As IT hiring slows, freelancers are getting more work

Scaling up and scaling down is much of what makes the cloud so attractive. Renting capacity when needed -- and not having to pay for it when it isn't needed -- is becoming the new norm. But a similar trend is starting to take hold in a much more personal way: the hiring and firing of people in IT.

As the IT jobs market slows after years of growth, many large companies are picking up the slack with hired guns: consultants, contractors, and others who do the work once covered by full-time employees, says David Foote, chief analyst at Foote Partners, which has tracked trends and salaries in IT employment since 1997. "The number of independent IT professionals [is now] at about 1 million and growing, and contract workers as a portion of the internal IT workforce at many medium to large size organizations has been rising, often between 10 percent and 25 percent," he wrote in a recent report.

At some smaller companies, adds Foote, hired guns (he calls them a "contingent workforce") may comprise as much as half the workforce. "We call it people architecture; that is, applying architecture principles to people. You never buy more than you need."

The part-time tech economy grows
The shift to contingent workers has been noted by others as well. IT research firm Computer Economics recently reported that the use of contract labor in large IT organizations (companies with IT budgets of $20 million or more) has grown to 15 percent, the largest share since 1998. Jon Bischke, who heads Entelo, a San Francisco-based recruiting firm, says consultants now comprise between 10 and 20 percent of the workforce of some fast-growing companies in an area where tech unemployment is close to zero.

Although a consultant may command a higher hourly salary than a full-timer, there's no need to pay that contractor benefits, there's no paid time off, and there's no difficulty in letting him or her go when work slows. Workers in many other sectors of the American economy are already in that position. In a wide range of jobs, such as household help, journalists, graphics designers, and even lawyers and accountants, the positions are being filled by freelancers. Studies by the federal Bureau of Labor Statistics and the Government Accountability Office show there are more than 20 million of them. IT is joining the trend.

Meanwhile, there are enough red flags waving in the breeze to be fairly certain the IT job market is cooling. Depending on who is doing the counting and how they classify IT, an analysis of January's report by the Bureau of Labor Statistics showed job losses ranging from about 1,400 to more than 3,100. That's not a huge number, but the sector was adding thousands of jobs a month through much of 2013, so it's a scary shift.

In the changing tech employment landscape, IT staffers really need business skills
The short-term cost benefit in hiring freelance IT help is obvious, but companies are adopting "people architecture" for more complex reasons.

As IT answers more and more to the business priorities, speed and agility are paramount. CIOs don't want to spend months on job searches. Instead, "the focus of IT leadership has for some time been on skills acquisition rather than hiring full-timers," Foote says. "That's because it has become less clear exactly what an employer's internal IT workforce should look like going forward."

I've talked to Foote over the last few years while reporting on the IT jobs market, and he's consistently repeated a theme: As IT is increasingly seen as an arm of business, rather than a mere service organization, "many of the most in-demand jobs require combinations of knowledge and skill in a business or customer context applied to problems and solutions with a high degree of difficulty."

That's not to say that technical knowledge is not a key attribute in a hire, but it's simply not enough for many companies.

Also adding to the trend of hiring contingent workers is uncertainty about the health of the economy. There's a good deal of volatility and a fear that we may be facing a market correction (that is, a downturn after a heady 2013), which makes employers more reluctant to invest in a new, full-time IT employee, says Bischke.

The positive side of a freelancer shift: An easier path to the full-time jobs later
But that also creates an opportunity for able freelancers to move inside, notes Foote. "Converting contract labor to full-time status remains one of the most popular strategies for filling full-time roles. Speed may be important but not at the sacrifice of caution in bringing aboard the right people who not only have the technical expertise but also fit in with the organizational culture."

There's no need to panic about the jobs picture at this point. But the best days of the jobs boom may be over or at least in a pause, so learning new, business-focused skills is more important than ever.

This story, "As IT hiring slows, freelancers are getting more work" was originally published by InfoWorld.