Well, it’s official: America’s economy has been in a recession since December 2007. Despite politicians arguing the contrary, “Houston, we have a problem.” In my own geographic area, we are seeing layoff cycles begin. This includes such mainstays as Anhueser-Busch (ImBev), General Motors, and Enterprise Car Rental. The IT area is not immune to the chopping block as organizations look to cut costs.
Consulting
In the case of Anhueser-Busch, 1400 jobs will be cut. Of these, 415 are contractor positions. That’s 29% of the total workforce reduction. Additionally, when you consider the ratio of FTEs (8600) versus contract help, the actual impact is significantly greater to the temporary employees. All this is expected to save the company $1.5 billion a year … by 2011. Ironically, Mr. Busch himself holds the title of “consultant” and is receiving full insurance, a $10.35 million lump sum cash payment, and $120,000 a month for the next 5 years with zero liability for poor performance … but I digress.
At my own company, there is an effort underway to eliminate contractor positions; and as many as possible. The FTEs are benefiting as we are being trained in areas that were historically preserved for IT consultant specialists. The training is to prepare the organization for the non-renewal of temporary employee contracts. The FTEs will step in and assume those responsibilities.
Offshoring Trends
Offshoring is a little different. The trend has been growing with each quarter; although at reduced rates recently. There is some discussion that US companies will begin pouring their staffing needs into offshoring firms. This has not yet been realized.
US Outsourcers Sample
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As it stands, the growth rate of offshoring has remained fairly steady. If there is a sudden spike in the coming quarters, we will quickly come to an understanding of recession’s affect in this area. Will companies send salaries to other nations in order to reduce costs if there are fewer domestic consumers to buy their products? History calls out with a resounding, “YES”!
Major Outsource Companies Sample
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Conclusion
While it is too early to know with certainty, the current staffing trends are indicative of a reduction in domestic consulting services. Offshoring continues to be a global trend that will sustain its current growth rate and, perhaps, accelerate during the economic crisis.