Tag: companies

The explosion of outsourcing companies – Part 1

consultants

In the last 20 years, there was a grow in the number of outsourcing companies, but in the last 5 years this number has increased substantially. Why? I think there are 3 main reasons I will discuss in these three part post. On the first part, I will show why this is an easy business to create. On the second part I will talk why the crisis was, ironically, a great thing for some of these companies, and on the part 3, for me the most important, the age of the consultants.

I would like to make this thing clear, I am not against outsourcing companies, they are necessary. In the time this post is written, I work in one of these companies. Computer market, for me, is the new construction business, and companies don’t need developers after the project is done, so it is easier to “rent” developers and delegate the responsibility to train (sometimes) and manage them in outsourcing companies.

Outsourcing companies are an easy business to create. To have a good durable company, you just need some money to handle the monthly gap between salaries and customers paying date (an outside investor/partner, for instance), someone to manage the resources and good sales people, usually called managers.

The blood of these companies, they aren’t the consultants. (I accept discordance at this point) but the CVs. They negotiate with customers with CVs. The consultants they are only needed when the probability of the customer wants the consultant be very high. Usually when they call you for a job interview, even if they have knowledge of your profile, they ask for your CV, unless you are a very useful resource, they will insist in a CV before the interview, strangely in their CV company layout. There are several ways to get CVs, the main ones are, having job descriptions from customers, and just put some “ghost” needs on the internet to get CVs from several IT areas, and consequently interviews.

It is necessary for customers know about the company, so the managers do this work and expect to follow with the customers on a regular basis or wait for them calling when they need some resource with a specific profile. This is the common cycle of development of a company.

Why is this an easy business to create? There are no materials, no stock, low risks. The major of companies appear as the result of some consultants or managers who have quit and started their own company because it is easy. They already know how this works! They already have contacts in customers, they already have colleagues or friends consultants and they bring some of them to the new company.

Probably it is not very discussed in public, but there are some mechanisms to try to avoid this leak in the system. In the job contracts, the outsourcing companies have clauses to forbid a consultant to have any kind of business with the customers, for as long as 6 months to 2 years. There are some “illegalities” here. First, at least in Portugal the Constitution has “the right to work” has something inviolable, for clear reasons, of course. So, these kind of clauses, are somehow against the worker rights. However, some companies started, and for me with some fair equilibrium to give something in return. Something like:

– After you quit the company, if the first 15 days after quitting, the company can forbid you, for 6 months, to work for the customer. But, it will give you in return 50-60% of average salary, for the 6 months. Even if you work in another place you will receive this money as a compensation and avoidance of the illegality.

– I have seen too, 10-20% for 1 year

– I have seen the inverse, for 1-2 year you can’t work in any of the customers, and if you go you can be punished some thousand euros plus more money the company could be losing from your moving.

I understand these restrictions in contracts. This is an easy business to create, and after some time in a customer I can easily open a company like this one and probably taking advantage of all the investment the outsourcing company had with me, and I just steal the customer and some consultants.

I call this an easy business, this doesn’t mean I think it is easy to have a company like this. I think with some grow it is very difficult to manage the consultants, their motivation, careers, make them stay even when other outsourcing companies have better projects or salaries. To avoid a big rotation of resources between companies, there is a current growing trend about the concept of culture in outsourcing companies. A way of the consultants to live the company as a family, or a great place to work. At the end of day the consultant works with a customer, and the company earns the money from the consultant in the customer, not “in the place to work”, so this culture is welcome, but I don’t think is the solution. That the reason on average a resourceful consultant stays for 1-2 years in an outsourcing company. It is not the only reason, but this is a theme I will discuss in future posts.

It is a tricky business having an outsourcing company, and somehow a very volatile business. I think it is the price to pay for an easy business to create, and with some irony because they try to restrict how themselves were created!

The Startup developers syndrome

MH900422589When I was studding in college there were these projects that toke me a lot of nights sleep just to deliver them before the deadline. They were database, programming and network projects, the usual preparation/education for the future job or Startup company.

After finishing the college I started to work for IT Companies, and let me tell you I was lucky because I didn’t suffer from “The syndrome of the Startup”. What is this syndrome?

Let me start, first describe how I have observed the IT world.

Along these years since I left school I started to see, that most companies pay for 8 hour/day job but they “ask” for more than this to their developers/workers without any compensation for that, like if it was an obligation. Why?

  • They do not work the 8 hours in a fair way?
  • They deserve less than a car mechanic or a mason? Because these guys if they work 12 hours you must pay them those hours, or your car will not get out from from the repair shop!
  • They don’t deserve the salary?

Of course, the reasons are most of the time others, and I can enumerate some of them:

  • The project manager probably is incompetent, because it couldn’t develop a project plan with the right resources, time and cost, so he hides it with more hours in the project.
  • The sales people just sold a project without questioning the experts to give them the right numbers for resources, time, etc..
  • The analyst team did not collect correctly the requirements so new ones started to pop as popcorns.
  • The manager just wants to improve his revenue in his Excel sheet so his commission at the end of the year can get him to take holidays in a better place, or buy a new car, or get a promotion!
  • “There are a lot of people looking for job these days, if they don’t like it, we can get other’s that are available to work more hours.”

But, for me, the main reason its because the IT workers accept this! Why?

  • Some of them they just think its normal.
    • Why is it normal to be paid for 8 hours and work 10/12 a day? Besides the low quality of life your salary just decreased between 25-50%!
  • They have afraid that if they don’t work these extra hours the managers will not promote them or they will start to talk negatively about them to other managers.
    • First, you will be promoted by your technical and soft skills. If you are very good in these skills, even if you work just the regular 8 hours, against some cultural trends in your company, the company will promote you anyway, because you are good and bring money to the company. Its not the time, it’s the quality and ROI.
    • Second, I know there are companies that talk negatively about the employees who don’t work the hours they expect, they say “they aren’t working as a team”. Well, there is a fallacy here, because if you work more hours and your salary it’s the same, the managers they get a raise because their revenue raises, but the only think you can get it’s a small raise in you salary, so if really you belong to a team everybody should win right?
    • Third, if the company have customers where to put you working, or projects to develop, that fits your qualities you will have work even working only 8 hours. If the company doesn’t have a place for you, you return to the office and after 2-3 months you will be invited to leave, event after you work more than the 8 hours/day.

Other reason that I see a lot, and that’s why I started this post talking about the college is that most developers they have his mind context to start a Startup company, and they work for IT companies with this thought that they are building something for them, like if they will get a reward after the project is finished. But it is so wrong, they haven’t build anything for them, just acquired experience. If in that time they have applied their knowledge to build a project for them then they have acquired not only developer experience but sales, marketing, leadership, entrepreneurship and managing experience, and they have done a great step in their professional life’s. Even if their project/startup didn’t work they have now experience to reach a higher role, like a team leader or manager?

I call this the “The Startup developers syndrome”, because most developers work with a mind set of a Startup but they are working for others where the only reward will be the salary.

NOTE: I am not trying to say the companies are bad and workers explored. There are bad companies? Yes! There are bad workers? Yes! There are great companies? Of course, As I said above, I had the luck to work in some of them! There are workers who just want a career, a job role, and they work extra hours to show to their bosses their dedication expecting a promotion. Sometimes workers need to miss a day or other just to handle private things and lot of companies they don’t discount from their salaries this days or hours, so its fair that the worker offer extra hours when the company need it, I think its very healthy for the relation between the company and the worker. What I think it’s not fair is the company, systematically creating the idea that working always more than 8 hours its normal and an “obligation”.

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