“The global information technology market is expected to grow to $13 trillion by 2026 at a CAGR of 8.8%.”
The impressive growth of the IT industry can be attributed to numerous factors, such as technological advancements, a growing gig economy, low-cost open-source alternatives, and tax advantages. Moreover, due to the rapid adoption of emerging technologies, the global demand for advanced technical skills has skyrocketed.
So, how can IT firms meet these ever-evolving market demands?
They must implement measures to holistically optimize their existing labor pool and mitigate talent gaps to stay afloat in a hypercompetitive market.
It will help reduce resourcing costs, ensure competent allocation, and enhance business efficiency.
This blog sheds light on the significance of resource optimization and the best strategies to optimize the IT workforce.
But before that, let’s start with the basics.
1. Significance of resource optimization in IT firms
Resource optimization is the efficient management of business resources to maximize organizational productivity and performance. It helps IT resource managers tap into their workforce’s maximum potential and improve profitability.
Most IT firms leverage two types of optimization techniques depending on the nature of the projects. They are: resource leveling and resource smoothing.
Resource leveling is applied to flexible projects where timelines can be adjusted according to resources’ availability and schedule. For example, let’s assume a senior solution architect is unavailable to work on a project due to ongoing commitments. Since the project has a flexible timeline, the manager can communicate with the stakeholders and change the initiation date to ensure the availability of this critical resource.
Alternatively, resource smoothing is applied to time-sensitive projects where float tasks are accommodated by redistributing work or adding more resources without changing the critical path or project timeline. For instance, another project has float tasks of 50 hours. However, the five IT consultants assigned to the project can work for 8 hours per day. Therefore, the manager can give the extra workload to a junior resource or two interns to maintain the deadline.
In addition, resource optimization improves productivity by ensuring competency-based allocation of resources across the IT organization. This helps to reduce resourcing costs as it prevents under or over-skilled employees from being assigned to projects. It also enables managers to monitor and adjust utilization levels by prioritizing critical project tasks first. Furthermore, these techniques allow supervisors to ensure even work distribution, thereby minimizing employee burnout and disengagement.
Now that we understand the basics of resource optimization, let’s delve deeper into the strategies to optimize the IT workforce.
2. Strategies to effectively optimize IT resources
Like in any other industry, resources are the most significant asset of an IT firm. Therefore, optimizing them guarantees better productivity and profitability.
Enlisted below are the best strategies for resource optimization:
A. Forecast and bridge demand gaps of IT consultants in advance
To optimize their resources, IT organizations need to forecast the demand for IT personnel required for project completion in terms of number, skills, and competencies. This gives them sufficient lead time to implement suitable treatments to mitigate the excess/shortfalls of resources. It includes initiating training/upskilling for existing employees, using out-rotation and backfilling strategy, or undertaking planned hiring.
Additionally, with complete visibility of resource demand, project managers can maintain the right band mix of IT professionals for every assignment. For example, the project manager needs four software developers for an IT systems development project. By creating the right mix of senior and junior software developers in this team, managers can control the project cost and ensure high-quality deliverables
B. Build a blended workforce model for a robust talent pipeline
To safeguard their economic interests against volatile conditions, IT organizations must build a blended workforce of permanent and contingent personnel. By leveraging competent on-demand consultants, managers can optimize the workload of critical permanent resources. Furthermore, depending on the demand, IT firms can initiate either project or talent-specific hiring to build a robust talent pipeline. This ensures they are equipped with the right people with the right competencies to take on future projects.
For example, an IT firm requires a cloud security analyst for a short-term cloud computing services assignment. Since they didn’t have the requisite skill in-house, the company decided to outsource the task to a contingent resource from a vendor organization. Doing this helped them reduce resourcing costs and deliver the project successfully. Additionally, they choose to absorb the analyst into the team with the hope of deploying their niche skill sets in pipeline projects, thereby building a talent pipeline for future prospects.
C. Consider IT consultants’ availability & vacation before allocation
IT project managers need to have a comprehensive view of consultants’ schedules to leverage them optimally. It helps them assign projects based on overall resource availability, including sick leaves, vacation days, and paid time off. Failure to manage and track consultant schedules can lead to project delays and resource over allocation. Furthermore, in the absence of competent personnel, the PM may be forced to allocate critical tasks to under-skilled resources, hampering the quality of operational output.
That’s why managers need to review and monitor resource schedules in real time before assigning them to various ongoing and future projects. For example, the technical lead analyzed the schedule of the two network engineers and found that one of them would be on leave for the next 15 days. As a result, he decides to assign the new project to the other available staff. Thus, the tech lead ensures that the project starts and finishes within the stipulated timeframe through efficient allocation.
D. Leverage onshore/offsite/nearshore model as per project demand
Depending on the nature of the project, IT organizations must appropriately leverage onshore/offshore/nearshore models. It’s common for IT firms to develop delivery centers on offshore/nearshore locations to provide cost-effective client support services.
Consequently, applying the right model enables them to deploy low-cost global IT consultants and reduce resourcing costs.
For example, an IT company with an extensive USA-based clientele undertakes a corporate restructuring to increase business efficiency and minimize overheads. First, they set up their IT software development services in an onshore facility in Austin, Texas, due to its favorable tax climate. Next, they open a nearshore base in Mexico for back-end services, and finally, they build offshore customer service operations in India. By leveraging the onshore/offshore/nearshore model intelligently, the firm can reduce operational costs and improve revenue.
E. Monitor and track IT personnel’s utilization levels periodically
“According to a report, IT attrition rate stood at around 25.2% in 2022.”
The IT industry faces high attrition rates, and one reason for this is sub-optimal resource utilization. When IT employees are overloaded, it triggers work-related stress and burnout. In contrast, underutilized IT resources can become disengaged and unproductive, resulting in unplanned attrition. Therefore, managers must regularly monitor and track their utilization levels and administer corrective treatments to address this issue before it adversely affects their performance.
For example, a project manager identifies that some consultants of their 10-member IT infrastructure management team are working 30% above their capacity. So, the supervisor decides to reduce their workload by distributing it among the rest of the teammates. Thus, by optimizing the team, the company will be able to deliver the project on time and within budget.
F. Manage and maintain an optimal bench strength
The standardized practice of maintaining a bench in the IT industry is to avoid the risk of project delays due to the non-availability of resources. Additionally, an optimal bench strength enables these organizations to minimize last-minute firefighting for competent consultants. Furthermore, it helps the firm manage uncertainties such as last-minute changes in the project scope, unplanned attrition, and sudden ramp-up activities.
For example, an app development project in the execution stage loses a front-end developer and UI designer as they suddenly resign. Fortunately, the project manager was able to replace them with two benched resources who had the appropriate skills and competencies to perform the required tasks. In conclusion, having a bench enabled the firm to keep the project on track, prevent billable losses, and meet client expectations.
G. Provide suitable training opportunities as a part of IDP
Due to rapidly evolving technological advancements, technical abilities have short shelf lives. As a result, IT companies must regularly upgrade their employees’ skills and competencies. By investing in appropriate training and IDP (Individual Development Plan), firms can equip their resources with diverse skill sets and the latest industry knowledge. Additionally, IDP enables consultants to develop their professional careers further.
For example, a group of software developers in an IT consultancy firm are proficient in programming languages such as C++, JAVA, PHP, and Python. However, to optimize their capabilities, the company decides to train them in new languages, such as SWIFT, Apache Groovy, and GO. Furthermore, by diversifying the resource competencies, the company can deploy them to new projects and maximize its billability. Therefore, suitable training and L&D initiatives can help the company create an advanced talent pool and improve its profitability.
H. Empower IT consultants to choose projects of interest
When IT consultants continuously work on similar projects, it leads to monotony and lowered productivity. Moreover, in the long run, it can obstruct organizational growth as it often results in employee absenteeism and unplanned attrition. Hence, IT firms must empower their employees to choose projects of interest.
“A study showed that employee empowerment increases engagement among workers, making them 21% more profitable.”
Additionally, it enables consultants to become proactive in their own career development, thereby improving their performance and lowering the chances of turnover. For instance, there is a network configuration project for which the PM requires a network administrator. So, they can publish the vacancy along with the necessary project details and competencies and allow interested candidates to apply for this position. Then, the PM can select the best-fit resource after reviewing the applications. Such an incentive allows IT employees to display their abilities and take on more challenging assignments, thereby improving their engagement.
I. Encourage IT employees to acquire multiple skills
Since IT companies work on multiple projects of varying complexity, they require a diverse portfolio of skill sets to accomplish their goals. Moreover, technical competencies are prone to obsolescence due to constant tech advancements. As a result, IT firms must encourage their employees to acquire multiple skills in order to build a highly flexible workforce.
Multi-skilled consultants can be deployed beyond their primary roles and across teams or departments, and they help firms to be more responsive to dynamic business needs. For example, an IT business analyst with aspirations to become a product manager can be given appropriate training to upskill their capabilities. In addition, the company can prepare the employee to become the next product manager as part of its succession planning. Therefore, by facilitating multi-skilling opportunities, IT organizations can equip employees to take on diverse roles and expand their portfolios.
Now that we know the best strategies for resource optimization let’s understand how resource management software can help achieve these optimization techniques.
3. How can resource management software help optimize the IT workforce?
Optimizing resources is essential for IT organizations to stay profitable and sustain themselves in volatile market conditions. Advanced resource management software can help these companies maximize the IT workforce’s potential. Here’s how:
- The tool’s enterprise-wide visibility and advanced filters provide insights into critical professional attributes such as supply, demand, allocation, skills, location, cost, etc., helping managers ensure competent allocation to various IT projects.
- The forecasting and capacity planning capabilities enable IT project managers to identify skill gaps and take corrective measures such as training, IDP, multi-skilling, etc.
- Various real-time reports, such as forecast vs. actuals, capacity vs. demand, color-coded heatmaps, project vacancy, etc., help track metrics such as resource utilization and financial variance. Furthermore, it provides insights that allow managers to optimize resources by capability, cost, utilization, and location.
- The open seat features empower IT employees to show their interest in projects, thereby improving their engagement and productivity.
- The tool’s What-if analysis facility allows project managers to come up with the best solution in a resource-constraint environment. Therefore, it helps them optimally utilize their resources to deliver projects successfully.
To summarize, these functionalities help improve resource efficiency in the IT industry.
4. Final Thoughts
An evolving business landscape and global competition have made it difficult for IT organizations to make a profit. Furthermore, pertinent resourcing challenges have added to the woes of these companies. However, by leveraging the IT workforce intelligently, these firms can proactively tackle resource-related bottlenecks and future-proof their business.
Good optimization techniques combined with advanced resource management software can help IT firms bring out the best of their talent pool and prevent resource constraints from adversely impacting the company’s financial health.
5. The SAVIOM Solution
SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has highly customizable products for project portfolio management, professional service automation, and workforce planning software based on business requirements.