Rise of the Corporate Skeleton Crew?

Big Stick asks: "Recently I have noticed a trend in several prominent companies in my area of laying off entire technology departments. Just this week in my own company--a division of a well known, mid-sized corporation--the software engineering department was let go en masse, rather than just a reduction in head count. The rationale for the move being that it would be easier to evaluate the potential cost of developing a new product if groups of contractors were hired, instead of the numbers getting lost in the 'free' work of the full time developers. The overall impression this leaves is that many major companies are re-prioritizing the need to innovate new technologies for the presentation of their business, relying on skeleton crews of DBAs/SAs to maintain rather than enhance. The main question this raises is, are we heading towards an era where full time software development is more likely to be housed in technology specific firms? Something along the lines of the construction industry where projects are bid on, constructed, and the involvement of the creators with the finished product is minimal?" If others of you are noticing this trend in the industry, please share your thoughts. Do you think this is a move forward or backwards?

Comments

Economic Recession

[jo42]

What you are seeing is the result of the economic meltdown that started with the dot-com bust. Despite what you see on TV and read in the papers, the economic meltdown continues - the media is masking the severity of this downturn. If you want to see for yourself how bad things really are, take a trip through the US and note the closures of many businesses, the 'downsizing', and actually talk to people. Things are much worse than they are made out to be. Conspiracy? Possibly. However, if the media told how bad things really are, economic conditions would be even worse due to reaction to these news.

How does this fit into the topic of this discussion? Companies are going into holding patterns, reducing costs and hoping that things will turn around soon. I predict a second wave of large reductions over the next few months. I point to an article that IBM is looking to let go up to 20,000 more staff by the end of the year. By letting whole departments go, costs are being reduced significantly. It also allows the company, if it survives, the ability to restructure, either by contracting work out or rebuilding.

Bottom line, keep the hatches battened down for further stormy weather. Bookmark this. Late in the year we will see if I am right or not.

Not good.

[Kris_J]

My guess is that they decided to outsource all the development to an off-shore company because it looked like it would be cheaper on paper. Only time will tell if that's really the case.

Time has told. Rough figures: Contractors do half as good a job, taking twice the amount of time (though they only get called in for half as much stuff). Overall, IT contractors cost about 25% more up front and the level of computer support falls so low that it adversly affects the rest of the staff to the point where the real costs of external consultants is anywhere from 50% to 100% on an in-house IT department.

Not all consultants are the spawn of evil, but the ability to walk away from something that goes wrong and have plenty of other companies still interested in your services does result in the failure of many a high profile project. In a big economy, a small IT consulting firm just isn't accountable. Mind you, failure often isn't strickly their fault -- if there are no IT people inside a company then there's no one who can really talk to and understand IT consultants. Frequently the two parties will think they've agreed to totally different things.

Unfortunately, the first full-time IT person to walk into a company after an outsourcing balls-up isn't much better off than the consultants, with no-one in the company able to help them define their job and understand the installed systems, so the turnover for the first few permanent staff is also a bit high, leading to problems that look very similar to those caused by outsourcing.

But I mean, what do you do when no-one in upper management understands how the company's IT infrastructure works? And how do we ever get to a point where upper managment at least has a few people who do understand IT when they're mostly so damn horrible to anyone that knows how a computer works?

Like zero-inventory employees

[texchanchan]

Zero-inventory = getting the supplies only when you need them, saving overhead in storage and so on. Hiring contractors instead of maintaining employees is analogous. Get workers only when you need them.

However, a worker is not like a part off the shelf that can be popped into place. For projects of any complexity, there is going to be a learning period.
a) About the project
b) About each other. There are always human dynamics to consider, even among focused technical personnel.

I see this as successful only in an environment of standardized work projects--more like an assembly line than anything else. And if it's that standardized, it'll probably find its way to the second or third world pretty soon.

It is easy to imagine management trying to treat a project, any project, as if it could be handled with plug-in workers. It's equally easy to imagine this leading to tremendous delays and failures.

I've been both contractor and employee. Always preferred the freedom of contracting. But I have a high tolerance for being broke.

yes and no

[josepha48]

There are companies that do this, well sort of. AMS is one. They cone in build your software package then leave. Of course they offer you a support contract. My company does this to an extent, but some firm will need software engineers to build the product and a 'custom' built system takes 3 years.

Then there are bugs. Building a bridge or house you better not have bugs (other than roaches and ants) that cause the house to collapse. How can the software industry make bug free software that works? THEY CANT. Linux has bugs, BSD has bugs, Windows has bugs, Sun has bugs, HP and AIX and MAC ALL have bugs. Palm has bugs as well. THER eis no way you can design a bug free OS and there certain is no way you can design software needed by a corporation to use that does not have bugs.

My company let go of 1/2 of our dev team this week. We need to rewrite or go under. I'd like to take the source, rewrite it and then sell it back to the company as an improved product that they can resell. Ah heck I'm going to get into a different software development market.