Benefits and Drawbacks of Using IT Consultants and Contractors

Let me describe the benefits and drawbacks of utilizing IT consultants and contractors. Events not directly related to the IT industry periodically occur that influence the use of these IT specialists. The onset of the new millennium a few years back was one such event. The current legislation of Sarbanes-Oxley is another such entity. This segment will examine the advantages and disadvantages of bringing in consultants and contractors to help meet these challenges.
 
 
Benefits of Using Consultants and Contractors
  1. One immediate benefit of using consultants and contractors is that they provide readily available technical expertise. Since they are under contract, you pay for only the time they expend. As the demand for IT services continues to increase, it often becomes difficult, if not impossible, to attract and retain skilled, knowledgeable, and highly motivated personnel. This requirement becomes even more challenging as the diversity of IT environments continues to grow. Shops are migrating from one hardware platform to another or from one software architecture to another—be it applications, databases, or operating systems—at ever increasing rates. In the midst of these many transitions, there often may not be the necessary level of technical expertise onboard at the time to perform the migration, support, or maintenance of these systems. Highly specialized consultants can help alleviate this by the providing technical expertise needed in these diverse areas.
  2. In addition to technical expertise, consultants can also provide management and financial expertise. The recent Sarbanes-Oxley legislation that dictates extensive financial controls are in place put increased emphasis on ensuring IT financial systems comply with regulatory requirements. Many companies are bringing in consultants from major accounting firms to ensure the company’s systems are in compliance.
  3. Another benefit that consultants and especially contractors offer to an enterprise is that they can assist in accelerating critical development schedules. The schedule to implement some major applications is often dictated by specific needs. For example, a critical distribution system in a major toy company may have been cost justified based on its absolute time deadline of being able to meet the Christmas rush. New systems that were designed to correct the year 2000 software problem obviously had to be in place prior to the start of the new millennium. Organizations may have the necessary quality of skilled employees onboard, but simply not an adequate quantity of them to meet critical schedules. In these instances, consultants and contractors may quickly be brought in to assist in keeping projects on schedule.

One of the most highly publicized examples of an IT development effort missing its critical deadline involved the Hershey Chocolate Corporation. A totally new and highly advanced distribution system was slated to be implemented during the summer of 1999. Teams of consultants and contractors were brought in to assist in this effort, but a series of missteps undermined the progress of the project. Unanticipated problems, untimely miscommunications, and a possibly overaggressive deployment plan all contributed to a six-month delay in the launch of the system. Unfortunately for Hershey, the majority of their annual sales comes during the month of October in preparation for Halloween. The system was eventually implemented successfully, but long after the lucrative holiday buying season, costing Hershey a substantial amount of lost sales.

 

Drawbacks of Using Consultants and Contractors

  1. One of the primary drawbacks of using consultants and contractors is their high cost in relation to onboard staff. The rates of critically skilled consultants from key suppliers or major accounting firms can easily exceed multiple thousands of dollars per day per individual. But if the need is of a high enough urgency, expense may not be a prime factor.
  2. Another drawback that occasionally occurs in larger shops is that it has an adverse effect on employee morale. Consultants and contractors who are highly skilled in a critical technical area may dismiss the need to be good team players. Their extremely high rates may justify in their minds the insistence for priority treatment in order to optimize their time on the clock. Thorough interviewing and reference checks can usually mitigate this concern.
  3. Since most consultants and contractors bill on an hourly or daily basis, there is always the concern that some may not work as efficiently as possible. The more time a consultant spends translates into more revenue earned. Three areas that are prone to inefficiencies are email, voicemail, and meetings. Email is an excellent mechanism for distributing simple, one-way information to many recipients. It typically does not lend itself to activities such as brainstorming, problem solving, or personnel issues where tone, emotion, and reactions can easily be misinterpreted. When consultants or contractors engage in these latter activities instead of using email, a task that may have taken only a few hours can often drag on for days or even weeks.
  4. Voicemail is another area where consultants and contractors can be inefficient. They neglect to employ a simple technique of leaving detailed messages on voice mail about the nature of the call when a called party is not available and instead ask only to have the call returned. This usually results in numerous rounds of time-wasting telephone tag. Efficiency-minded consultants and contractors often can actually resolve issues with voicemail by simply providing specific questions, information, or responses.
  5. Meetings can be time wasters for consultants and contractors from two standpoints. The first is simple mismanagement of meetings. Commonly accepted meeting practices such as advance online invitations, an agenda, objectives, action items, minutes, and the use of a scribe, timekeeper, and facilitator can significantly improve a meeting’s efficiency and effectiveness. Although contractors, and especially consultants, need to conduct numerous meetings as part of the performance of their duties, few follow many of the common meeting practices described above. The second way to waste time with meetings is to hold them when not needed. Often a brief face-to-face discussion or even a telephone call may accomplish the same result as a costly and time-consuming meeting.
  6. A final drawback of using consultants and contractors is the issue of hidden costs. The total cost of employing a consultant or contractor is not always apparent when the initial contract is drawn up. Some of these hidden costs include costs for office space, parking, and long distance telephone use. Most consultants today have their own laptop computers or access to a desktop. But an independent contractor who is employed primarily to do coding work may require access to a company desktop computer, login authority to the company network, and printing services. All of these activities require setup time, administration work, and other expenses not specifically spelled out in the initial contract.

Table 1 summarizes the benefits and drawbacks of using consultants and contractors.

Benefits

  • Immediate availability
  • Pay only for effort expended
  • Ability to accelerate schedules
  • Can supply rare or unique technical expertise

Drawbacks

  • High costs
  • Potential source of morale problems
  • Occasional inefficiencies
  • Hidden expenses

Deciding Between the Use of Contractors versus Consultants

 

As mentioned in the previous section, another alternative available to infrastructure managers needing to fill critical IT positions is the use of consultants and contractors. Their use in IT environments in general, and in IT infrastructures in particular, is increasing at a rapid rate for a variety of reasons. Technical specialization, accelerated time-tables for vital projects and recent legislation such as Sarbanes-Oxley are fostering the use of consultants and contractors.

Other factors such as outsourcing, company downsizing, acquisitions and mergers, and global competition are leading to significant reductions in full-time IT staff. This trend toward reduced IT staffing—especially in larger, more established shops—is also feeding the supply of ready consultants. Many of the previously displaced IT personnel elect to become independent consultants. Frequently many of these former workers enter into service contracts with their previous employers. Others market their skills to companies with IT environments similar to their previous company to ensure a good fit between the skills they can offer and the technical requirements needing to be met.

The explosive growth of the World Wide Web and the flood of Internet start-up companies have also contributed to unprecedented demand for IT consulting services. Integrating dissimilar architectures—database software, desktop operating systems, and networking technologies, for example—often requires specialized skills. In many cases managers find it easier to contract with a consultant for these specialized skills than to attempt to grow them from within. A heightened awareness of the benefits of new, replaced, or migrated systems is pushing implementation schedules forward. Accelerated schedules are well suited for the immediate availability and short-term commitments offered by consultants and contractors. The shortened project life cycles of open system applications, the rapid deployment of Web-enabled systems, and the intensifying of global competition are some of the forces at work today that fuel this demand for accelerated implementations.

Consultants come in a variety of types, and they contrast slightly with the notion of a contractor. Understanding the differences between the two can help ensure a better fit between the skills being offered and the business requirements needing to be met. The term consultant normally refers to someone hired to do an analytical task such as a capacity study, a security audit, or a re-engineering assignment. This contrasts with the term contractor which generally refers to someone hired to perform a more specific task such as coding an interface or developing a software enhancement.

Consultants are commonly supplied from one of the major accounting firms or from major computer hardware or software suppliers. Contractors, on the other hand, are more likely to come from software development companies or are in business for themselves. Consultants tend to be oriented toward issues of strategy, service process, and management. Contractors tend to be oriented towards issues of coding, documentation, technology, and deliverables. These orientations then determine the specific type of consultant or contractor to be hired.

Knowing the specific type of person to be hired helps in one other important area—that of teaming with onboard employees. For example, a consultant hired to develop IT customer service levels needs to show empathy toward the customers that he or she is dealing with. Similarly, a contractor hired to work with an existing team of onboard developers needs to be able to fit in with the members of the group. In this case, a reference check or two from recent previous employers may prevent potential personnel issues in the future with current full-time staff. This is particularly important if the engagement is likely to be long-term, and involves much interaction between the contractor and employees and users.

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