Demand supply mismatch in IT shops

Demand management in enterprise IT shops is a perennial problem. The problem is actually of demand supply mismatch. There is a gap in the demand of qualified IT professional and supply, to serve the ever increasing IT demand from enterprises. This assertion is based on personal experience and I dont have any data right now. My observation is that, many big enterprises I have worked with, invariably have a big IT backlog.

Enterprises have tried various options, including outsourcing to tide over these issues. Outsourcing orgnisations have bigger resource pool of qualified professionals, and other enablers to help match demand. But there are situations where even outsourcing does not help in handling demand supply mismatch.

If lack of skilled professional for a particular skill is a reason for demand-supply mismatch,outsourcing can help here. Whereas,if lack of smoothening of demand for an entity within IT, making that entity a bottleneck is the reason for backlog then steady state outsourcing does not help. Which in turn gives rise to more of demand supply mismatch. Mind you this is not some fixed entity within IT shop. Any entity can be sucked into this situation based on its role within various IT projects that are going on. If your IT shop is organised on basis of SDLC roles then that entity can be pool of senior designers, system testers, even enterprise architects. Or if your IT shop is organised based on architetcural layers, then it can be front-end , business logic unit or database unit. Or if your IT shop is organised based on functional component then it can be any of the functional component.

It might so happen that large number of projects starting now, are going to hit that particular entity around the same time causing the demand surge.

What can be done to handle such situations?

One obvious solution that comes to mind, is dont start all the projects at once. But the problem is one cannot predict future demands and the situation can still arise even if you deliberately defer the projects, some other project might crop up in future which will have other imperatives (like business or regulatory) to start and cause the deamnd surge. Also the project budgeting and planning of IT shops happens periodically, which does not help. Well one cannot really have these activities aperiodically, so whats the solution?

Solution again is outsourcing. What we have seen earlier is a case of pro-active outsourcing, which does take care of some problems. For the problems arising out of demand surge, can be handled by re-active outsourcing. Outsourcing does offer an advantage, in terms of making IT expenditure 'variable cost', thus committing and withdrawing resources is easy. So IT shops can work out deals with outsourcing companies on a contingency basis, commiting some resources permanently to this continegency resource pool and an agreement to ramp this pool up in case of demand surge, ramp it down when demand ebbs. The advantage being

1. Outsourcing companies do have resource pool which can absorb these demand surges.
2. Outsourcing coupled with offshoring makes this otherwise dead investment, economically viable.

Outsourcing companies will have global knowledge, and can work out deals (billing rates, utilisation etc.) to their advantage. Its a win-win proposal.

And as an EA it makes me happy, because none of my strategic projects will be derailed because of demand-supply mismatch.