Managing Contractors in tough times

Computerworld - As IT departments adjust to a slowing economy and tighter IT budgets, third-party consultants are often the first to feel the brunt of any changes. But some savvy IT managers who have come to rely on freelancers are leveraging the economic downturn to get more bang for their consulting bucks.
The Hartford Financial Services Group Inc., for example, is cutting back on its use of outside consultants. "This puts us in a stronger position with the ones we do hire," says John Madigan, vice president of IT human resources at the Hartford, Conn.-based financial services firm.
"We're able to exert more pressure for a better deal, to get a reduced hourly rate or additional services for the same amount of money," Madigan adds. "They're saying, 'You guys are squeezing us!' But it's simple economics."
Like other big companies, The Hartford has increased flexibility by relying on its in-house consulting unit, which has more than 400 contractors. "We're turning more to them; they have a pretty good recruiting machine," Madigan says. Previously, consultants from outside the company were hired to fill recruiting gaps at The Hartford. Since the market has softened, however, "our in-house team is now recruiting outside consultants who are looking for work," he says.
Other companies are also finding it more cost-effective to build up their in-house consulting staffs.
"Rather than paying through the nose for expensive outside consultants, we've created a group of internal consultants who are not only forging closer ties with customers, but also generating new revenues," says Honor Guiney, CIO at National-Oilwell Inc. in Houston.
At The Limited Inc. in Columbus, Ohio, the need for new data mining and data modeling applications to better focus products and improve customer relations is leading the retailer to take a mixed approach to using consultants, says CIO Tom McFadden.
The company has assembled a team of both in-house staffers and outside consultants to work on systems integration and middleware for a new customer relationship management system, says McFadden.
Indeed, some IT executives continue to cost-justify the use of outside contractors where it makes good business sense.
Greg Clancy, executive vice president and CIO at Sallie Mae Inc. in Reston, Va., is working with Onex Inc., a technology consulting firm in Indianapolis, on a Web integration project. Clancy says Sallie Mae chose Onex because its rates are about half those of larger firms and there's less contractual paperwork with which to contend.
Enzo Micali, chief technology officer at 1-800-Flowers.com Inc. in Westbury, N.Y., says he used to rely