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The scenario – company A employs a 20-strong IT department that builds, maintains and iterates on its software like websites and apps and looks after the IT infrastructure.
It’s a pretty typical scenario.
What’s the problem with what I’ve just described? Why is it a money-sucking monster?
Traditional in-house IT departments are often based on several logical biases
Traditional in-house IT departments and tech teams are almost always cost-efficiency disasters – if you’ve worked in or with one, it’s a scenario you will be familiar with.
They are based on a traditional model and school of thought that usually simply doesn’t fit with the tech project cycles of modern organisations.
There is an ingrained school of thought that full-time, in-house employees are the default “better” option based on the following assumptions:
- Managers have better control of employee output than contractors.
- Employees are more motivated and loyal than project-based experts.
- Tech talent working on a particular tech project for a long time get to know it inside out and become more efficient.
The reality is often very different
However, the reality is often completely different.
There’s no, literally no, reason why managers would have more control and oversight over full-time employees vs. full-time contractors. Why would they, what is that based on?
It’s cognitive bias, pure and simple – especially if employees anyway work remotely or to a loose “hybrid” model.
Project-based experts are, in fact, naturally more motivated than employees.
As humans, we are programmed to work towards a clear goal and outcome. Remember studying for an exam vs keeping up with normal coursework over the year?
In which scenario was your focus and output better?
Project-based experts are always in the ‘studying for an exam’ zone. Employees spend most of their time in the coursework zone.
Working on one project or in one organisation for a long time can, sometimes, lead to the kind of detailed knowledge that can be useful.
It more often means:
- Experts losing sight of the bigger picture and objectivity.
- Failure to keep up with wider technology trends and developments and upskilling accordingly – tech skills become obsolete and more limited over time.
- Professional stagnation as the cost of comfort.
The cost of sticking to traditional IT recruitment and staffing models is huge
Recent data published by the U.S. Department of Labour indicates staff turnover in software development roles in the USA is 60%.
60%!
If you are turning over 60% of your tech talent annually, you have a project-based talent recruitment model anyway – just a bad one because that’s not what you are set up for.
You are paying a fortune to replace employees who leave (various studies indicate between 33% and 66% of the salary of the employee being replaced) – which the data shows they often do.
Those who stay are often not the cream of the crop because they don’t have the same need and motivation to keep upskilling.
Project-based IT staffing to slash costs and improve outcomes
A project-based team has the exact and well-practised tech stack the project needs. And they are not deep in the employee comfort zone – so they build better and faster.
And when the project cycle turns and there is less work – you aren’t stuck with a hugely expensive overhead you need to find work for or fire– which is also often expensive, hurts morale, is bad PR etc.
How do I avoid the money-sucking monster of a traditional in-house IT department?
Maintain a lean core team you invest in keeping motivated and their skills current. And let them then bring in and manage the project-based expertise needed – when it’s needed.
And you’ll have the best of both worlds:
An efficient inhouse team that isn’t a money-sucking monster.
And the tech teams your projects actually need – not just have sitting around in their comfort zone.
