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.