Outsourcing may save the New York $15 million

NY found consultants cost $25,000 more than staff

The state of New York is going to hire 500 new term employees to replace work done by external consultants.

The savings is expected to be $25,000 per employee for an annual total of $15 million.

The staff will be limited to 5 year terms to avoid some of the paperwork required to hire permanent staff.

“As many as 500 new state IT jobs may be created under a new in-sourcing program that was recently approved by the legislature and backed by Gov. David Patterson.”

“This law creates “term appointments” for state IT workers, which strip away some hiring and firing rules that apply to permanent workers. The maximum tenure for “term appointments” is five years.” ComputerWorld

States are trying innovative ways to save money during the Great Recession in the US. Generally that means cutting payrolls and outsourcing IT tasks. This is one of the first times we’ve seen in-sourcing cited as a money saving plan.

This recession has seen an increase of outsourcing as companies try to lower their IT costs and gain control of complex IT resources that may not be their core competency.  Generally outsourcing is not less expensive since the same skill levels are required for IT tasks whether they are performed by consultants or staff.

“I think most managers here would be very happy if we didn’t need to outsource,” said Mark Leinung, deputy director for state operations, said yesterday in a presentation to state managers that was made available on the Web. The state may still turn to outsourcers in cases where it lacks the expertise needed for certain jobs, said Leinung. However, he added that the state plans to use some of the money saved to boost its IT training programs.  ComputerWorld