Though hobbled by huge losses, Ford Motor Co. has a list of IT projects it wants to tackle this year, including boosting security systems, shoring up network infrastructure and maintaining its core applications. But first, the automotive giant needs to beef up its in-house IT talent.
As a result, the struggling automaker is leaving intact an initiative under which it’s converting many of its contract IT positions to full-time jobs. Ford officials said the initiative, dubbed Project Renaissance, won’t be affected by deep cost-cutting measures announced earlier this month, including plans to slash 35,000 jobs and shutter five manufacturing plants this year.
Greg Moran, director of application development services at Ford, said bringing more technology jobs in-house will let the company “build out our IT capability…while eliminating the margin we often pay service providers.” Project Renaissance should help fill gaps in Ford’s IT team and cut costs at the same time, he said.
Ford began its migration away from contract workers last fall. The company’s IT ranks include approximately 6,800 workers, only about 30 per cent of whom are full-time staffers. By reducing the fees paid to consulting firms for contract workers, Moran said, Ford expects to significantly reduce its IT costs without cutting the number of workers.
Ford last week posted a US$5.1 billion loss for the fourth quarter of 2001, compared with earnings of US$1.1 billion in the same period a year earlier. Included in the loss were charges of US$4.1 billion taken to cover workforce reductions, plant closures and other cost-cutting measures.
“Ford understands the only way to improve their financial position is to streamline internal processes, because that has the highest potential for cutting costs,” said Thilo Koslowski, an analyst at Gartner Inc. in Stamford, Conn. “IT is the only way Ford will get back on its feet. It’s the only variable left where they can save money – they’ve already cut jobs, asked for cost reductions from suppliers and closed plants.”
Ford isn’t alone in looking to keep its IT talent intact and trim costs by either eliminating consultants or converting those workers into regular staffers.
Duke Energy Field Services LP, a US$9 billion natural gas firm, quadrupled its internal IT staff in 2001, said Fred Kesinger, CIO at the company’s Duke Field Services unit. During the dot-com boom, he said, Denver-based Duke Energy used consultants rather than getting locked into “unreasonable” compensation for salaried employees.
“We relied on outside resources, but at a premium cost,” he said. Duke Field Services shored up its application development and network operations when it made the decision to increase its reliance on salaried IT workers in lieu of consultants, Kesinger said.
“Companies are trying to reduce costs as much as possible, period, but they’re not in any blanket way getting rid of consultants,” said David Foote, managing partner of Foote Partners LLC, an IT salary research firm in New Canaan, Conn. Foote is also a columnist for Computerworld (U.S.).
Even during the recession, “companies are still building the infrastructure for e-business,” and accordingly, they’re ensuring that they have the internal resources for those projects, he added.
By converting a consultant to full-time staffer, an IT department can quickly and significantly reduce costs, said Jen Ibanez, director of marking at Remy Corp., an IT consulting firm in Denver. “We’re seeing more contract-to-hires and permanent placements in the last six months than we’ve seen in a long while,” she said. “It gives the company a chance to test-drive the consultant to make sure it’s a good fit.”
