The IT industrys emergence from recession may have been greeted with sighs of relief across the UK, but the reality is a challenging marketplace with low margins and demanding clients. And now staff attrition rates have jumped to their highest level in years.
Companies simply cannot afford high recruitment costs or the use of external contractors to fit skills gaps. If IT consultancy organisations are to deliver the skills demanded by clients at the right price point, they need to create them in house. And that means developing and implementing strategies that not only support continuing professional development (CPD) but also take into account employees career aspirations.
To be achieved effectively and without adding overhead, these processes need to be automated. By integrating a resource management skills matrix into existing HR systems, organisations can improve the delivery of the right skills in the right place to improve customer satisfaction. This will also enable companies to flag up a change in an employees aspirations and take the action required to mitigate the risk of attrition, explains Tony Hurst, head of business development, SharpOWL.
While IT spend is once more on the increase, after years of recession, when it comes to consultancy services clients are extremely savvy. Organisations are no longer content to pay 800 a day for a junior consultant with limited expertise. Instead they are demanding specific skill sets both technology and vertical market and quantifiable experience before committing to any spend.
For consultancy organisations fighting for business in a highly competitive market, this trend has caused a major challenge. With the fee payable for a senior consultant now at the same level at which a junior would have been charged out, margins have been stripped to the bone.
Accurate online timesheets and expense recording have significantly reduced the time taken to produce invoices, boosting cash flow and removing administrative costs. However, the industry is now out of recession, and once nervous IT personnel are beginning to feel confident to look for new job opportunities. As a result, levels of staff attrition have jumped to 20% in 2005 according to the Management Consultants Association. With recruitment fees at least 25% of annual salary and headhunter rates even higher this rate of staff churn is adding a huge cost to a business model that was already struggling in this new, low margin environment.
Nor can organisations rely on that traditional backstop, the contractor; rates are simply not sustainable for profitable business. Yet it is arguable that in many cases consultancies are failing to exploit their existing skills simply because they have no coherent understanding of the extent of those skills. How can a resource manager in the public sector in the UK have any viable knowledge about consultants in other vertical sectors or technology areas in this country, let alone other consultants, who could well be English speaking, across the rest of the world?
These companies are missing a trick. Not only are they failing to match the right skills to meet customer demands but they are also failing to develop those skills to meet both evolving business requirements and employees hopes and career development objectives.
Organisations need to take a structured approach to Continuing Professional Development that not only reflects business requirements but also the career development objectives of every employee. And the benefits will be tangible: with the squeeze on margins, individuals are not changing jobs for a significant jump in remuneration package. Instead the focus is on working for an organisation that can provide the technology and vertical market experience, and training to fulfil career development objectives.
It is also important to be more accommodating, recognising the unique requirements of employees. While an individual may have attained excellent experience working in sub Saharan Africa, a change in personal circumstances such as the arrival of a family may make long-term projects in this area extremely unattractive. Failing to recognise such change and persisting in a strategy that simply leverages an individuals experience will only result in one thing: a resignation letter.
The challenge for these consultancies is to provide resource managers with the visibility of consultant expertise that incorporates their aspirations and specific demands such as short rather than long term projects. Using a resource management skills matrix, managers have a complete picture of consultant skills across the entire organisation. Critically the matrix includes job history, technical expertise and vertical market experience as well as other skills such as languages.
This technology also provides an opportunity for employees to input their own requests for job experience, new skills or career development plans. While this information is invaluable for resource managers looking to match skills to customer requirements, it is by integrating this information into the core HR system that HR and resource management personnel can use a co-ordinated platform to support the development of employee specific CPD programmes.
Furthermore, a change in aspirations can also provide an organisation with visibility of an individuals lack of job satisfaction. Using automated alert technology or weekly reports, resource managers have immediate insight into such changes, enabling an appropriate response from new project to training plan, an approach proven to reduce levels of attrition.
Organisations can also use this skills matrix and structured programme to become far more agile to accommodate new areas of technology and vertical market opportunities. Without it, consultancies will struggle to move rapidly into new, less competitive areas that offer greater revenue generating opportunities.
The IT world has changed dramatically post recession: while attrition rates may be up, individuals are now on a constant push for ever higher remuneration packages. Add in an increasingly demanding and knowledgeable client base and consultancies today need to start nurturing employees. By creating excellent programmes for CPD and recognising each individuals aspirations, consultancies will be able to develop the skills in house to meet customer needs, achieve business agility and provide an environment that minimises staff churn.
Tony Hurst is head of business development for SharpOWL--a leading author of specialist software, designed to improve the performance and profitability of people and projects in consulting and professional services organisations.