Is the BP way a safe bet for IT service providers?

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I wrote an article last year about IBM's plans to reduce its permanent headcount and make use of many more contractors.

To cut a long story short a senior IBM HR executive told a journalist that that IBM was considering cutting its permanent workforce from 399,000 today to 100,000 in 2017. It would use contractors when needed.

Although IBM denied the report it actually made sense to a few senior IT executives I spoke to.

One said to me that this type of strategy is known as "the BP model." BP uses contractors for almost everything he says.

Today I did an article about BP and the report into the recent oil spill in the Gulf of Mexico.

The spill at the Mocondo oil well has been catastrophic for the local people and the environment and will have major repercussions on BP for years to come.

The report points out that a multitude of factors combined to cause the disaster with the overall failure one of management. For example monitoring systems were not up to scratch

If BP uses contractors for almost everything surely this could have contributed because it is more difficult to manage a large number of individual contractors and contracted firms.

So IT service providers adopting the BP way, or even the IBM way if it happens, must realise the potential repercussions. 

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BP's main problem is the "B" bit - if they were a US company there would have been far less political interest in giving them such a good kicking over the US oil spill, whatever the real failings in management.

As for sub-contracting work in the IT sector, IBM's approach may be a little extreme, but we already have a lot of sub-contracting in IT, although a lot of the work ends up going offshore anyway, where legal jurisdiction may become a little murky.

In any case, in the end it will depend on who can afford the best lawyers. Big primary contractors will be able to shift liability onto smaller sub-contractors as a condition of giving them the work - many of them already do this as a matter of course.

Also, big contractors usually have enough political clout to avoid serious penalties e.g. how many public sector IT failures in the UK have actually led to significant financial penalties for the suppliers? And how many of those same suppliers pop up time and again when bidding for new government contracts?

Plus ca change...

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This page contains a single entry by Karl Flinders published on January 7, 2011 12:18 PM.

Do we or don't we have a IT skills shortage in the UK? was the previous entry in this blog.

Calling IT professionals to solve the riddle of the IT skills shortage is the next entry in this blog.

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