31Jul 09
The contractor conundrum
Posted by Suzanne Tindal @ 15:40 7 comments
I wasn't surprised when I heard about the uproar up in Queensland over a proposed government model for hiring contractors. Sure, it seemed to take the industry by storm and they're peeved, but there's definitely an underlying issue here that something needs to be done about — an issue which has made itself into a monster on the sly.
According to Queensland-based research firm Longhaus, the IT contracting industry is worth $18 billion in Australia. That's a lot of money. I mean it could have paid for the old fibre-to-the-node broadband network plan almost four times over. And that money is starting to annoy people.
We've already had a bit of an uproar this year on how much the CenITex COO was paid as a contractor. Almost $500 grand. That's half a million smackeroos. I'm in the wrong business. Then there was former NEHTA CEO Ian Reinecke, getting paid $70,000 for a week's work, although I've been browbeaten by a lawyer cousin on that example. She told me that his advice would in all likelihood save the government much more than $70,000.
But that's beside the point, which is that contractors can rake in big dollars. Of course, many will say, and it's true, that such figures are not the rule. And Longhaus's report says that they're necessary in some firms to cover costs.
So they cost a lot. What does that mean to me? Be careful what you use them for. Be sure why you're using them. Get them in to do what they're supposed to do then get them out. And if their business model is set up around bearing the risk for projects, let them take that risk!
According to Longhaus, this isn't what Queensland's been doing and it needs to be rectified. But somehow the message's got lost in the wash with a proposal that seems like an episode of Grand Designs. For those who haven't seen the show, it's where people get to build their dream home which might be an absolute failure, is sure to be obscenely expensive and piss off all the neighbours.
It might be a brilliant masterstroke. But to me, there are simpler solutions. For instance, I'm sure the cost ($18 billion) wouldn't be quite so big if we didn't have so many of what I would call "sleeper" contractors hanging around.
These workers act like permanent employees, they're trained like permanent employees. They can have tenures creeping up to a decade, but they're paid like contractors. Seems like the permanent employees are getting a rough deal there. Makes Gershon's contractor recommendation sound like pure genius.
But dig deeper. Why exactly is it that there are so many? Well the government needs workers. Maybe it isn't sure how long it needs those workers. Projects drag. People get entrenched and they're still needed. There's no way you're going to get them onto a permanent contract because it would be a massive pay drop.
What's that I hear? Massive pay drop? Maybe, instead of using the stick to try and get the contracting industry into line, we could raise the wages for IT workers in the public service? In the current environment that might draw some into its warming bosom of safe employment. I'm not saying it's the best idea since sliced bread, the light bulb or whatever, but I think it may need to be considered.
Or, shock horror, we could widen the skills pool by doing something massive. Something really Ruddesque like saying that from now on, all IT degrees are free. Yes, you still have to pay if you do your piddly little arts or journalism degree, but tech rides for free.
Of course, maybe it was the government's master plan to piss everyone off either to make its next proposal smell like a rose, or just to force change. If the latter is the plan, it's likely to succeed. I've been told that the situation up there is a bit chaos theory. If a butterfly flaps its wings, it could cause a hurricane. And as we've already seen, governments tend to follow each other like lemmings. So watch out industry. Change could be afoot.
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The flavour of this article appears to one-sided. As a general rule of thumb, contractors provide a combination of external thinking and a high skill set to form a valuable resource. The use of contractors over long periods of time (I am one) can enable employers the ability to allow BAU resources to focus on the daily operations, whilst contractors can be used for the development/deployment of a new application/system.
You will also find as the market has self corrected over the past 12-18 mths, the rates of pay for contractors may not be as high as they once were.