Is it time for IT contractors to get permanent jobs?

Writing about IT and having a beat that includes IT outsourcing puts me in contact with lots of businesses that rely on outside support for their IT.

As it is the PCG’s National Freelance Day I thought I would put together a blog about the challenges facing freelancers.

Thousands of IT contractors support our government and financial institutions.

Nationwide cuts contractors

I recently spoke to Nationwide’s COO Tony Prestedge, who told me that contractors are perhaps the most talented and knowledgeable IT professionals out there.

Despite this high praise Nationwide, which used to hire over 200 contractors virtually constantly, has replaced them with IT service providers as part of a £1bn IT transformation project.

Also the supplier builds up expertise so trains new hires itself rather than internal staff doing it. When contractors leave they take specific skills and knowledge with them. When new one come in they have to be trained again.

So despite Nationwide’s COO believing IT contractors are some of the best resources available and the company consuming IT skills heavily at the moment it cut out contractors in favour of suppliers with the internal staff becoming integrators.

General Motors goes in-house

The next recent event that could impact IT contractors is General Motors’ decision to take IT back in-house. Obviously this affects IT services firms more, particularly main supplier HP, but if other companies follow GM’s example IT contractors could lose out.

GM sees the future of IT in-house so if other big businesses follow its example there could be less work for contractors.

GM CIO Randy Mott said: “Transforming our internal IT operations will give us the resources, tools and flexibility we need to provide better services and products to our global GM customers.”

Offshore threat

And nobody can forget the offshore threat. IT services forms are substantially undercutting UK IT contractors through lower cost labour from offshore locations. UK IT contractors are even being forced to train overseas workers to take their jobs.

Shrinking public sector opportunity

Then in the UK public sector there could be less contracting as the government faces an exodus, as new guidelines will force freelancers earning more than £220 a day onto departmental payrolls.  

But perhaps more of a threat to contractors and possibly a reason for them to seek jobs with IT services providers is the move by businesses to have more strategic relationships with suppliers. IT departments inside big business are becoming smaller and more focused on integrating multiple suppliers.

So what next for IT contractors?

How do IT contractors see the future?