Businesses often lose money rather than save it when
they make IT job cuts because they do not understand what the staff
do.
The recession means that organisations in every sector have to
cut costs. But cut the wrong people, and the costs could far
outweigh the savings. This is particularly the case in IT where
decision-makers often have no understanding of the role IT staff
play.
Cost-cutting not cost effective
Professor William
Scott-Jackson at Oxford Strategic Consulting, part of Oxford
Brookes University, says, "You cannot demonstrate the true cost of
getting rid of [IT] people, because the finance director does not
know what these people do."
He says businesses risk losing key capabilities as a result.
"Most cost-cutting does not help, but leads to businesses losing
money," Scott-Jackson says. "When the economy starts to improve,
there will be huge competition for the specialists you have
lost."
Skilled staff are often employed by rivals, or companies re-hire
redundant IT staff as contractors, who are more expensive and less
loyal than in-house staff.
"In one company we studied, 80% of contractors used to work
full-time for the company," he says.
Room for better understanding
David Bloxham, director of recruitment services at GCS, which
specialises in IT and engineering, says businesses' understanding
of what IT does is getting better, but there is room for
improvement.
"In recent rounds of redundancies, we have seen businesses
getting sharper about what people do. We think this is because the
candidates that are available are not necessarily the best.
"People understand IT now more than they did 20 years ago.
However, permanent people are being let go and are being taken back
as contractors, or companies have to get in contractors because
they do not have enough IT staff to do the work. This happens
because they do not always understand what the workers actually
do," he says.
Skilled staff in demand
Bloxham also warns that when voluntary redundancy is offered to
IT workers, it is inevitable that the best people will take it up
because they are confident they will get another job.
Making people redundant without understanding exactly what they
do is a risky business in any sector.
Workers are described by employers, during good times at least,
as "the most valuable asset", This is not just a handy cliché used
to keep staff on board.