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What’s been happening to I.T companies?

While we’ve been busy working away in our little ecosystem of FM companies and long standing customers, the IT market has been changing. We would receive regular bits of inside information leaked to us by ex-employees or friends and colleagues working inĀ other companies; the occasional case study, proposal, or technical specification. These were useful in checking that we are performing against the competition and are competitive. But we hadn’t done any in depth competitor research in a long while, until recently that is.

Recently we have been commissioned by an London Facilities Management company to project manage their new product; a hardware system that monitors the physical status of company assets (this product had in fact been envisaged back in 2006 when we first started working with FM companies, but it’s taken them this long to make the product a reality). The product uses a programming language that we are not familiar with, but this client was keen to work with us because of our long standing relationship. So we agreed that Ad Finem would act as project managers, taking care of the project for them by finding a suitable developer and overseeing their work. This coincided perfectly with our market research; we now had a real project that we could approach the I.T market with.

Our study was quite in depth. We not only shortlisted companies by their skills, but we also carried out background and technical checks on them. We were very surprised with our findings. We found that most I.T companies use foreign workers in some way or another. Thankfully most did not outsource or farm out work, instead they were created using special relationships or arrangements. This could be by way of a foreign company setting up an office in the UK, or by collaboration with a UK company, or sometimes, a single company with international offices.

Actually we had suspected something like this for a while. If you consider the average London salary for a programmer, add a standard labour markup, and divide that by 1624 working hours per year, the hourly rate that comes out is a lot higher than the average rate charged by a UK developer. Basically, the development prices commonly being charged could not be sustained using UK developers.

Posted by philip.antoniou
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