back to article Insourced staff paid a pittance but don't want to leave

After the scourge of outsourcing rampaged across the industry in the 1990s and 2000s, you'd think any news of insourcing would be good news for IT professionals, especially those who prefer to work in a nice, warm, in-house IT department rather than the measure-every-minute world of consultancy. At Australia's Yarra Valley Water …

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Mushroom

"Linley knew he couldn't pay market rates for skilled staff"

Rates for IT work have been dropping for years and the lack of any movement in salary was what made me leave the world of being an IT drone.

If you take low wages then you deserve to never recover in your salary in punishment of the damage to the market rates you are doing.

People who work for cheap drag down rates for all. Well done guys!

Meanwhile, some of us are still running out sourcing companies who can still undercut you so short tem gain because they are afraid of not having job.

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Anonymous Coward

Re: "Linley knew he couldn't pay market rates for skilled staff"

Totally agree about not paying low wages. However suits don't understand the benefits of in-house staff. So for now it goes to the Indians.

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Facepalm

learn2economy, ffs!

> People who work for cheap drag down rates for all. Well done guys!

Sounds like someone wants a cartel or negotiator that doesn't hesistate to use force to impose monopoly pricing on wages, aka "trade union".

> If you take low wages then you deserve to never recover in your salary in punishment of the damage to the market rates you are doing

Yeah, definitely a cartel. The "market rate" is what people are asking. You cannot "damage" it, because that would mean there is a magical "right price" or "guaranteed price". Once that concept appears, your problems really start. It' just normal that people get lower pay if the benefits are better. Otherwise they are not benefits, they are "entitlements".

In this here very central European country named after a confectionary, public employees get better benefits, better pay, basically cannot be fired, see their salary increased by law during a depression and have a trade union that does not hesitate to block the capital. On the other hand they very often do shit work (if they are not outright corrupt and are actively soliciting bribes). That doesn't help anyone.

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Re: learn2economy, ffs!

> In this here very central European country named after a confectionary

I'm guessing you live on the north-facing slopes of the Toblerones?

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Re: learn2economy, ffs!

Yes, the only other place I can think of is Mars, and that's surely neither European nor sufficiently connected to support oursourced IT services yet?

Galaxy would be a bit too non-specific and Milky Way just ridiculous.

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Anonymous Coward

Re: learn2economy, ffs!

If mom serves Swede for desserts, time to flee the nest! No, that would be a ridiculous sweet.

Maybe Luxembourg --- often in desperation called Whotsit, or Whotsitsname, --- was intended?

Nah, my money is on the Toblerones too.

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Flame

"benefits of in-house staff"

What are the benefits of in-house staff.

In any business setting, you either look like an expense or a source of value.

If you are adding value to the organisation, and the organisation knows it, then they will want to keep you around and will pay to do so.

If the organisation doesn't see you as a value-adder, then they see you as an expense. Expenses are something you try to reduce to make better profits.

If the suits don't understand the benefits of in-house staff, then that is not THEIR problem, it is YOUR problem. Educate them!

Make sure you are seen as the bloke that fixes problems and increases productivity, not just the dickhead who keeps on screwing things up and making silly rules.

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Anonymous Coward

Once bitten, etc

I once took a position with a small start-up for below average wages as lead, and only, analyst/programmer. This was based on the owner/manager assuring me that this would be made up once the company got on its feet. I figured that I was going into this with my eyes open and while I had reservations about the promise, I could live with what was on offer as my partner was drawing a reasonable salary elsewhere.

Two and a half years later, the business was doing OK. I was leading 3 IT staff and enjoying my job but the salary hadn't changed. When I brought up the subject with the boss (who turned out to be an absolute micro-manager) , he kept promising a review in x months. X months never came.

I finally had enough and accepted a contracting position at 2.5 times what I was previously making. When I told him I was leaving, I was accused in front of all the staff of betrayal and letting the side down. True colours will always come out, I suppose.

Bottom line: permanent employment gives you security (mostly) while contracting gives you more £££. If you can get both at the same time, good luck to you!

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Anonymous Coward

Re: Once bitten, etc

@AC - 04:46

"Bottom line: permanent employment gives you security (mostly)"

You must be joking. I've seen many, many more permanent staff laid off for all sorts of reasons (budget constraints, outsourcing) than contractors. "Permanency" of a job is purely imaginary. You have seen first hand what employer's loyalty is worth.

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Anonymous Coward

It's a very personal choice.

I was on a good wage but I was doing a 120 mile commute a day which at its best took 2.5 hours per day but usually swallowed up over 3 hours each per day.

I'm now in a different job earning 15% less but my daily round trip commute is less than 25 miles and it takes me about 20 minutes each way. I now have more time to spend at time home with my family, I'm nowhere near as stressed from the commute and of course my car is not needing a service every few weeks and wont have 100K on the clock in just over three years.

Do you think I'm mad?

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Re: It's a very personal choice. @AC 0702 GMT

No

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Re: It's a very personal choice.

"Do you think I'm mad?"

No, you sound smart to me.

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Anonymous Coward

Not so fringe benefits

The job package is not just the take home pay.

As the article says governement employment brings "stability, generous retirement savings contributions and flexible working conditions"

I know former and current workers from the civil service and local government. Retirees before the age of 60, current workers often seem to have days off in what I know as the working week, and those extra days after bank holidays.

Why knock yourself out earning a high income and then having to stash it away for the later years, when if you can live within your means on a lower salary, it'll be waiting for you with no effort when you're done working.

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Anonymous Coward

Re: Not so fringe benefits

Quite so... Been making the maximum permitted extra payments into a government pension scheme for a good many years now, and the return looks as if it well be a lot better than if I'd put the cash privately where it would have been plundered by the financial industry.

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Anonymous Coward

Re: Not so fringe benefits

Before I retired I did the same, boy am I glad I did!

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Anonymous Coward

Re: Not so fringe benefits

Those fantastic Government retirement schemes are seldom fully funded, totally unsustainable and a burden on future taxpayers. Look to the southern European nations if you want to see where promises of guilt edged benefits to public sector workers get you.

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Re: sustainable pensions...

A lot of the stuff about sustainable public sector pensions is just finance industry propaganda because they want to get their greedy mitts on the pension fund money and raid it for commission. Given a stable level of public sector employment there's not really much point in hoarding away huge sums of money for government pension contributions. Much better to use the money for something useful and pay the pensions from the next generation's contributions and thus ad infinitum. Provided the sums are done on the basis of a stable employee base its no problem and its certainly not a Ponzi scheme as the naive or deliberately misleading would tell you. It would only be a ponzi scheme if the sums relied on continually increasing staff levels, not stable ones.

This isn't possible with private sector companies of course, because we all know that the companies wouldn't be there when it was time to pay out the pensions, unlike Governments, which tend not to offshore the income to Ireland or whatever.

That in turn means that the other bunch of people frenziedly claiming that such things are undesirable are outsourcers, since if government pensions are cheaper for the employers outsourcing is much less likley to be price competitive.

In fact there's really only one group that benefits if government pensions are paid from future income instead of current income, and that's the taxpayers, because huge sums of money aren't shunted away in pension funds, but instead are available for public services. But who cares about them?

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Anonymous Coward

Re: sustainable pensions...

@JimC

Well said. I wish I could upvote you more than once.

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Re: Not so fringe benefits

>seldom fully funded, totally unsustainable and a burden on future taxpayers

Hmmm... what country do you live in?

>southern European

????

In AUS, the government pension schemes are mostly, if not entirely, independent and fully funded

Except that some of the ex-government superanuation schemes (for example the education sector fund), have remaining fixed-benefit liabilities. This means that current (floating rate) members have to fund the fixed-benefit members if the market goes backwards.

That is, the scheme is fully funded out of existing capital, and future benefits for existing members may be poor.

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Re: Not so fringe benefits

As the article says governement employment brings "stability, generous retirement savings contributions and flexible working conditions"

But I always thought that was a major selling point for any government job and hence one of the reasons why the salary was less than could be obtained from the private sector.

I suspect that additionally, we can expect to see more older people taking such positions as they step down from demanding jobs, but still having to work until they are able to retire at 70 or so..

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Re: sustainable pensions...

"A lot of the stuff about sustainable public sector pensions is just finance industry propaganda "

Whilst there is an issue about the size of the pensions liability and how government will fund it's obligations, I think there is really no issue about contribution levels. Currently, for a private sector final salary pension (40/60th), the total annual contributions (employee + employer) need to be around 23% of pensionable salary. So I suggest we should be using this figure (albeit adjusted to reflect the differing benefit levels) to assess whether public sector employees are making sufficient contributions towards their future pension.

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Happy

What Price Quality Of Life?

Most jobs come with a package of ups and downs. The up is hopefully the pay, but this can be split up into several reward packages, so much for anti social aspects, so much to cover travel costs, perhaps so much for dealing with the throwback in charge, etc. After a while everyone starts to look at the math. Are those compensation factors worth the agro? At one time, many years back I was working 7 days a week and often from 6 in the morning to well past sane people's bed time - I was paid for the hours and made more money than the most senior guy in the company location -yippee.

Things improved and the crazy hours became optional, funny how soon I stopped the overtime and accepted the drop in cash.

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I chased the almighty dollar, thinking that the long hours, the long commute and the high stress was what was expected or the norm. I wised up, now when or if I think of moving companies, I do it, based not on the salary but the work/life balance programs they have in place and the people i get to work with.

I work to live not live to work. A company can jam the extra 10-20% if they expect 10-12 hour days and regular weekend work.

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Its really refreshing to hear other people also appreciate working for an in-house team in a SME as much I do. My salary might not be as high as it could be elsewhere but its not terrible and I am quite happy with it, especially as I know if I am ill I wont be interrogated on return and Management don't require endless statistics to prove the necessity for a new Mouse. As with all things its swings and roundabouts and you have to decide what's best for you in the long run but for me at the moment as an IT youngling (only 6 years in the post grad IT Industry) its a great way to be able to get hands on with every aspect of IT from Debian to Windows from Cisco to Juniper which working in a large outsourced department would not let me do. Ok so I drifted off topic there but basically well done for smaller companies giving in house IT a chance. We certainly save ours money.

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Anonymous Coward

Funny..

To read about people in both the public and private sector accepting the lower wages as a better work life balance is more preferable than bigger wages - Hang on how does that work? Does that not just mean as a permanent worker who knows the systems in-house, can sort issues in 5 mins, has relationships with other workers and show loyalty to a company/department should be paid less than people who just know the tech? This has always struck me as disgusting and a gtreat example of p!ss poor management.

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Holmes

Re: Funny..

The company has to pay more to torture the techs at the outsource firm. The actual techs don't get the extra pay anyway -- it goes to management, who torture the techs.

I was a consultant for years, the kind who is a permanent employee of a consulting company. The employing company paid extra for superior tech knowledge and the ability to drive us nuts; plus markup for profit, of course. We also told their management the truth rather than sucking up. We always knew we would be out of there at some finite future point, leaving them stewing in it.

Ironically, most of this type of consulting is gone, outsourced to India. I was there when the flags came down.

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Re: Funny..

The problem is that many companies have reneged on the unstated loyalty agreement, thereby devaluing the permanent package.

At an extreme the difference can be earn £40k + benefits as permanent staff or earn £80k + benefits as a expert but have utilisation and revenue targets to meet and be expected to go wherever the next assignment is often at very short notice (there was one period in my career where I carried my passport and had a packed overnight bag to hand) - which can play havoc with your non-work social life.

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Anonymous Coward

TUPE

I've seen a nice little example of TUPE and outsource/insource:

A group of workers were outsourced from company A to company C in 2000. TUPE ensured they retained their T&Cs (and a deal was included on pensions which were outside TUPE at the time).

In the changing world,Company A changed its T&Cs, changing pensions from Finals Salary to contributory.

In 2010, Company A insourced the service from Company C, TUPE again applying. Those staff are now the lucky few with a continuing Final Salary pension in Company A.

See, Outsourcing does save you money - in the SHORT TERM.

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Outsourcing Strategy

Outsourcing always sounds like a really good idea to begin with. They often are able to undercut an 'in-house' service and give you added benefit of cover for leave / sickness, usually have access to a wider range of skills etc... Big pluses. However in my experieince its when you start making changes to the service is when you get hit and thats where they make the big profit.

Variations = big increase in service cost.

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Tradeoffs

It's always about tradeoff, but to quote an old joke, "Nobody went to their grave regretting not having put more time in at the office."

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Unhappy

Insourcing?

It is truly horrible that there should even be such a word. The opposite of outsourcing should be just --- normal.

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What about the profit margin?

Ahem, ten to fifteen percent savings is probably below the profit margin the outsourcer had on the project.

So if the pay really is significantly below market rates then there are two obvious potential conclusions:

Either the savings are much bigger than 10-15%

or the insourcer is using more staff to do the same job as the outsourcer (possibly due to inefficiencies or lower skill base)

A third cynical conclusion is that they are overpaying the market rate (at least for someone) but spinning it the other way so that no-one notices!

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Facepalm

Do the commute math

Don't folks do the maths on the commute? I worked out a while back that one mile of daily commute (2 miles round trip) equals over one hundred quid a year extra you have to earn (before tax) in direct fuel costs (or public transport costs). That is excluding any notional value you place on the commute time itself (at least minimum working wage perhaps?)

If I commute an extra 50 miles each way (100 mile round trip) a day, I need to earn over 5K more a year to make it worthwhile. All else being equal of course. Plus there would be a notional value of a couple of hours of my time a day which I would value _at least_ 3K per year (minimum wage for commute time for 220 days ).

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Folding stuff vs warm/fuzzy

It all depends how enjoyable the job is and the culture of the company, Working in-house usually beats consulting, but not necessarily. Some consultancies treat their staff as humans, others are just poorly run sweat shops with 50% staff turnover. In-house is warm and fuzzy, but can become a hideaway for problem individuals just biding their time.

A job you enjoy is obviously wonderful, better than $$$. And having a good manager is probably the best perk.

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