Your complaint against the cost and quality of programming and other IT staff is misdirected. Recruiting and contracting firms mark up the cost of programming 250% to 400% or more. Contracting firms make a higher margin by billing the client company at a premium while supplying the client firm with the least experienced and least qualified workers. This can only happen when the management is unqualified to manage and/or the management is unwilling to do their job, which is to efficiently and effectively manage the resources with which they have been entrusted.
Client managers could cut their IT costs by those same percentages if they would do their own advertising, interviewing, and hiring, instead of relying on recruiting and contracting firms to supply their technical staff. They would be more assured of getting the level of expertise and skillsets that meet their requirements, and they would eliminate the waste and fraud being perpetrated by recruiting firms. They would be better able to retain the intellectual capital that gets created when technical employees develop experience in their particular systems and applications.
Markets didn't create the problem and markets are not creating a solution; not for the client companies and not for the people doing the work. Management, or rather incompetent and unqualified management, created and perpetuates the problems of high-cost, low-quality staffing, massive rates of project failure, and massive under-employment of the most qualified technical professionals.
Managers who depend on recruiting and contracting firms will never see the resumes of the best qualified candidates. They will only be presented with the ones that can provide the widest margin to the recruiting firm.
In the past, I've worked in that industry. More importantly, my reference is not to personal experience but to statistics.
Recruiting and contracting firms mark up the cost of programming 250% to 400% or more. Contracting firms make a higher margin by billing the client company at a premium while supplying the client firm with the least experienced and least qualified workers. This can only happen when the management is unqualified to manage and/or the management is unwilling to do their job, which is to efficiently and effectively manage the resources with which they have been entrusted.
I was referring to wages that programmers themselves were paid, whether it be in-house ones or contractors (who prefer to call themselves consultants).
Client managers could cut their IT costs by those same percentages if they would do their own advertising, interviewing, and hiring, instead of relying on recruiting and contracting firms to supply their technical staff.
Not necessarily: isn't advertising, hiring and interviewing costly?
More importantly nowadays, don't they save on not paying benefits to outside contractors?
They would be more assured of getting the level of expertise and skillsets that meet their requirements,
There is no evidence that it does not. One or few managers may be unqualified or make a mistake. The very fact that this trend occurs industry-wide tells you and me that this course of action is currently best. and they would eliminate the waste and fraud being perpetrated by recruiting firms.
If you have evidence of fraud, you should bring them up.
Perhaps, you should reflect on the fact that this "fraud" somehow is unnoticed even by large companies, with in-house lawyers that could bring a lawsuit with no additional cost --- and yet, the do not do that. When one does not know what money is spent on, it looks like fraud.
They would be better able to retain the intellectual capital that gets created when technical employees develop experience in their particular systems and applications.
Would you like to pay to a great carpenter I know? He has a great deal of skills. You don't? Oh, it's probably because you have no USE for that capital.
What is of VALUE to you need not be capital: it becomes one only when it is put to productive use. As recently as a couple of decades ago, major banks had software development departments and created their custom packages. The great skill of those particular programmers and analysts was capital. Programming has become a commodity since then, and all that great capital was fired --- precisely because it was no longer capital. To be sure, most skilled one moved to software development firms, away from mainframes and into still nascent PC environment, There such skills were, and still are, capital.
You see the point: what seems to be of value to you need not be of value to the company. The recent industry trends are screaming loudly that things you mentioned are not capital.
Markets didn't create the problem Which problem?
and markets are not creating a solution; not for the client companies and not for the people doing the work.
It seems to me the solution is created every day. When it ceases to be a solution in the ever changing environment, the companies will adopt new methods.
In many marketing books you will find a paragrapg on the use of own sales force vs. brokers. In every accounting book you'll find a chapter on buying vs. leasing. In other words, there is nothing new with programming, and it is no exception: there are times and situations when one's own workforce is best, and there are times when an external one is better. That has been the case since times immemorial. It is the Leftist press that made it look like "outsourcing" is new.
There is no problem here: what you witness is maturation of the software development and maintenance as an industry.
Management, or rather incompetent and unqualified management, created and perpetuates the problems of high-cost, low-quality staffing, massive rates of project failure, and massive under-employment of the most qualified technical professionals.
Ah, and their CEOs with huge staffs of business-educated people have no clue about that. You do.
Is it possible, just possible, that you simply don't know how to compute costs and benefits?
Managers who depend on recruiting and contracting firms will never see the resumes of the best qualified candidates.
Again, does it occur to you that they simply do NOT WANT to see those? In most jibs ones does not see the best qualified candidate but the one that suffices. More qualified candidates cost more and leave sooner. Again, if you acquainted yourself with principles of business management --- of its personnel function in this case --- you would see that immediately.
You make a very common mistake of assuming that you can judge the quality of managers from the experience of working for them. As I said in earlier posts, you don't learn aerodynamics by driving a car or combustion engineering by looking at its engine. Similarly here: you can work for a company or companies all your life and learn absolutely nothing about management. People don't fancy themselves astrophysicist just because the see the moon almost every day. They don't fancy themselves chemists just because they swallow pills when they are ill. But, like you, many make an exception when it comes to administration, whether public (governments) or business. Like you, they KNOW what the managers should do; like you they KNOW what Greenspan should do with interest rates, etc. Like you, they will go so far as to declare management of the best American corporation stupid --- and, in addition, all those millions of people that invest in those companies: managers, financial analysts, private investors are all stupid, but thank G-d we have programmers to point that out.
All I can see from your reasoning is that you incorrectly conceptualize objectives of the business and them perform benefit-cost analysis of decisions. That does not help to arrive at a correct conclusion.