It’s hard to find a business that doesn’t make use of information technology – but there’s a spectrum from those who simply need off-the-shelf software, with nothing more than online support from the vendor, to companies working directly in the IT industry.
Placing your business on this spectrum can be helpful in understanding how to balance the use of contractors, freelancers and contingent staff with employed resources. Even businesses with a large in-house capability are likely to engage contractors – Microsoft, for example, makes significant use, with as much as 40 percent of US work carried out by contract staff. However, most businesses are not so tightly focused on IT, and here getting the balance right is more nuanced.
A good example is the airline industry. Along with banks, airlines were among the first to realise the significance of IT to their success. This was particularly the case with booking systems, which required high-speed, transaction-based computing available via a worldwide network. With no commercial solutions, airlines developed booking systems in-house, starting with the American Airlines SABRE system. These vast programs were the crown jewels of major airlines – American’s CEO once described the organisation as a booking system company that happened to fly planes.
Until recently, large airlines, and specialist providers such as Amadeus, jealously guarded their expertise in-house. They put IT central to their businesses, but of late some have drastically reduced staffing, deciding perhaps unwisely that IT is not part of their core business. This may have contributed to some failures, for example, with British Airways’ systems of late.
Is IT core to your business?
It makes sense to employ dedicated IT staff if a company has core functions where IT ties in strongly to the nature of the business itself. There’s a cost involved, but it is more than paid back in the continuity and application experience provided. However, where the particular use of IT isn’t central to the business – and every company will have examples of this – then it makes absolute sense to go for contractors or to outsource the requirement.
Contractors and freelancers provide valuable flexibility, particularly on tasks that do not need the same staffing levels all year round. They can bring specialist or hard-to-find skills and experience. They also have the advantage over total outsourcing of being able to work onsite and better integrate with your own staff – though it is essential to avoid co-employment liability (where contractors are treated as if they were directly employed, resulting in tax and other statutory implications). This means ensuring contractors have a regime that clearly distinguishes them from employees, including appropriate periods working elsewhere.
There is no magic equation to determine exactly how and where to make use of contract staff on IT systems. However, by being clear about the parts of your IT requirement that are crucial to your business operation, a practical balance can be achieved.
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