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NY To Replace IT Vendors With State Workers
dcblogs writes "New York state plans to replace as many as 500 IT contract workers with a new type of temporary state worker. The state estimates it can save $25,000 annually for each contracting position that is in-sourced. This is the result of a new law creating 'term appointments,' which strip away some hiring and firing rules that apply to permanent state workers. These term appointment workers are employed 'at will.' Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs."
This is the result of a new law creating 'term appointments,' which strip away some hiring and firing rules that apply to permanent state workers.
Government declares that laws don't apply to them... news at 11
State employees have one of the most powerful unions there is. This is the thin end of the wedge to destroy it. Whether you are happy about this or not depends on how you feel about unions. I, for one, welcome this as a step forward for government employment.
Plus the underfunded pension obligations passed on to the taxpayer.
Of course, some of that $128/hour the contractor gets goes toward employee benefits... and the cost to the state will be more than $55/hour including benefits...
It must have been something you assimilated. . . .
They're called "slaves", actually. And "right-to-work" laws really mean that you have the right to be fired for no reason and have no recourse. Funny what happens when you let corporations write the laws in this country.
On the surface this sounds like a good idea.
Employees are more loyal, and generally care more about the work they are doing than outside contractors.
I have mixed feelings about creating the positions as a special semi-temporary group. Its good in that it allows the state to actually hire needed people, but it sounds like they are second-class employees. Only here temporarily. Not really part of the team, but expected to work extra hard in the hopes of someday getting to be a real employee...
F*(#! @$$!? $#!+
I look forward to a re-enactment of recent happenings in greece. ;)
I'd assume most of these are helpdesk jobs anyway.. so this might be just fine for positions like that. But for anything more technical or requiring expertise I image they will keep full time on site support. Or feel the results of Temp workers when a "critical" to them system crashes.
~Mekkah
If they hire IT workers who match the quality of most NY state workers, they will wind up hiring contractors in the end anyways...
You're assuming the contract company pays benefits.
The new thing that I've been seeing is a slightly higher hourly but no benefits - it's basically a back handed pay cut.
$128 hr - bill.
At most $64 is going to the employee as wages and maybe benefits. More likely it's $45 (with no benefits) going to the employee and $83 going to the company.
SAIC gets huge money from govt contracts, please expain to me how this has not biased your opinion here.
If you properly manage a smaller number of very high paid IT workers instead of a much larger number of low paid IT workers, you'll find that the ROI is hugely in favor of the higher paid workers - because they were "properly managed". That includes selection, hiring, and allocation of time and resources. (In many ways it means give them the tools and the requirements and then get out of the way.)
Now if you are lousy managers it makes sense to hire low paid IT workers because you pay less and you won't produce much value either way. So perhaps NY is on to something because they didn't say anything about fixing their managers.
Very often, people confuse simple with simplistic. The nuance is lost on most. - Clement Mok
Sure, but because of cronyism and bad economic & political policies, politicians/department heads have been "contracting" jobs that are needed full-time and would have cost less in-house. For example, a Department of Transportation isn't "in the business of IT". For political reasons, a department head may choose to outsource the IT to a contracting company. This allows DoT to claim a lower personal overhead even though it is now paying more than it was before, and "the government is smaller". There are likely just as many IT employees working at the DoT as before, but DoT doesn't pay them directly, and DoT can claim it isn't some bloated government agency. Next, DoT will shift its accounting, legal, cleaning, and engineering staff to outside agencies in an effort to show smaller government; "a win-win for all!" (Except the poor taxpayer who now pays twice as much because everything now has a much greater overhead).
Enterprise IT process isn't easy. I hope they achieve the savings they really hope to get from people paid 50% less. http://www.itil-officialsite.com/
I'd suggest that a better method - and I've seen it implemented elsewhere at a company with 120k employees - is to tell the vendors that massive cuts are coming in 6 months. The new average rate will be $92/hr. 12 months after that, the new rate will be $82/hr.
After those two adjustments, they will have determined what type of folks will still be around and better understand the risks. They can't get to $55/hr with vendors, since after taxes and fringe, they only have $88K per employee and they don't have any profit. An IT union will never go for that or work the hours required by data center production, deployment, planning, and architecture teams.
Good luck with that.
This sounds like a good move for government IT. Governments IT shops (especially unionized shops) suffer badly from the dead-sea effect. The more productive IT workers who keep their skills up will tend to stay for a few years ago go. The less productive are free to stay for 30 or 40 years because they can't be fired and have no potential of finding a job that pays as well. Over time the IT department becomes heavy with unproductive employees.
Medium-term employment provides a methd for the government IT organization to turn its staff over frequently enough to keep healthy.
-1 Reactionary: I'm pretty bleeding heart on most issues, but try as I might, I'm not seeing how the GPP indicated his political affiliation, or did anything other than point out a very mild form of hypocrisy (which I don't consider all that hypocritical, since the government is merely subjecting itself to private industry rules instead of the usual more generous government rules).
$_ = "wftedskaebjgdpjgidbsmnjgcdwatb"; tr/a-z/oh, turtleneck Phrase Jar!/; print
Management: IT is expensive - we can save money by OUTsourcing.
5 years later...
Management: IT is expensive - we can save money by INsourcing. ...
5 years later, Go to line 1
Those of us who've been in IT for a while have seen this cycle through a few times. After much reflection, I conclude that there is no such thing as competent management.
Although actually, I'm not clear on why you're so confident this is a move to "destroy state employee unions"? This wouldn't seem to displace any actual state employees. Rather, it makes a change so the contractors they now outsource (instead of actually hiring state employees who would be part of a union) would be substituted with temporary employees, paid half as much as the contractors were costing them.
Personally, I think contractors are generally "bad news" when it comes to government projects. They inflate costs and take advantage of the fact that their paychecks come from the taxpayers. (Once they "win a contract" to complete some project, they know they're getting paid for a while. They can slack off or just learn what they're doing on the job. If the project goes over budget or collapses completely, they just walk away at the end of the contract period, and let other people sort out the mess. Half the time, they even convince the right people that it wasn't their fault, and they get a second chance and more money to try again.)
When you're directly employed by the state, by contrast, your paycheck is subject to being cut off at any time, if you fail to live up to their expectations. Someone else is always happy to interview for the job opening to take your place, and the project as a whole goes on with or without you. If you're successful and save the govt. money or improve its efficiency, that stands to benefit you too. (They're not going to give a contractor a raise for doing a job well.)
They could replace those IT workers with trained monkeys and save a lot more money! Unfortunately, you usually get what you pay for.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
was working for NYS OMH (Office of Mental Health) as a programmer at one of the facilities. I worked there for 5 years before I was layed off in 1991. I saw more corruption and incompetence in those 5 years then the rest of my career. Completely turned me off from unions. No one there was ever fired even when caught red-handed. They were allowed to resign.
I wonder if the meeting went something like this.
Nerd Rock In Progress
I do plenty of work with NY's state and local government offices. Usually dealing with the IT staff. (I'm not a contractor but consult on specific software products.)
The usual job of an "IT" person in government employ is to follow very specific, very carefully prepared documents with step-by-step instructions complete with screenshots. Should a task need to be performed that is not in a document or the steps are different in some way, they call up vendor/consultant support to lead them through the process. All IT tasks are performed this way. No troubleshooting, no independent research, and no process improvements are attempted. Any updates to software or procedures are done with vendors or consultants. These updates can drag into years. There is no way, either, to predict which updates will be delayed before starting the process.
The long-term contractors I have dealt with have been marginally better than internal support. If only because the state-employed IT workers I have dealt with can as often be victims of a lateral move from another department within the organization when their old job ceased to exist or some other action forced them from something like "scheduling coordinator" or "assistant photocopier maintenance" (both real, and funny, examples). Contractors will have actual IT training in some capacity besides that provided by the organization.
Basically, it takes more people to provide less support in the government offices I have dealt with. It costs more, too, because the actual support is provided by hidden outside vendors and service contracts. Since promotions are not based on technological metrics like successful projects or cost savings initiatives, I do not see this situation improving. With the organizations I deal with and have seen the finances (part of my job), the staff/contractor costs are dwarfed by outside support and consulting costs. In most private companies, the amounts are closer to parity.
With the above considered, I doubt state organization budgets will improve.
...the tea party should have a field day with this one.
That experience is the reason terms like "socialist" are demonstratively negative for us.
Unless things are really different there, its pretty safe to assume that most of those employees arent making anything close to $128, having been in that area of employment I can assure you for most of the people doing the work, $55 will be a raise. Most contracting firms (yes there are some exceptions) these days are just a legal form of prostitution, the pimp gets the big money unfortunately they tend to have enough pull to block the independent contractor from most companies looking for help.
2000 hrs X 128 per hr = USD 256 000
2000 hrs X 55 per hr = USD 110 000
The difference is USD 146 000 not USD 25 000
To get a difference of USD 25 000 you would have to work a little over 2 months a year.
Eventually, even the government will discover that labor is cheap in an economic downturn. They're smart to lock desperate people into cheap 5 year contracts right now.
If your employer physically strikes you, can you have him arrested and press charges for assault? -- Yes.
If your employer rapes you, can you have him arrested and press charges? -- Yes
If your employer forcibly takes from you your personal property, can you press charges for theft? -- Yes
If you decide you don't like your employer, can you quit your job and start looking for another one? -- Yes
If you decide you don't even want to be near your employer, can you move to another city or another state or another country? -- Yes.
None of these are true of slaves. Modern workers are *NOT* slaves.
It IS true that most people have to work in order to survive. This necessity does not automatically make them slaves, however. The fact is, life requires labor. Food must be grown. Power must be generated. Clothing must be spun. Goods must be constructed. People have to do this work in order to survive. The practice of employment is just an organizational mechanism for this.
The term "wage-slave" is a highly slanted description of the reality. Just because you have to work doesn't mean you are a slave. It just means that if you don't work, you will starve to death. Sorry, but that is nothing new. Until we have a means of creating food without expending effort, people in general will still have to work to survive.
if the state gets away with these long-term "temps" doing a regular position's work; then OTHER state jobs will go the same route.. the unions for state workers will be all over this.
Jesus I hate that ITIL stuff.
The managers where I work run around making sure they are up2date with it and processify everything. Where once upon a time if a problem arose you knew who to call, spend 5-10 minutes getting updates on personal lives and then sort out whatever problem was presented immediately after.
Now, primarily because of ITIL, the personal phone calls have stopped, problems go into a queueing system (ticketed - and the poor bastard on the Help desk had better have entered the ticket correctly) where it will eventually get sorted. Most cases not being classed as urgent because not everybody thinks it is, but it is always urgent to somebody. That person then resents 'the it department' because the incident took a day or two to be fixed.
There is more paperwork which means less actual work gets done. Management get to have their management meetings and have whole documents of incidents to show that their department did things by the book (but not actually solving anything because everybody was busy writing out documents and filling in forms).
This stuff is the reason why governments (and large organisations) have a bad rap.
*sigh* /rant
.
I know of this issue first hand being a IT contractor and working for the state. Where Im at they have approximately 125 IT contractors. So far they have laid off 15 IT contractors, are trying to convert 15 or so more to government service. Next in Oct all IT companies will have to bid through a Managed Service Provider. Basically an appointed IT contractor that all the agencies will go through to source contractors. I don't believe they plan on eliminating all contractors since I don't think they can do to the fact the most people would rather be a contractor than work for the state. Also a lot of the IT contractors are from overseas and cannot become state employees without a green card. Most of us are just taking a wait and see approach to what our future actually is with the state come Oct. Who knows how many contract slots will be available at that time.
For some people taking the state job is actually good deal. Some prefer the stability that the state has offered in the past. What I can add is the converted contractors will receive a tier 5 pensions not tier 4. The state legislature enacted the tier 5 pension in Jan 2010 in coincidence with the plan to convert the 500 contractors. Here are some of the reduced benefits that they will receive.
Require most public employees to work 10 full years before vesting in the system, rather than the current five, and limit the amount of overtime that can be used in the calculation of a final average salary to 15 percent of regular annual wages.
Raises the minimum full-benefit retirement age for members of the State and Local Retirement System to 62 years from the current 55.
Certain exemptions were granted to firefighters, teachers, and police officers.
They figure they will save $48 billion over 30 years.
Here is the full article. http://www.nypost.com/p/news/local/statehouse_oks_deal_to_fix_hyper_p72NcP2a2IegZcBJFKuf0J
I assure you, the average contractor on a state job doesn't pull in $128/hour. His pimp...I mean contract agency...charges on average $128/hour for his services. The contractor gets only a piece of that.
Go ahead, hire them as independant contractors, or long term temporary employees,pick a "term".
Remember,the wages you pay reflect how much you are buying.
Are you paying "from the neck down"?
Or do do you want some "brainpower " to go with it?
You only get what you are paying for...
"Temporary state worker" status is the Plague.
In my third-world country (Greece) as well as in other states in Europe (e.g. Italy), the main trend since 20 years is to replace state workers in Universities, secondary schools, Municipalities and most other public sectors with the so-called fixed-term part-time workers. They are much cheaper, they get no additional or pension benefits and are as obedient as slaves because they are expendable - there are legions of them waiting in line eager to replace them.
Everybody accepted and still accepts to work under these terms, signing 19th century - style sweatshop contracts, with no real health or pension insurance and total insecurity, in the hope that someday (usually just before general elections), a law might pass allowing them to become permanent state workers.
Most of them actually are equally or more qualified than the respective permanent state co-workers - most have post-graduate degree and a significant percentage holds a PhD. Competition for these positions is so fierce that everybody strives for post-graduate studies.
However, the majority of them are living on 8-month or less contracts which are continually renewed, even when the recent (2004) state law strictly forbids them being employed in the same place for more than 24 months. There were even cases of people signing [b]daily[/b] contracts that started at 8am and finish at 4pm [b]every day[/b], 24/7/365.
The problem is so grave that in 1999 the EU issued the Council Directive 97/81/EC for the protection of part-time workers, which is still largely ignored by local governments who pass legislations that might seem legal but in reality severely distort the directive's intent. The Directive states that no-one in the public or the private sector should work under short-term contracts for more than 2 years when actually he is fulfilling a permanent and perpetual need of the employer.
It is estimated that at least 15-20% of the workforce in Greece (and to a lesser extent in Italy) lives on such contracts. They are fire-fighters, hospital nurses, ambulance drivers, school guards/guides, state building cleaners, administrative staff in public services, even teachers in state Universities, you name it. The "lowly" jobs are done usually via contractor firms, that borrow and lend the same people to the same institutions year after year.
For example, the cleaning ladies, guards, gardeners, receptionists in our University are the same 15-20 years now, just under a different contractor each year, the one placing the lowest bid. You can understand what that means for their salaries and benefits. Since this is ./, the majority of our central IT and computung facilities developer, helpdesk and support staff are also under (illegally) recurring short-term contracts (no contractor firms though - yet).
Most of these short-term workers managed to live a life and make a family (not me), even have kids and are really living on the thin edge of the wedge, making frequent public protests and asking for more permanent and fair terms of work. Personally, I "work" in a major state University under these terms since 1991, together with several hundreds of colleagues in the same situation. Currently, until new contracts appear in a few months, I'm living on 5 euros per day. Hope never dies.
The EU Directive attempted to prevent what I see coming to you in the US, that is, the exploitation of part-time workers. The state thinks that by bypassing the Big Contractor Firms they'll do their job much cheaper, and they're damn right.
I hope your labor Unions over there are well aware of the pending dangers of this within-county outsourcing of state jobs. In the worst case scenario, the public sector will collapse (as is the case here), because no-one will be really willing to commit to his state work duties like a permanent state worker does (who usually works under oath, at least in Greece). All our public sector suffers from the indifference of both permanent worker
if a private sector employer employed a "contrator" for 5 years in this way the IRS would could consider them an employee
And the guy flew his airplane into the IRS because. "He cited a 1986 change in the tax code affecting software contractors like him as the source of his problems." There is a chance that this is illegal.
Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't. Mark Twain.
Your translating private industry to government. It is an apples to oranges comparison.
It is more like:
"After wasting lots of money on expensive private consultants that have friends in high places, that generally do a poor job for lots and lots of money, and after much public outcry..."
Political Government: IT is expensive - we should build talent and experience within government.
5 years later...
NEW Political Government: IT is expensive - the last government wasted your money, look how big government is! We must reduce the size of government, and put the jobs in the free market and let business do what it does best, Innovate! (queue up the juicy contractor and consultant pork)
Workers souls dies a little bit inside...
Repeat until the world burns.
Strange thing how numbers work. I am a contractor for one of the agencies being targetted and have several people placed with New York State. I see all of the winning bids that come out of the state in IT and it's funny how the highest rate that I have seen win in the last 2 years only touches $125.00/hr... and that is the only one. The average rate for a "Staff Augmentation" position is around $75/ hr. keep in mind, no paid vacations, no health benefits, and that INCLUDES any retirement that is provided to that individual. Of the 100 + positions that are currently placed in one agency, almost every one is $90/hr or less. Somebody didn't do basic math to get the $128/hr, but even $75/hr is Still a lot of money right?
Now let's break a $75/hr rate down... The average union rep will scream.."That's still $150,000.00 per year". Is it? Let's take 4 weeks vacation (that's still less than many are offered who have been working in state or private industry). Contractors only get paid if they are there. no sick days, no paid vacation. That brings our gross down to $126,000 a year. Health benefits for a family are about 11,000/yr on the low end (no dental) bringing it down to $115,000/yr (about $55/hr). Next, in order to have the equivalent of a state pension (which can become available at 52 to state workers) how much would a contractor have to put away of the remaining sum to have 50%+ of their income for life starting at the age of 52? My assumption is that if the state can't do basic math to get an average rate of pay, then this math would be meaningless.
Finally there is one huge elephant in the room that is never discussed. Skillset. The reason contractors are brought in isn't that there aren't staff available, it's that the staff that is available does not have the skills required. The state workers with an updated skillset and a "get it done" mentality, are leveraged to the breaking point. To add new technology, or new projects, contractors are required. They have to work to keep their job every 12 or 18 months, because their contracts are continuously reviewed. They have incentive, and yes much of it is pay-based, to stay at the top of their game and produce. State workers don't have that. They are constantly reminded that advancement in the state has less to do with a persons productivity and skills, as it does a test score and a "years of service" button. We see it constantly where GOOD state staff are frustrated as they work their butts off but watch the person on their team get promoted that sits and plays games all day.
By converting the contractors there is one other BIG issue. Six months after the conversion, there will be a huge sucking sound as the people who took the job for fear of being jobless in this economic climate, jump ship once they've had enough time to rechart their course in the private industry. Then the knowledge the state hopes to keep in house will leave at once