1. MOVINGDe-
Away From
Outsourcing
IT Department TrendsDe-

2. 2
CONTENTS:
04 Why Employers Are Bulking Up on IT
06 A Growing Need for IT Talent
09 Why Do Companies Outsource?
11 Disadvantages of Outsourcing and the End of a Trend
13 What to Do When Outsourcing Is Not an Option

3. After years of layoffs and hiring freezes, U.S.
companies are expanding their IT departments.
3
• 91 percent of CFOs expect the number
of employees at their companies to
increase or remain the same in 2014,
with recruitment focused on big data,
cloud computing and data security.
i
• Employment in IT fields is expected to
increase 22 percent by 2020 according to
the U.S. Bureau of Labor Statistics.
• The federal government will increase IT
staff — President Obama said he hopes to
bring on more IT talent and add more private-
sector technologists into governmentii
on a
temporary basis.
As a result, companies will have to fight hard to attract
top talent, both domestically and abroad. And while
outsourcing may seem like a prudent way to tip the
fight in your favor, evidence shows that there are many
disadvantages to outsourcing, and many advantages of
alternative solutions.
i BDO, LLP. 2014 BDO Technology Outlook Survey.
ii NextGov.com. Federal Tech Funding Dips Slightly in Obama’s Fiscal 2015 Request.

4. Why Employers Are
BULKING UP ON IT
4

5. Why Are Employers Bulking Up on IT
iii Forbes. Marc Andreesen: Five Ideas that Have Shaped the Internet.
iv IDC. Skills Requirements for Tomorrow’s Best Jobs.
v Ford Motor.Co. AppLink Reaches Out Globally.
vi Progressive Insurance.
vii Big Data Startups.
viii Susan Kuchinskas. Precision Agriculture: From Real-Time Farming Data to Meta Analytics.
Here are the four main drivers of IT
department expansion:
1. Software is now everywhere in the company.
Software improves efficiency and, ultimately,
reduces operational costs. It also makes it easier to
communicate with clients’, partners’ and vendors’
systems. Now, companies are seeking to leverage
the advantages of software in every aspect of
their operations. Thus, technology powers logistics,
inventory, medical, hospitality — even manual labor
jobs often include software for measuring, designing
or fabricating. Every kind of company now has an IT
department to support critical business functions.iv
2. Every company is now a software company.
In addition to using software, companies are now
creating it. Ford Motor Co. hosts regular hackathons;v
Progressive Insurance launched a mobile app;vi
Casino owner Caesars Entertainment has built a
massive infrastructure that tracks customers from
Netscape founder and venture capitalist Marc
Andreessen famously said, “Software is eating the
world.”
iii
He was right. Today, software has pervaded
every business, every job function and everyone’s
daily personal life. As a result, companies of all sorts
and sizes are expanding their IT departments.
5
their first visit to a website to their post-stay surveys.vii
John Deere continues to innovate its software platform
for tractor owners.viii
There are many more examples of
companies developing software to meet their internal
needs or to serve customers and partners.
3. Big Data keeps getting bigger.
The torrents of data generated by doing business
digitally are becoming a competitive weapon that
companies can mine for deeper and more interpretive
insights. According to the Technology Councils of North
America (TECNA), 64 percent of companies identified Big
Data — analytics, data mining and business intelligence —
as the top driver of growth in 2014 to 2016.ix
4. Mobile is major.
The continued emphasis on mobile and mobile-first
strategies has upped demand for mobile developers.
TECNA’s survey found that 59 percent of companies
identified mobile application development as a key
driver of growth. Daniel Burrus, author of Technotrends
and Flash Forward, expects half of all companies to
have their own mobile apps within the next two years.x
Obviously, they’ll need help. Some may turn to IT shops,
which are experiencing their own hiring boom: 41
percent plan to hire more technical staff in 2014, with
medium-sized firms being the most aggressive in hiring.xi
ix TECNA. National Survey of Technology, Policy and Strategic Issues.
x Daniel Burrus. Mobile Apps Will Transform All Business Processes – Is Your Company Ready?
xi CompTIA.IT Industry Outlook 2014.

6. 6
A Growing Need for IT Talent

7. A Growing Need for IT Talent
xii LinkedIn. Hottest Skills that Got People Hired in 2013.
xiii CompTIA. 2014 IT Industry Outlook.
xiv Ibid.
xv IDC. Skills Requirements for Tomorrow’s Best Jobs.
xvi Computerworld. 2014 Forecast Survey.
The expansion of IT within
every company and into
every part of the company is
already creating a talent gap.
On LinkedIn’s list of the “25
Hottest Skills that Got People
Hired in 2013,” all but two skills
were technical.xii
• The unemployment rate for IT professionals is 3.7 percent,
versus 6.7 percent overall in December 2013, according to
the U.S. Bureau of Labor Statistics.xiii
• The total number of core IT job openings in the U.S.
reached over 500,000 for Q4 2013, according to Burning
Glass Technologies Labor Insights.xiv
• Computer programmers and specialists is one of the five
high-growth and high-wage employment categories
projected to make up 53 percent of all competitively hired
and highly paid jobs in 2020.xv
• In 2014, 32 percent of all companies expect to increase
head count in the IT department.xvi
There’s little doubt that information
technology professionals are in demand:
7

8. A Growing Need for IT Talent
xvii icrunchdata. Big Data Jobs Index.
As businesses begin to extract more
intelligence from their data sets — and
begin to understand how their data
can improve every aspect of their
operations, products and services — it’s
understandable that data specialists of
all stripes are in short supply.
The Bureau of Labor Statistics
says that employment in core IT
occupations may grow as much
as 20 percent in the next six
years. It identified these core
skills as likely to grow the most:
Software developers
Database administrators
Network and systems
administrators
Systems analysts
Information security
analysts
Web developers
Network architects
Although data analytics has been around for decades,
it’s not an area of expertise that universities and training
schools have had their eye on, so these skills are hard
to find.
The Big Data Jobs Index is a real-time snapshot of what
employers are looking for at any given moment. Of the
490,000 big-data job openings on a recent day, more
than half (224,867) were for data analysts, followed by
84,424 data scientist positions.xvii
As businesses in all industries, from professional services
to retail to entertainment to media, race to provide
mobile apps and mobile web access, mobile developers
are also able to write their own tickets.
8
TECH SKILLS
MOST IN-DEMAND

9. 9
Why Do Companies Outsource?

10. Why Do Companies Outsource?
xxii Tholons. 2013 Top 100 Outsourcing Destinations.
xxiii Datamark. Top 10 Business Process Outsourcing Trends to Watch for in 2014.
xxiv Ibid.
xxv International Association of Outsourcing Professionals. IAOP Releases Annual
Outsourcing Trends to Watch in 2013.
xxvi Ibid. xxvii Ibid. xxviiiI bid.
xxix Everest Group. Immigration Uncertainty Among Top Outsourcing Trends.
At the turn of the 21st century, e-business was
booming. All kinds of companies were installing
computerized systems to modernize and streamline
operations. Projects such as installing ERP or
marketing automation systems took months and
required extensive customization, employing
legions of consultants with specialized knowledge.
Following this first outsourcing boom,
around 2004, U.S. companies began turning
to offshore outsourcers, especially in India.
There were several reasons why this
made sense:
xviii Rediff. 5 Big Reasons for Indian IT Boom.
xix ibid
xx Financial Express. The Coming Boom in Telecom Outsourcing.
xxi IT Pro. IT Skills Shortage Prompts Outsourcing Boom.
• Offshore IT outsourcers could offer scale in the
number of infotech professionals available with
the skillsets companies needed.xviii
• IT outsourcing companies responded to demand
by adding new services to handle infrastructure
solutions, business process outsourcing and
software/QA testing.xix
• Outsourcing contracts offered companies a
predictable level of IT spending.xx
Even as late as 2013, businesses were investing in
emerging technologies at the same time that they were
struggling with slashed budgets and reduced staff. The
two prime reasons organizations turn to outsourcing
are to improve service levels and to access skills not
available within the organization.xxi
IT Outsourcing Trends:
• Expansion from software development and
implementation to outsourcing of many business
processes
• Offshore providers of outsourcing expanding from
India to more than 100 countries in Asia, Europe,
China and Central Americaxxii
• Shift to outcome-based pricing modelsxxiii
• Mid-market companies engaging business-process
outsourcing companiesxxiv
• Social issues including fair wages and labor practices,
environmental impact, local community support and
sustainability become important in engagementsxxv
• Data security remains a critical issuexxvi
• Consultants with the right credentials, expertise and
talent continue to be in high demandxxvii
• Companies seek to handle compliance, legal and
financial risksxxviii
• Potential for U.S. immigration reform creates
uncertainty about using foreign contractors
10

11. 11
Disadvantages OF
Outsourcing AND
the End of a Trend

12. The appeal of outsourcing as a business strategy
appears to be waning. Demand for IT outsourcing
in India has already leveled off, according to The
Economist, because most of what can be moved
offshore already has.xxx
In fact, KPMG predicted
that the outsourcing concept will die out, to be
replaced by complex business partnerships at an
increased cost.xxxi
There are several potential disadvantages
of outsourcing:
The skills gap is global.
Business executives around the world share the
concerns of their counterparts in the United States.
In PwC’s annual survey of global CEOs, 30 percent
of the respondents felt confident that they would
be able to find the talent they needed to grow their
companies, while 58 percent said a lack of key skills
is hampering their growth prospects.xxxii
The leaders in outsourcing are not faring better
in their own hiring. Among the world’s top ten
economies, employers in Brazil, Russia, India
and China are having the most difficulty filling
vacancies.xxxiii
There are risks.
Outsourcing IT functions, especially when the work is
sent offshore, may carry business risk. The risks include:
• Projects take too long
• Rising or hidden costs
• Loss of control of data security and disaster recovery
• No control over how services are delivered
• Lack of service quality or expertise
• Some IT functions not easily outsourced
Communication is more difficult.
Even differences in the time zones between client and
outsourcer can interfere with speedy delivery of the
project. For example, an email sent during the client’s
business day can arrive in the middle of the night, with
the response coming back after business hours,
client time.
Compliance becomes complicated.
For some businesses, use of an outsourcer can lead to
compliance issues, if the activities of a service provider
don’t comply with applicable U.S. laws and regulations.
This is especially a risk for companies that must comply
with rules regarding data storage.
Because of all these disadvantages, some companies
that have tried outsourcing are now electing to keep IT
functions in-house.
xxx The Economist. On the Turn.
xxxi KPMG. The Death of Outsourcing.
xxxii PwC. Skills Gap Is Hindering Growth for Business.
xxxiii CareerBuilder. How the Skills Gap Affects the Global Economy.
Disadvantages of Outsourcing and the End of a Trend
12

13. 13
Is Not an Option
What to Do When Outsourcing

14. xxxiv CompTIA. National Survey of Technology, Policy and Strategic Issues.
What to Do When Outsourcing Is Not an Option
In instances where outsourcing is not
an option, simply hiring more IT staff
may not be that easy.
Technology companies that plan to hire new staff
in 2014 perceive a shortage in the quantity and
quality of tech talent available to them. According
to a Technology Councils of North America
(TECNA) survey:
• 25 percent feel that the shortage is significant
• 31 percent view the cost and availability of talent as a
threat to business growth
• 34 percent support expanding visa categories and H1B
caps to keep foreign nationals with advanced STEM skills
in the U.S.
• 72 percent experienced a severe shortage in the quality
and quantity of tech talent available to themxxxiv
14

15. What to Do When Outsourcing Is Not an Option
xxxv Forbes.com. Nolan Bushnell: How to Compete for Top Talent.
xxxvi SmartRecruiters.com. 4 New Types of Hackathon Recruiting.
xxxvii Oracle.com. A Conversation with Technology Evangelist Chuk-Munn Lee.
xxxviii Hopkins Medicine. Employee Referral Program.
xxxix HubSpot. HubSpot Launches $30,000 Referral Program for Developers and Designers.
Competing for Top IT Talent
In a competitive hiring marketplace, companies
have to look beyond titles, salaries and job
descriptions in order to lure highly skilled IT
professionals. They need to be able to offer the
same things that make startups and incubators
so attractive to programmers and engineers:xxxv
• Flat management structure and access to
company leaders
• Small, semi-autonomous teams
• Opportunities to work on passion projects
• Meaningful work within a company that has
vision
• Flexibility in work hours and location
• Access to work tools of choice
Of course, these benefits should be highlighted in job
postings. But recruitment shouldn’t be limited to times
when there’s a staff vacancy. Smart companies make
recruiting a year-round process, and they look at every
situation as a recruiting opportunity. The most
competitive recruiters:
• Run hackathonsxxxvi
• Hire technology evangelistsxxxvii
• Have technical staff who are active on social media
• Promote the company’s brand and value proposition via
social media, public relations and content marketing
In other words, recruiting can no longer be left to HR.
Everyone in the company should be encouraged to
network and promote the business as a great place to
work. Employees should be incentivized to do so, as well.
Referral bonuses are a standard at high-tech firms, with
amounts ranging from $2,500 (Johns Hopkins Hospitalxxxviii
)
to $30,000 (marketing software maker HubSpotxxxix
)
or more.
15

16. What to Do When Outsourcing Is Not an Option
Grooming Internal Candidates
Another important strategy for
expanding the IT department is
promoting internal candidates.
In cases where a current
employee can step into the
new role, the hiring process
will be faster and cheaper than
hiring outside the company.
Promoting from within
offers another benefit to the
company by demonstrating
to employees that there’s a
solid career path available.
Moreover, opportunities for
growth and professional
development are the things
most sought-after by job
candidates in the
United States.xl
When there is not a current
employee with the exact skill
set and experience needed,
that lack is often balanced
by the employee’s good track
xl Society for Human Resource Management. Study: U.S. Job Seekers Want Growth, Professional Development.
xli Harvard Business Review. If You’re Not Helping People Develop, You’re Not Management Material.16
Managers should be
incented and required to
offer informal mentoring
and training to all of their
direct reports. When
planning work, managers
should ask their team
members not only what
they can contribute but
also what they’d like to
learn. And conversations
about an employee’s
career path should
happen not only during
the annual review but
throughout the year.xli
record with the company and
institutional knowledge. The
company still must invest
resources in getting the
promoted employee up
to speed.
Companies that are committed
to promoting from within
the IT department often run
formal or informal internal job
training programs to make sure
they have a steady stream of
employees ready to move into
more senior roles. Employee
development programs that
offer time off and/or a stipend
for advanced training and
certification classes should
be tailored to the skills and
certifications needed by
the business.

17. xlii Accenture. Trends Reshaping the Future of HR.
What to Do When Outsourcing Is Not an Option
17
Working With IT Staffing Agencies
Contingent workforces can
quickly and efficiently fill IT
skills gaps caused by growth
and change in a business. They
can add the IT muscle necessary
to complete critical but finite
projects. Contract workers with
the necessary skills can form
teams to handle special projects
without permanently increasing
the employee headcount. They
can also provide expertise that’s
not available within the company.
In fact, using just-in-time IT talent can give a company
a competitive advantage. A global network of outside
contractors, outsourcing partners, vendors, strategic
partners and other nontraditional workers can maximize
the potential of both contractors and permanent
employees, increasing the company’s agility and access
to valuable talent, according to Accenture.xlii
But there can be challenges to using freelancers or
contract workers:
• It can be difficult to assess their true level of skill or
experience
• The quality of their work may be lacking
• They may leave before the project is complete
• Their immigration status may cause problems for the
company

18. xliii Tower Lane. Surveying the New World of Work.
IT staffing agencies can address these challenges. In this
model, the agency sends its own employees to work at
the client’s company. The agency has direct knowledge of
its consultants’ experience and abilities, so it can provide
consultants who are prepared to take on the project and
who will remain until it’s done.
Agencies also offer permanent placement solutions.
In addition to development positions, they can staff
exceptionally high-value candidates — all the way up to
the CIO. Enlisting the services of a staffing company that
specializes in IT is often the most cost-effective and
timely solution to acquire needed skills. Since many of the
best candidates available in the field are those currently
employed, agencies have developed best practices for
attracting passive candidates, thus vastly increasing the
candidate pool for their clients.
Some agencies have immigration sponsorship programs
that handle the entire immigration life cycle process,
from sponsoring H1B visas to completing the process for
employees receiving green cards and beyond. Immigration
sponsorship programs help IT staffing agencies retain
professionals over the long term, keeping them trained and
credentialed, and moving them quickly into position at client
companies.
Because the agency contracts directly with the client,
one or two layers of relationship complexity and cost are
removed from the equation.
What to Do When Outsourcing Is Not an Option
18
Even when a company identifies
qualified contingent workers,
managing the relationship
adds additional challenges. In
a survey of staffing decision-
makers, 36 percent said the
process of paying freelancers
was cumbersome and 34
percent found it hard to manage
and communicate with their
freelancers.xliii

19. Benefits to the IT Staffing Agency Model
• Superior access to professionals from around the globe
• Faster project completion times
• Reduced staffing costs
• Flexibility in hiring models
• Protection from visa and immigration issues
• Contract-to-hire model lets the company audition
contractors for permanent employment
Many consulting firms will give their clients the
option to retain consultants as full-time employees
after the contract is over. By this time, consultants
have proven themselves and have begun to fit
into the company’s culture. Another benefit is
that companies can continue to enjoy a foreign
consultant’s talents until the time that he or she
has received a green card, and then make a full-time
hire without immigration hassles.
What to Do When Outsourcing Is Not an Option
19

20. xliv Healthcare.gov.
What to Do When Outsourcing Is Not an Option
The impact of the Affordable Care Act
on IT Staffing
The Patient Protection and Affordable Care Act was
signed into law in 2010, and a sweeping overhaul
of this country’s healthcare system ensued. The
Affordable Care Act (ACA) has implications for
employers of all sizes.
In 2015, employers with more than 50 employees,
each working more than 30 hours a week, will be
required to provide health insurance to them or
pay a penalty. To avoid all penalties, an employer
must provide a minimum amount of essential health
insurance to 95 percent of its full-time employees.xliv
Companies that are expanding the permanent
workforce — within the IT department or outside
it — should be aware of whether their staffing goals
could trigger the ACA’s insurance requirement. It is
also important for companies to be aware of ACA
regulations for contingent (temporary and project-
based) workers as well as permanent employees.
When a company manages contingent workers
on a daily basis, they often become classified as
a co-employer or joint employer along with the
staffing agency that supplied the workers. While
the staffing agency is responsible for maintaining
compliance with a number of regulations regarding
20
its contingent workforce, co-employment means the client
company may be held liable for the decisions and mistakes
of the staffing agency. For this reason, it is imperative
that companies monitor the hours and days worked by
their temporary and project-based workers to ensure
compliance.
The Treasury Department, which has primary jurisdiction
over enforcing the ACA, recognized the special needs of
employers using a variable workforce and added provisions
to the regulations that should allow most companies
to continue existing contingent workforce strategies
without triggering the new insurance requirements. The
advantages and flexibility of contingent and project
workers are largely retained under the ACA, and Modis or
other workforce experts are available to consult on these
and other workforce strategies.
The Affordable Care Act has not yet been fully
implemented, and Congress, recognizing the needs of
employers, may make more tweaks in the next year or
two. This changing regulatory environment provides a
good time for companies to reassess which staff members
and skills are essential and, perhaps, which non-core roles
could move to a contingent or part-time model.

21. The issue of outsourcing is just one
layer in the multifaceted and constantly
evolving world of IT. For now, it seems that
the pendulum is swinging back in favor
of bringing more IT functions in-house.
However, even if you continue to rely on
outsourcing, everyone can agree that there
is greater demand than ever for IT talent —
and, in many areas, a shrinking supply.
If you would like to discuss your IT staffing
strategy, or need help making connections
with hard-to-find IT talent, please contact
your local Modis representative today.
modis.com
EXCEPTIONAL CONNECTIONS IN
A COMPLEX WORLD
21