Reseller News

Demand for IT contractors rising slowly

FRAMINGHAM (04/02/2004) - 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 after three years of cost cutting, many companies will look to domestic IT contractors to help supplement their project teams, IT executives and analysts said this week.

"We're seeing a little bit of an uptick in demand for contract labor," said Tom Pohlmann, an analyst at Forrester Research Inc. in Cambridge, Mass. Pohlmann cited a December survey of 364 North American IT decision-makers, conducted by Forrester, in which 52 percent of respondents said they 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 percent of the survey respondents said they plan to increase their internal IT staffs this year.

Still, U.S. companies appear 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, is seeing 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.

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 labor -- 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 upgrade 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 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 IT workers to 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.