IT Staffing Firms Watch Rates -- Are IT Consulting Rates, Rising or Falling?

Surrex Solutions Corporation is one of the fastest growing IT Consulting firms in the US with 22 offices nationwide. Surrex is bridging the gap between IT Staffing and IT Consulting utilizing evaluation tools such as the FIT® Analysis and proprietary project management testing and evaluation tools. The "FIT®" Analysis is a unique tool, developed by Surrex, enabling hiring managers to effectively evaluate available IT Consulting resources and respond to pay rate and bill rate dynamics.

As an IT Consulting professional or IT Staffing Manager, this question is on your mind when a new project is being considered. For the IT Consultant, whose goal is to maximize his earnings potential, the hope is his or her skill set commands top dollar in the marketplace. In contrast, the hiring manager, who has a limited budget, is told the project needs to be completed with limited funds allocated for an IT Consulting resource. The IT Staffing firm looks to balance the desires of both the IT Consultant and the Hiring Manager while maintaining a reasonable gross profit margin. So, what determines which direction IT Consulting rates are moving? The truth is that neither the needs nor desires of the hiring manager or the IT Consulting professional determine the direction of rates, though they are forces that have influence. The major factor that determines whether rates are rising or falling is:

IT Consulting Market Conditions

Yes, the old adage of supply and demand is the driving force IT Staffing firms use to determine IT Consulting rates. No matter how skilled a COBOL IT Consultant might be, in today's market space, the demand for his or her skill set is just not there. On the other hand should a hiring manager need an IT Consultant skilled as an asp.net Architect, yet their budget is $30/hr, they will either be waiting a long time, or will have to compromise the level of experience needed. This could jeopardize the project outcome. The reality is each individual marketplace has a finite number of qualified IT Consultants possessing a defined skill set. If that number is low, rates will be higher, and vice versa. It would be a mistake for either the IT Consulting professional or the hiring manager to be firm on their rates without understanding the market conditions. There is nothing wrong with initially attempting to achieve your target rate to determine what level of talent is available for a given budget. Perhaps there are aspects of an assignment where you can compromise experience for rate. IT Staffing professionals will tell you, in the end, you get what you pay for.

IT Consulting professionals are always worried that if they take a step backwards in rate, they will be locked in to the lower rate for good and move backward. Any reputable IT Staffing professional will tell you this is a misconception, as IT Consulting rates will always vary with experience and market conditions, and can fluctuate both ways, sometimes in a short period of time. Those IT Consulting professionals, who are firm on their rates, may actually end up making less money over time. A $60/hr IT Consultant who wants to hold out for $65/hr, and waits one week before getting the higher paying assignment, will miss out on a $2400 paycheck (40 hours at $60/hr). It will take them 480 hours (or 12 weeks) until they break even ($5/hr x 480 hours = $2400). And that is assuming they get the position in one week, if it takes longer, well... just do the math and discuss with an IT Staffing professional. So, holding out for a higher rate does not always mean making more money in the long run.

The IT Staffing firm is in the precarious position of trying to fulfill the needs and desires of both the Hiring manager and the IT Consulting professional while providing value to both and making a reasonable profit. It is very rare, based on today's market conditions, that the difference between the pay rate of an IT Consulting professional and the bill rate to the Client is such that the IT Staffing firm will make an unreasonable profit. The truth is that market conditions do not allow this to happen. A successful IT Staffing firm recognizes the long-term relationship is much more important than short-term gain.

So, are IT Consulting rates rising or falling? It depends on which side of supply and demand you are on, and the market conditions of where you reside. Your best source of information may be an IT Staffing Professional from a pure play IT Staffing firm or an IT Consulting Services Manager from an IT Consulting firm. They are being squeezed from both ends so they have current and intimate knowledge.

By: Michael D. Ellis

Michael D. Ellis is Executive Vice President at Surrex Solutions Corporation a National leader in IT Consulting and IT Staffing. He has been active in the IT Consulting and the IT Staffing industry for 19 years and is considered a leading knowledge source in the field. Mr. Ellis's previous background in IT Consulting and IT Staffing include several years as the number one IT Consulting Services Manager out of over 2300 Professionals for a prestigious nationally recognized IT Staffing firm. Additionally he has had many articles web published, as well as being an IT Staffing subject matter expert, answering inquiries from around the world for the Alta Vista web portal.

About Surrex Solutions Corporation

Surrex Solutions Corporation offers timely, reliable, high quality information technology consulting services. Offering project management, project staffing, information technology staffing, contract programming, contract consultants, technology consulting and direct hire for information technology as & software development organizations. Surrex Solutions Corporation strives for excellence in fulfilling our promise of speed, quality and value.

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