Demand for IT contractors rising slowly

As corporate revenue growth steadily improves this year, spending on new or backlogged IT projects is also expected to increase.

But with IT staffs running lean following three consecutive years of cost cutting, many companies will look to domestic IT contractors to help supplement their project teams, according to some IT executives and analysts.

“We’re seeing a little bit of an uptick in demand for contract labour,” said Tom Pohlmann, an analyst at Forrester Research Inc. in Cambridge, Mass.

Pohlmann cited a December 2003 survey of 364 North American IT decision-makers conducted by Forrester that found that 52 per cent of respondents plan to use a combination of internal training and IT contractors to help make up for a shortfall in IT skills this year. Only 22 per cent of the respondents said they plan to increase their internal IT staffs this year.

Still, U.S. companies appear to remain tentative about launching into new project spending as they await further signs of an economic recovery.

For instance, Digerati Solutions LLC, a Babylon, N.Y.-based systems integrator, has noticed a rise in interest in new projects, but that hasn’t yet translated into new orders, said Dan Hoffman, the company’s president.

“People are more encouraged about the economy, but they’re not knocking down doors yet,” said Hoffman.

Lack of urgency

Carl Schulz, a principal at Delta Corporate Services Inc., an IT consultancy in Parsippany, N.J., concurred, noting that the lack of urgency to start new projects — along with the increasing use of lower-cost offshore labour — has led to continued downward pressure on IT contractor fees.

PGA Tour Inc. in Ponte Vedra Beach, Fla., is planning to increase its domestic IT contract spending in two areas this year. The professional golf association will tap contractors to support IT infrastructure improvements and to help develop and implement a digital-asset management system for managing more than 35,000 hours of archival video footage, said Steve Evans, vice-president of information systems.

To help make upgrades to its servers, networks, desktops and operating systems, the PGA Tour has brought in eight contract workers for a 13-week period and is planning to retain four of them for an additional 13 weeks, said Evans.

Because of its continued revenue growth, GE Real Estate in Stamford, Conn., hasn’t reduced its IT investments or IT staffing levels for the past four years, said CIO Hank Zupnick.

Still, the company plans to continue to use contract workers to help supplement its own IT staff for large projects, he said. This includes the use of six full-time and two part-time Java contractors to help with the development of a new property management system, Zupnick said.

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