The skills cycle: Can it break you?

The IT skills cycle can be vicious - both for organisations and It professionals. Avoiding the traps can be difficult and expensive, if you don't plan carefully.


From economic boom and bust to the expected lifespan of an employee’s smartphone, it often seems that the IT department follows ever-revolving circles.

This can make or break an organisation with IT skills, where supply and demand follows a set pattern. When certain skills are in high demand, businesses race to snatch up the best workers available, leaving many either unable to fill all the roles they need or having to pay a premium for independent contractors.

Eventually technologies become more established, the economy slows or businesses’ strategies change. The demand for skilled personnel drops, until businesses need to reduce headcount. Then new technologies and strategies arrive or the economy recovers, and IT skills are back in demand. In this way, the IT skills cycle keeps on turning.

Even outside the cycle itself, IT departments will often need to execute projects that require a new set of skills.

Matching demand can cost businesses dearly. When skills are needed, skilled workers can charge more for their services: organisations must either spend quickly, often and above the odds for the best workers, or resign themselves to losing out on skilled personnel.

When demand is lower, organisations must decide whether to hold onto their skilled personnel in anticipation of demand returning soon, or reduce headcount to a more realistic level.

Neither is ideal. When keeping workers, without retraining there is no guarantee that their skills will be needed again. If workers are shed, organising redundancies and the damage to the company’s image caused can offset any efficiency benefits.

Currently, the IT skills cycle is slightly out of sync, with IT departments stuck in a catch-22 situation: skilled personnel are needed to advance the business and make money (Research from Vanson Bourne found 72% of IT directors believing skills shortages are holding back the company), but due to the recession the money to hire them doesn’t exist.

To break free of this impasse, IT departments have two options: attempt to ride out the recession, or find the money to hire the specialist skills needed. Such quandaries give an extra incentive to organisations looking to leave the skills cycle altogether. There are several ways in which to do this; not all are equal in cost, efficiency or feasibility.

Contractors and outsourcing: the imperfect solution

Firstly, organisations can employ contractors to make up for skills gaps. This has its benefits: organisations can pick and choose, ensuring that the right skillset is always available. Yet contractors are a short-term solution, and devour funds that could be used developing in-house resources.

Contractors are also as subject to the IT skills cycle as regular employees. Contractors tend to silo knowledge; as the sole expert in one area they can easily make themselves irreplaceable. When their skills are needed long-term, contracts will need extending, possibly indefinitely, completely negating the benefits of hiring them as a short-term fix.

Another option for some organisations is outsourcing. From employing Software as a Service and other solutions to offshoring functions such as IT support and development, businesses can reduce the need for in-house skills.

However, for many organisations outsourcing isn’t a realistic option. While it may be possible to pass on some IT functions, there are always core functions that need to be kept in-house.

Both contractors and outsourcing share the same problem: they cannot completely remove an organisation from the IT skills cycle.

There is a way to do this, however: employing a third party to provide skilled personnel on an as-needed basis, so an organisation always has access to IT skills that meet their business requirements. This practice is known as flexible resourcing.

Flexible resourcing: the third way

Flexible resourcing is a managed service, combining the best parts of outsourcing and employing contractors. Under flexible resourcing, an organisation maintains its own staff of essential IT personnel. For other requirements, it relies on a pool of skilled IT workers from a third party.

When skills are needed, the organisation can select exactly what’s required, for exactly as long as needed, without paying more than the agreed fixed rates.

This makes the business’s resources flexible enough for any task, as organisations can easily shift and modify their IT skillset. Since the flexible resourcing provider is responsible for its personnel, it manages all overheads itself, lessening the strain on the business.

Beyond the IT skills cycle itself, organisations benefit from increased flexibility, responding to needs without having to consider a huge restructuring of personnel.

Organisations might spend 50% to 80% of their headcount budget on permanent IT staff, and assign the rest towards flexible resources.

For example, an organisation wishing to implement flexible resourcing in the current recession will often have pruned their IT department headcount down to the essential few, knowing that flexible resourcing can provide the skilled staff to deal with any eventuality.

The IT skills cycle on its own can be a thorn in the side of businesses. Combined with the current recession and the need to swiftly implement IT projects, it becomes a spear. By implementing an intelligent flexible resourcing system, businesses can constantly have the right skills at the right time: no more, no less.

Mike Devlin, is a director of IT services and technology company Morse">Morse

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