Monday, October 24, 2011

Musings on body shopping, IT Service Firms, visas and the 7 Year itch

Technology sourcing companies have long struggled with the "7 year itch" but now with a few forces coming together, the problem seems to be getting magnified: Sluggish global economy coupled with continued demand for offshoring, protectionist visa policies, and IT service companies continuing to go after a slice of the same big pie. The unsung beneficiaries of this: small, mid-size body-shops (And no, in this blog, I am not adding to the debate on Whether Infosys Is a 'Body Shop')

Firstly, defining the 7 Year Itch. Many IT professionals who have grown in a service firm, especially those with an extended experience working on hot technologies in more than a few projects feel the need to explore the grass-on-the-other side. These Tech-lead/Junior-Architect level folks are also backbones of successful IT sourcing projects, and are much in demand.

Case in point. Here is a practical problem that managers of sourcing firms face. My client just awarded a million-dollar six-month contract for the next phase of eCommerce program to my firm. Most of the existing technical folks in my project are already locked into working on the previous phases. I don't have a pool of experienced IBM Websphere, IBM Portal and IBM Commerce programmers currently available in my organizational bench pool to join the team at a short notice. Flying in folks from out of US is not a practical option for two reasons: we don't have a pool of "visa ready" folks waiting on bench, and getting visas for other folks at short notice would be impossible.

What do I do? I turn to sub-contractors in the local market. The sub-con has a database of Websphere professionals working for other tier-1outsourcing and offshoring firms - possibly my competetors. These also happen to be folks either going through a 7-Year-Itch at their firm, are looking for a subcon to sponsor their immigrant visa or simply an opportunity to make a few dollars more as an IT contractor.

There are a few interesting market forces coming together here, something that the body-shops are looking to capitalize on.
  • Sluggish global economy with continued outsourcing. Sluggish global economy means most companies either have a hiring freeze or a slowdown in hiring. The slowdown in hiring does not always mean a corresponding freeze in the technology initiatives, which translates to an opportunity for sourcing vendors.
  • Let the big dogs fight over the slice of the same pie. A client may decide to award an eCommerce project to a Vendor A and a SAP upgrade program to Vendor B. Vendor A scrambles to put together a team of Managers, Architects, Tech Leads and Developers proficient in eCommerce technologies. Vendor B likewise does it for the SAP program. Just like organizations realize they can easily interchange and deploy resources across client programs, the ‘resources’ realize they can switch employers and continue to work on same technologies.
  • Fewer Work Visas: Not wishing to go against political headwinds, service companies are applying for fewer work visas. Even the few applications are going through additional scrutiny by immigration officials, which means one thing: fewer experienced IT professionals available in any geography.
Opportunity: Body Shops promise mobility while carving out a niche. Technologists with the 7-Year-Itch are motivated and unencumbered by a baggage of loyalty and need to work for a single employer. However, their mobility is restricted by their immigrant/visa status and sluggish hiring by end-clients. Also, most large sourcing firms are reluctant to hire candidates in the US if they also have to sponsor visas for them. The body shops are stepping in to provide a bridge: hiring talented individuals who can be sub-contracted to larger sourcing firms with the only overhead of having to sponsor their paperwork.

ps: As with any opportunity, there are risks, especially for those being "body shopped." Risks include being out of visa status if the body-shopper is unable to get the right paperwork to sponsor visa extension …. but that is another topic in itself.

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