Designing a scalable IT work force

The industry you work in is cyclical which means that you will have periods where you can afford to spend money enhancing systems and designing new products, and other periods where you need to focus on reducing costs and minimise activity.

A typical response to this type of situation might be to outsource or contract most, if not all, the IT work.  Stop contracts during the weaker periods and simply re-hire people during the stronger periods.

Good times: outsource everything with a nominal internal management team
Bad times: stop work
Restoration of good times: ramp up again

Sound good?

Well, this is what is more likely to happen:

• The managers lose familiarity with the IT systems (which includes strategic systems) so they are ineffective at managing any IT projects.  All the domain expertise is with the outsourcing partner.
• When you stop work to save costs, the partner re-assigns their experts in your domain or makes them redundant.
• When you ramp up again, the domain expertise in your partner has degraded or is gone.  No one knows how your IT systems (including strategic systems) work with all the related consequences (more mistakes, more costs, generally more problems)

So what to do instead?

Maintain a core team within your organisation and use partners only to scale up.

To maintain partner expertise, there are several options:

• Use partners within the core team
• Help the partner get work with other similar companies in the industry
• Retain minimal project activity even during bad times but focus on capturing knowledge and cost optimisation