HOT TOPICS

· What is temporary IT staffing?

o Focus: IT Consulting Firms

o The GTI Solutions LLC difference

· IT Staffing Industry Tidbits

o Another visa stirs up debate in the staffing industry

o Job exports may imperil US programmers

· Where is the technology economy headed?

o The State of the Technology Economy

o Staffing Trends

o Economic Trends

o Technology Trends

What is temporary IT staffing?

Employ on a temporary basis, specialized technical IT talent not prevalent within the organization for a strategic high impact IT project. With a combination of both IT capacity restrictions and numerous project requirements, IT organizations are ill prepared. Hiring temporary IT resources will provide your IT organizations with the expertise required for any strategic IT project. There are many benefits to utilizing temporary IT resources within your organization:

· Utilize skills of specialized resources to complete projects faster

· Utilize skills of specialized resources to develop more robust solutions that take advantage of a particular technology

· Eliminate the costs of training current resources

· Reduce the inefficiencies of existing resources working on multiple projects

· Increase the efficiency of resources, as clients are responsible only for productive hours worked, not for time associated with managing internal careers and dealing with office politics.

· Eliminate costs attributed to benefits like paid holidays or sick days.

· Eliminate costs associated with full time employee terminations

· Eliminate negative publicity associated with public layoffs

· Adjust IT capacity quickly depending on IT organizational requirement

Focus: IT Consulting Firms

IT consulting firms have a difficult time making resource decisions in a market environment that changes on a daily basis. From rapid consolidation and product changes in technology, to fickle customers contributing to wavering demand, projecting the needs of an IT consulting firm over the long term can be complex. The very temporary project nature of IT consulting itself can make determining optimal resource levels a complicated matter. Whether your organization is looking to ramp up resource capacity to support the growing customer demand of new specialized software applications, or, your organization is looking for specialized skills to assist with a current project, temporary staffing can help

Temporary Staffing

The provisional nature of the IT consulting industry combined with market demand for many varying skill sets makes it difficult to hire permanent employees. Since most IT consulting firms act as the technology expert for their clients, many projects of IT consulting firms expand beyond the company’s area of expertise. An IT consulting firm might be implementing JD Edwards financial applications for one client project, and then find themselves integrating the application with a custom development application that utilizes Powerbuilder for another, without the in house expertise to effectively execute the project. Instead of outsourcing this project to a consulting firm that specializes in custom development, the IT consulting firm could utilize GTI Solutions LLC’s Temporary IT Staffing service and manage the project effectively. By staffing a percentage of project positions with temporary IT resources, an IT consulting firm can receive benefits from specialized technology experience and be positioned to effectively manage any project.

· Increase capacity on a project-by-project basis without assuming additional overhead.

· Integrate specialized technology experience on projects not core to the organization.

· Maintain profitability of projects by assuming a variable cost structure for each resource that is tied to a similar revenue structure for the project.

Temporary to Full Time

Small to midsize IT consulting firms provide companies with great project management for IT strategy, systems implementation and IT integration projects. Most IT consulting firms grow organically, in an effort to remain profitable and not assume long-term debt as they expand into new service and product offerings. Typically, an IT consulting firm “Staff’s” a temporary consultant on a project engagement to fulfill the skill requirements of that particular project, without consideration of keeping the consultant on payroll over the long term. In many cases, many of these temporary consultants are unwilling to convert to a permanent employee with the organization, as they prefer the “freedom” of working as a contractor. Unfortunately, this situation leads to firms having many contractors servicing projects, negatively effecting profitability. GTI Solutions LLC works with IT consulting clients to help grow their business profitably. GTI Solutions believes in assisting clients with their organic growth initiatives by converting highly effective temporary resources into full time employees.

· Improve firm profitability by converting higher priced temporary resources into full time employees

· Contribute to organic growth by retaining qualified temporary resources

· Improve only great talent to increase the quality of the firms consultant base

The GTI Solutions LLC difference

Why GTI? GTI Solutions LLC coordinates all the essential functions for identifying highly qualified IT resources for temporary employment, including, technical interviews, full background checks and logistical coordination. Through its national network of highly skilled IT resources, GTI Solutions LLC offers its clients pre-qualified specialized technology resources. The GTI Solutions LLC network supports an excellent talent pool, providing our clients with resources that focus on high performance, value and success. Your IT organization will benefit from utilizing GTI Solutions for all of your provisional staffing needs in the following way:

· Improve the quality of the temporary IT resources you employ

· Eliminate the cost of searching through websites, interviewing unqualified candidates, and reviewing resumes.

· Speed the recruitment process and save your HR group time to focus on other activities

· Consolidate the billing process by using one company for supplying all of your contractors

· Eliminate the extensive tax processing forms required to for contractors

IT Staffing Industry Tidbits

Another visa stirs up debate in the IT services industry[i]

There's yet another visa controversy brewing in the IT services industry these days. A few years ago, the H1-B visa made headlines. Now, it's the L-1 visa. Many in the IT services field claim that large multinational consulting companies are misusing the L-1 visa to bring low-cost employees into the United States from other countries. The L-1 visa allows companies with an international presence to bring in people from their overseas offices to work in their U.S. offices, if they fit in one of two categories: managers or employees who possess specialized, proprietary knowledge relevant to the company's operations. The law sets time limits for their stay in the country, but not any minimum wage limits. This intra-company transfer of employees has generated a furor, with some companies accusing others of sending workers funneled in through this route to work at client sites – instead of within their organizations – at low rates that local companies, with no international presence, cannot compete with.

Job Exports May Imperil U.S. Programmers[ii]

The hemorrhaging of tens of thousands of technology jobs in recent years to cheaper workers abroad is already a fact of life -- as inevitable, U.S. executives say, as the 1980s migration of Rust Belt manufacturing jobs to Southeast Asia and Latin America. But a new wave of technology outsourcing -- involving tasks that involve greater skills -- could be cutting to the industry's bone, threatening to prolong the three-year U.S. economic downturn. Some who oppose the trend, which such industry stalwarts as Hewlett-Packard, IBM, Dell and Microsoft are embracing, believe it could even usher in the end of American domination in technology. Cost-conscious executives have been shifting lower-level tech jobs in data entry and systems support abroad to cheaper labor markets for more than a decade. But now they are exporting highly paid, highly skilled positions in software development -- jobs that have been considered intrinsic to Silicon Valley and tech hubs such as Seattle; Boston; and Austin, Texas. Critics say it's the equivalent of exporting not just the automobile industry's assembly line jobs -- but the core engineering and car design jobs, too. Roughly 27,000 technology jobs moved overseas in 2000, according to a November study by Forrester Research. It predicts that number will mushroom to 472,000 by 2015 if companies continue to farm out computer work at today's frenzied pace.

According to Forrester, companies in the United States and Europe will spend 28 percent of their information technology budgets on overseas work in the next two years. Boeing, Dell and Motorola have opened software development centers in Russia. Intel employs 400 full-time Russian software research engineers and nearly 200 others in marketing and sales, wireless Internet access and modem projects Microsoft is adding software development jobs at its India Development Center in Hyderabad, opened in 1999 to create versions of Windows for giant corporate computers. Bill Gates said late last year that the expansion was part of an estimated $400 million in corporate investments in the subcontinent. On its corporate Web site, Microsoft lists dozens of Hyderabad openings, many requiring five years of experience, fluency in multiple computer languages, and college degrees in computer science -- far from the hourly telemarketer jobs that financial services and insurance companies exported to the Philippines and elsewhere in the early '90s. Some say sending those jobs abroad may cause American tech workers' wages to stagnate. According to the nonpartisan Economic Policy Institute, non-inflation-adjusted wages for tech workers grew 1.7 percent between the fourth quarter of 2001 and the fourth quarter of 2002 -- not enough to keep up with the period's inflation rate of 2.2 percent. The average computer programmer in India costs $20 per hour in wages and benefits, compared to $65 per hour for an American with a comparable degree and experience, according to consulting firm Cap Gemini Ernst & Young. Bob Pryor, who heads the outsourcing practice of Cap Gemini Ernst & Young, said it's "naive" to think outsourcing software jobs could ruin America's tech dominance. "The reality is that we live in a global economy and we compete against global players. We need to look at where we have strategic advantage -- whether it's resources or skills," Pryor said. "It frees up people and dollars to do much more value-added strategic things for clients."

Where is the technology economy headed?

The State of the Technology Economy

Based on the most recent data, it appears that the economic condition for the technology sector will remain flat, with potentially minimal growth over the next couple of quarters, as temporary staffing, manufacturing, and IT spending barometers appear to have bottomed out last quarter and have made very small gains over the 1^st and 2^nd quarters of 2003. Though the war with Iraq has been declared over, the anticipated post war stimulus has been moderate at best. Low interest rates have contributed to fuel the economy by way of increased growth in refinancing and home sales, however, the lower interest rates have done very little to spur corporate spending on IT software, hardware, and services. The bright spot for the technology economy can be seen through the stability of most indicators, suggesting that the overall sector has stopped its bleeding. CIO surveys, a way in which the industry can gauge future growth, suggests a moderate increase in IT spending through the end of 2003, with an advanced pace of growth, yet still moderate, through 2004. The overall landscape appears healthy, however, this is a relative comparison to the past 2 years, as IT is headed for moderate, limited growth over the short term to mid term horizon.

Staffing Trends

Since trends in temporary employment are often good indicators of the direction of the overall economy, understanding the current state of the staffing industry is an important consideration for planning for the future in addition to other economic and industry factors. It appears that the temporary staffing industry has picked up significantly this past quarter after having bottomed out in the 3rd quarter of 2002. The 11.7% increase in temporary employment over last years 1^st quarter was the largest annual % growth in temporary staffing since the 4^th quarter of 1997.While the total number of temporary employment has stabilized with only a 1.16% decrease from the 4^th quarter of 2002, this year's decline was the smallest in the history of the survey between the 4^th and 1^st quarter. The next smallest was a 3.6 percent decline in the first quarter of 1994, as the US economy headed out of the 1992 recession.[iii]

· "Sustained employment growth in the staffing industry suggests that the U.S. economy may be gaining strength," says ASA president and CEO Richard Wahlquist.

· According to the June beige book, a monthly periodical published by the Federal Reserve, District reports on the temporary employment industry are mixed. Temporary staffing firms in the Dallas District report that demand has steadied. However, the vast majority of temporary help industry contacts in the Chicago District said that new orders fell in recent weeks, and those in the Richmond District reported lukewarm demand for workers in recent weeks. [iv]

Economic Trends

· Although reports from the twelve Federal Reserve Districts indicated some signs of increased economic activity in April and May, conditions remained sluggish in most Districts. No District report suggested that economic conditions had deteriorated since the last Beige Book. The unwinding of war-related concerns appears to have provided some lift to business and consumer confidence, but most reports suggested that the effect has not been dramatic.

· Consumer spending remained lackluster overall. Retail sales rebounded as the hostilities in Iraq subsided, but sales remained below the level of a year ago.

· Manufacturing activity was mixed, with some Districts reporting signs of improvement since the last Beige Book but others still seeing declines in orders. San Francisco noted strong demand for advanced technology production.

· Service sector reports, although limited, suggested sluggish activity overall. Low mortgage rates continue to stimulate residential construction and home sales in most Districts, but commercial construction and real estate markets were still weak. The energy industry continued to strengthen. Agricultural production was impaired by wet weather in some areas. Most Districts continued to report weakness in labor markets and some downward pressure on wages, although benefit costs continued to increase.[v]

Technology Trends

· June results of the Citigroup Smith Barney CIO Macros Trends survey indicate a clear improvement in overall sentiment with corporate IT spending budgets increasingly appearing inadequate. There appears to be an increase in willingness of CIO’s to spend on IT initiatives that will help to generate revenue in a firming economy. The survey results bode well for CRM, are mixed for ERP and suggests mainframe software in unlikely to participate in a recovery. IT services are likely to Lag on an upturn in software, and consulting demand should continue to be weak. Priority projects over the next 6 months appear to be CRM, Portals and Supply Chain Management.[vi]

· Although the spending outlook in the latest survey remains far from great, and pricing showed further entrenchment, several other sentiment indicators saw a bounce from the April trough. 2003 IT spending expectations are now back to roughly flat, up from –3% in the prior survey. The survey also shows 2004 spending plans as growing with a capital growth budget growth of 4.9% and overall IT budget growth of 3.5%[vii]

· According to Merrill Lynch CIO user survey, IT spending views for 2003 seem to destabilizing at a flat-to-slightly up vs. 2002. The CIO survey indicates a 1% increase in spending for the overall technology sector. Consulting fares the worst in IT services with spending anticipated decreasing 3%. However, this fares better than last quarter, as pricing pressures lead to a double-digit decline in consulting services.[viii]