Got a project, need a team

Deadlines are approaching, the boss is breathing down your neck asking how long the system will take to complete, and your employees are already working most weekends – in other words a typical day for many a software manufacturer. What can you do if you have no time to hire more workers or you’re afraid of bringing in the wrong people for the job? You can always lease some able bodies, a practice that is becoming a go-to solution in the IT industry By Beata Socha Body leasing or IT contracting – the two terms are used interchangeably – is used when a company faces a labor shortage and, rather than recruiting new employees, it takes on contract workers from a firm specializing in keeping a base of well trained and experienced IT specialists. “This is definitely a growing market. Increasingly often companies take on outside contractors to complete individual projects,” said Mariusz Zarzycki, director, Business Consulting at EY. The practice is ideal for firms specializing in fields other than programming, like banks or insurers. Keeping a team of highly paid specialists who are not needed at all times would be simply wasteful. However, body leasing has long since moved from satisfying only incidental needs for IT engineers. “Software producers are also moving towards such a model,” admitted Zarzycki. They often take on entire teams of contractors for projects ranging from weeks to even years. [caption id="attachment_94343" align="alignleft" width="300"] Image: shutterstock[/caption] No training required How is it better than regular recruitment? You could say it is a way of avoiding recruitment. It is a solution for companies that need specialists straight away and want to avoid time-consuming interviews and on-the-job training. Body leasing firms boast their specialists are available in a matter of days. “In most cases in IT contracting, the recruitment process takes 1-3 weeks,” Jakub Mazur, senior account manager – IT Contracting at Hays Poland, told outsourcingportal.pl. It is obvious why contractors are a better option to satisfy immediate labor needs, but why do companies choose to pay the extra cost for entire teams of contractors who work on several-year-long projects? “The individual cost may be higher, but it is similar to leasing or owning a car. Sometimes maintaining your own employees over a longer term is unprofitable,” Zarzycki explained. A candidate’s market But flexibility aside, the reasons why body leasing is becoming so popular in the IT business lie in the specifics of the IT job market. “The IT market is still where the candidate dictates the conditions and will continue to do so for the next few years,” said Mazur. Despite the high number of students and graduates of computer sciences (in 2014, there were 30,300 applicants to computer science faculties across Poland, with some 13,000 graduates joining the job market each year, according to statistics office GUS), the supply is far from adequate to meet the constantly growing demand. And, the harder it is to find the right skill set, the more valuable are those who possess it. Consequently, IT specialists are, and will continue to be among the highest earners in the country. A software developer with more than 10 years' experience earns an average monthly salary of PLN 7,700 (after tax), according to a report by employment website pracuj.pl. IT is also likely the only field where a novice with less than two years’ working experience can earn more than PLN 5,000 a month, according to data by ANTAL International. [negative]We can expect an influx of contractors from former Soviet Bloc countries from Asia over the next years[/negative] It takes one to know one Another reason for the continued growth of the market is information asymmetry. Highly specialized technical skills, such as programming technologies, are much more difficult to assess than, say, language or soft skills. The latter can be relatively easily verified by specialized recruiters, the former requires experienced IT personnel. Studies have shown (the first by Sackman, Erikson, and Grant in 1968, later repeated by several researchers) that a very good programmer is often ten times more productive than a mediocre one, even with the same amount of experience and training, not to mention that some coders even have negative productivity, lowering the efficiency of the entire team. Avoiding mismatch Finally, working in the IT industry usually requires a high degree of specialization. Generally programmers specialize in a handful of technologies and frameworks. While a good sales rep can work in a number of industries, a good database specialist may not be the best fit for a mobile app developer. It is also why those who keep extensive databases of IT people, and can provide the right people for the job, have an advantage over recruitment agencies. “These companies simply know who does what. It is far easier for them to mobilize the necessary resources,” explained Zarzycki. Information is indeed of key importance in this niche market and that may be why contractors sign confidentiality agreements that preclude them from divulging any details about their employment. They are threatened with hefty penalties for even disclosing the name of the company whose project they are currently working on, an employee of such a company admitted, asking to remain anonymous. [negative]PLN 7,700 is the average monthly pay of a software engineer with 10+ professional experience[/negative] Something in between What if a company wants to hire its own specialists, but has no time to go about the entire recruitment process as it needs workers straight away? There are methods combining regular recruitment with IT contracting, called try & hire, where a specialist is hired by an intermediary and leased out to a software company for a trial period of 3-6 months. After that, if the programmer is deemed valuable, he or she is hired permanently by the client firm. This new form of recruitment, where the risk of the new hire is borne by the firm providing the workers, seems a good fit for the IT industry. It is offered by companies specializing both in IT contracting and by HR firms, such as Adecco or Work Service. Contractor’s perspective From the point of view of an IT specialist body, leasing has a lot of upsides, as well as a few major drawbacks. The biggest advantage is probably variety: working on several projects a year rather than being [caption id="attachment_94342" align="alignright" width="300"] Image: shutterstock[/caption] stuck maintaining and upgrading the same old system for years on end. Thus, contractors get the opportunity to hone their skills in a number of technologies and frameworks, making them even more valuable on the job market. Also, body leasing firms often offer higher pay than a regular nine-to-five job: a premium for flexibility if you will. Then again, IT contractors have to deal with an extra layer of bureaucracy: they get paid by a different company than the one they go to work for every day. “Until the time sheet is verified and approved, which happens once in a blue moon, your pay is considered an advance, which basically means the money isn’t actually yours until confirmed,” complained the same programmer employed by a body leasing company. On the other hand, jumping from one project to the next makes any advancement virtually impossible, as you will never be an employee of the company you work for. Some projects could take years, during which time you will see other team members move up the corporate ladder, meanwhile doing the same specialist job. The downsides include lower job security. However, given the imbalance in the market and how easy it is to find a new attractive opening, it is rarely the deciding factor for IT people. Still, there is no denying the fact that switching teams so frequently makes it harder to maintain work relationships. Fresh reinforcements There is one more aspect of IT contracting worth mentioning. It is a great way of bringing specialists from abroad to work for Polish companies. This way the firm avoids dealing with visas, work permits and related issues. It is all handled by the intermediary. The continued disequilibrium in the IT job market and the resulting pay scale makes Poland an attractive destination for specialists from the east. “We can expect an influx of contractors from former Soviet bloc countries and from Asia over the next few years,” admitted Mazur. Needless to say, their salary expectations will likely be lower than those of Polish IT specialists.