Managing IT contractors presents unique challenges

Hiring contract tech workers is a quick, easy way to staff up a project or offload mundane tasks -- but managing them can be ticklish.

As companies ramp up projects postponed by the recession and attend to delayed maintenance, they're beginning to fill in the IT ranks -- with full-time staffers, to be sure, but also with a breed of worker that once lurked at the edges of the organization: the IT contractor.

Proponents say hiring contract IT workers -- those engaged on a temporary basis for either in-house or remote work -- allows companies large and small to access skills that current staffers don't have, quickly round out project teams without an onerous hiring process, and offload routine tasks to low-cost labor.

Jack Cullen, president of IT staffing firm Modis, says companies view contract labor as a smart way to find the exact skill set they need for as long as they need it. "Employers are relying on contractors in every aspect of IT," he reports, "from network engineers to Web developers to call center professionals and business analysts."

Indeed, spending in the IT contract labor market revived in mid-2010 and showed a strong uptick in 2011, according to a recent IDC report. While the eurozone crisis slowed that growth in 2012, IDC predicts spending will continue to rise.

As sensible as the use of contract labor can be, it presents IT with a ticklish management challenge: To the untrained eye, contractors may walk, talk and code like the full-timers they often work beside, but they are not, in fact, company employees.

And that makes a difference -- or it should -- when it comes to how they're managed. Employment experts point out that there are myriad opinions about where the boundaries should be drawn between contractors and employees. But smart IT leaders should spend time finding the balance that works best for their team.

How do you get the most from your IT contractors and do right by them in the process? Here's some advice from IT managers experienced in getting stellar results from a temporary workforce.

When and Why to Use Contractors

At Vanguard Health Systems in Nashville, the use of contractors follows no hard-and-fast rule. "It's situational," says Scott Blanchette, senior vice president and CIO. "We have some [contractors] we acquire because of a specific skill or talent, and there are others we acquire because we simply don't have the labor needed to get critical initiatives done in a timely manner."

WellPoint, an Indianapolis-based healthcare company, also hires contractors to fill a need for specific skills or to quickly staff up in areas it wants to expand into, says Andrew J. Lang, CIO and senior vice president. In such scenarios, hiring contractors may be "a bridging strategy," where people are brought in under contract-to-hire arrangements, he says.

WellPoint also employs a fairly large group of contractors as "variable-demand resources," says Lang, explaining that the size of this group is increased or decreased "based on project work." It also hires contractors to handle day-to-day IT tasks instead of assigning such duties to higher paid employees.

Reed Technology and Information Services, a content-management service provider, uses contractors more sparingly. "We've had enough scale, with the volume that flows through our business, to manage the work with our full-time work population," says Dave Ballai, CIO and vice president of commercial solutions.

For Reed, the minimal use of contractors isn't a technical issue, but one of corporate culture. "Our historical preference has been to in-source -- in other words, to identify the skill sets required and hire those on a full-time basis," he says.

That said, Reed does use IT contractors, typically as part of partnerships with vendors. "We run into initiatives that have complex technical requirements, and we will partner with third-party providers who will then staff capabilities with their employee base," Ballai says. "Every organization at some point reaches a threshold beyond which they don't have the competencies in-house."

At Ingram Micro, an IT distribution and logistics company, the decision to bring in contractors is re-evaluated continually, says Bob White, senior director of strategic program management and compliance. "We have to constantly [ask], 'Do we have that skill set [we need] within our environment?' " he says.

Ingram Micro brings in contractors versed in SAP process and configuration skins, large-scale program management or new technology like Microsoft Lync or Cisco UCS.

"We typically do this while we build our own internal skill base in a technology area," says White. Such people may eventually be hired as full-timers, "provided we have no contractual terms that preclude us from doing so," he adds. "We have transitioned a number of contractors over the years."

At Pro Publica, a nonprofit investigative news organization, Nick Lanese isn't just the director of IT -- he's the entire IT department. The company gives him an assist with contract help, in the form of a single individual with long-term ties to Pro Publica.

"When I started working here, two months after the company was founded, there was an IT contractor already chosen, so I 'inherited' him," Lanese explains. "He is still being used -- and happily I might add. He built our initial infrastructure and knows us and our business, so it has worked well."

Part of the Team? Or Solo?

Once IT contractors are brought in, the exact way they're managed is largely a function of corporate culture and less a function of the technology in question, IT leaders say.

At Ingram Micro, White says the approach is to integrate contractors as members of "the Ingram Micro team" -- that is, contractors are managed by the specific IT organizations responsible for delivering the services that they help provide.

This isn't just for the sake of being chummy, says White. It's part of a rigorously monitored process to drive value in a business where profit margins are typically small. "We review how [the contractors] are driving efficiencies within our organization," he says. "We're very vigilant about tracking [contractors'] time, for financial reasons and for relationship reasons."

Management Notes

5 Things IT Contractors Hate

While there may be good reasons to treat contractors and full-time staffers differently, rest assured that the temporary workers themselves will notice any differences. Here are some common complaints that IT contractors have about the way they're treated by the companies that engage them:

1. Arriving at a workplace to discover that paperwork hasn't been signed, equipment hasn't been ordered, or email and other necessary accounts haven't been set up.

2. Not having the opportunity to take part in onboarding or orientation programs when starting at a company.

3. Being denied perks, such as the option to telecommute or work flexible schedules, that are offered to regular full-time employees.

4. Not being invited to participate in company social functions.

5. Not receiving performance feedback or raises. As one contractor who didn't wish to be named put it, "The only way to know you're doing a good job is if you get your contract renewed."

- Serdar Yegulalp

Day to day, there is no divide between full-timers and contractors, who undergo an onboarding process once they're engaged. "For work purposes, we attempt to keep teams together. Our philosophy has always been that consultants are a member of our team and not just hired help to be kept at a distance," says White.

The one exception is that contractors aren't invited to the CIO's quarterly global town hall meetings, which are company-confidential. And, of course, Ingram Micro carefully controls the level of access that contractors have to company data, White says.

At some organizations, particularly in industries such as healthcare, concerns about access trump all others, to the point where contractors are in essence "firewalled" off from the rest of the company.

"We tend to isolate most of our contractors by design," says Vanguard Health's Blanchette. "Being in a regulated industry, security and privacy are going to be paramount in how we approach privilege management for all of our contractors." The few contractors who have access privileges, he notes, are from companies that have established relationships with Vanguard and are considered trustworthy.

Outfitting the Contractors . . . or Not

When it comes to day-to-day hardware and technical support for contractors, corporate culture rather than size again dictates the approach.

Ingram Micro occasionally supplies contractors with hardware, stipulating in the contract the details of how that will be handled. In other cases, the service provider outfits its workers. Under both scenarios, security is always a top concern. "For organizations that bring their own [hardware], we have strict security screenings that have to be done on the PC," White says. "We're very vigilant about our overall security profile as it relates to our company."

Mike Stalnaker, director of technical operations at Sendme, a mobile game developer, describes his 100-employee company's approach to contractor support this way: "For [long-term] contractors, we provide a system for them that matches our typical engineers' systems. The rationale is, when they leave, we can be assured we retain the data they were working on." On the other hand, consultants who are hired for short-term assignments provide their own equipment, Stalnaker says.

Will SaaS Kill the Tech Contractor?

With continued corporate interest in procuring software as a service, is it possible that we will see a day when IT contractors as we know them disappear?

White, Reed's Ballai and Pro Publica's Lanese all say no.

"We use Salesforce in one piece of our business," says Ballai, citing one of the most widely used SaaS offerings on the market. "But in almost all cases, both in the licensing and the use of that technology, most of those instances sit within the walls of our data center."

It seems that the need to have real people on the premises, whether they're staffers or contractors, will never completely go away. One key reason, says Lanese, is perspective. In the workplace, he explains, "more than one point of view is always good" -- especially when that view comes from the outside.

Yegulalp has been writing about computers and information technology for over 15 years for a variety of publications.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

Read more about management in Computerworld's Management Topic Center.

This story, "Managing IT contractors presents unique challenges" was originally published by Computerworld.

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