting that organisations should have an annually assigned flexible resourcing budget, so that they can still retain control of their IT, but also can reap the benefits of a dedicated and cost-effective skills resource.”

Morse did not make any specific reference in its research as to how much it could actually save companies by using its services compared to jiring IT contractors.