Hacker News new | ask | show | jobs
by etothepii 3 hours ago
As a junior software engineer, I worked at a large UK bank.

Senior management routinely seem baffled that they could announce redundancies or hiring freezes, yet technology costs would continue to rise.

One pattern I saw repeatedly was a contractor being let go, only to return via a large outsourcing provider. The provider must have added a substantial markup despite supplying the same engineer back to the same team, without having incurred any procurement costs.

I once asked a more senior colleague how this made any sense. His answer stuck with me:

"You can’t stop people from doing their jobs. If someone thinks their job is to deliver X, they’ll find a way to deliver X. Sometimes that means working around processes and incentives in ways that look very strange from the outside."

9 comments

when i worked for an australian bank, one co-worker in a nearby team had been working on the the banks systems as a sysadmin for over a decade.

the bank would go through cycles of "we need to reduce our headcount and outsource everything" and then 4 years later "we need to reduce spend on contractors and retain more knowledge and expertise in house". he'd survived multiple waves of it, switching back and forth between being an employee or a contractor through some external agency, as management trends changed, while essentially doing the same job.

I hope he was able to get a paybump each switch!
Managers love the idea that contractors can be fired more easily than employees. Except that this flexibility comes at a cost; people insist on being paid more to have an insecure job.

The uncertainty never goes away. You can pay someone else to suffer it, but it will always cost more than dealing with it yourself.

And that can be ok. Just don't fool yourself into thinking you're getting a bargain.

I've seen that in a large management consultancy company. Part of their risk management procedures (both for the company and in terms of some EU law) meant they couldn't keep contractors for longer than x years. They'd have to convert to employee or separate for 12 months.

Bit that doesn't really work in knowledge systems. Even with the best documentation people will build up knowledge that no one has, and their departure is costly.

Equally at the end of their contract a lot of time will need to be spend on a handover which slows down others even more.

So what happened? The contractor went via another middle man, which checked the correct boxes on the form, and everybody was happy.

> Even with the best documentation people will build up knowledge that no one has

I think that's the part management teams are missing. They assume that employees are just human resources and they can replace a senior engineer with a 100% equivalent one when needed.

I worked for a large US bank that has a 10% biannual attrition target at all levels across the company. Twice a year they PIP 10-15% of staff, most of whom take a substantial buyout. Institutional knowledge is constantly being lost and experienced staff are being replaced with fresh cohorts of new grads, who then get replaced themselves right as they start becoming useful.

I knew multiple people there who made more in signing bonus, pay during training, and severance than they made for work actually performed.

The CEO is convinced that this is the path to "top tech talent."

> Senior management routinely seem baffled that they could announce redundancies or hiring freezes, yet technology costs would continue to rise.

I dont think they're baffled, they just trying to show they're attempting to keep costs under control.

I have a friend who left BigCo and then rejoined it as a contractor, plus some additional employees that he manages now. He cynically says "My job is to convert OpEx to CapEx when the finance department tells some director they can't have more headcount."
The same way cloud is about doing the exact opposite.

Understanding a bit of accounting / corporate finance opened my eyes to many things.

> One pattern I saw repeatedly was a contractor being let go, only to return via a large outsourcing provider.

That's 'normal' in Canada and France.

I think I have a simpler answer: quarterly results.

Management just really needs to make the next earnings look like what it should look. Next quarter is next quarter's problem.

That's because the bankers didn't realize they're not in the banking business anymore - they're in the IT business (which has a focus on tracking money).
I have made this same argument to a C level person in the US capital markets and told I don’t know what I’m talking about. As long as the check clears, I have no strong feelings on the topic, it’s just a performance on a stage.
The military is like this. Higher Headquarters decides to contract out maintenance and logistical support for $aircraft_fleet. Uniformed maintainers go home in Friday and show up Monday making a lot more money to do the same job but without risk of getting posted or deployed.

Contractor fees come out because of a different pot of money, so perverse incentives abound.

Don’t those uniformed maintainers get reassigned to other military jobs or are they allowed to work as a contractor while being active military?
They're dismissed due to a reduction in force.
That’s pretty rare in the USAF. Most servicemembers will be sent to be retrained on a different airframe or even into a different career field unless their date of separation doesn’t make it worth it. Voluntary separation programs do sometimes pop up but they’re not that common.

It is common to have people separating and coming back immediately as contractors into basically the same job, but that’s usually because there is already a contracted workforce in place and they made connections while serving.

Sometimes they do but often they quit because the work life balance is much better.
This doesn't seem to answer why an engineer is let go and gets rehired through an outsourcer.
In some cases it could be driven by the shape of the work & where the funding is allocated:

If there isn't enough guaranteed recurring work, it might not make sense to have a full time position, particularly in a country where its difficult to lay people off & if employees have additional overhead (pensions, employer funded heathcare or insurance, etc) vs contractors.

But, if there's funding allocated for some key project that's framed as a 6-12 month project, there might be a good business case to hire a contractor. Maybe the funding comes out of the project bucket, not the core funding for legacy product X bucket.

If the contractor is someone who was recently let go & has a good reputation within the company as someone who gets stuff done and is easy to work with, it's probably a no-brainer to re-engage them as a contractor vs rolling the dice on an unknown quantity.

Whoever is managing the budget of their old team gets a win as they were able to reduce headcount to fit in their budget

Whoever is managing the new project gets a win as they find a great contractor for their key project

The former employee returning as a contractor probably gets a win, as they get paid at a better daily rate while the project is rolling, provided they're able to line up more projects or land a new permie job once the project is completed.

If there's an outsourcer involved, they win by taking a cut. The former employee might also win by having the outsourcer involved if the company has some baroque process for engaging contractors with many compliance hoops to jump through -- in extreme cases (think banks, or public companies that need to demonstrate they don't do business with suppliers engaged in slavery, or so on) it could save the worker months of paperwork and tens of thousands in legal expenses to set up their own one-person agency and go through the compliance process to be able to work for their former employer, so they might not be able to win the contract work without piggybacking on an outsourcer who already has the contracts & compliance stuff sorted out.

most large companies have a 2-year limit on contractor employment so what they tend to do is they'll hire the same guy through a different contractor with another two-year agreement..... that's to get around the situation where if someone is working as a contractor for more than 2 years they can legally claim that they're actually an employee....see Vizcaino v. Microsoft Corp., 120 F.3d 1006 (9th Cir. 1997) [0]...

this is just a guess by the way but it seems like a plausible one, as I've seen it happen in Fortune 500 a lot, where the same guy comes back through a different vendor 2 years later if he was really good and they needed him to come back....

[0] https://law.justia.com/cases/federal/appellate-courts/F3/120...