OnForce Services Index Shows Rise In Staffing For Stretched IT Departments

The OnForce Services Marketplace Index (OSMI) for the second quarter shows a marked rise in services partners providing "micro-staffing" services for IT departments struggling to do maintenance and network changes in the wake of layoffs, said OnForce CEO Peter Cannone.

Micro-staffing by service providers was up to 8 percent of all work orders on the index, up from less than 1 percent last year. What's more, Cannone predicted that figure will hit as much as 20 percent of work orders in the third quarter. "Outsourcing is the name of the game over the next six months to a year," he said. The OnForce OSMI is a bellweather for on-demand services.

CIOs who have significantly cut their staffing levels are struggling to do network maintenance and services and OnForce partners are reaping the benefits, said Cannone. "It's usually W-2 employees doing this maintenance but they have been let go because of the difficult economic times," he said. "Innovative VARs have gotten creative and are reinventing themselves providing staffing through the OnForce platform for anywhere from two weeks to one month on these projects."

Cannone applauded those VARs that are stepping forward with new micro-staffing services to help businesses get through the economic downturn. "My advice to VARs is continue to stay close to their customers and be innovative," he said. "They should also look at providing asset recovery services for excess computer equipment."

Cannone predicted that IT product sales will continue to decline in the second half of the year and VARs that do not move quickly to provide a full panoply of services will suffer. He said there is a huge excess supply of IT equipment in businesses as a result of a blizzard of layoffs in corporate America. "We have shed somewhere close to 2 million jobs in the U.S. in the second quarter," he said. "That's 2 million PCs available in the pipeline. It's going to take at least a year to clear that pipeline. We went through this same kind of bubble in 2000 and it took nine to 12 months to clear it out."

What's more, Cannone said, he does not see any new products like Microsoft's Windows 7 operating system release sparking an IT product refresh. "It's just not compelling enough," he said.

A bright spot will be on-demand services orders. "It's a services economy and VARs using OnForce have a pricing advantage because they aren't carrying the labor cost," he said. "In this economy you need to stay price-competitive in order to thrive and survive."

Cannone said service providers are definitely adjusting their pricing to win business in the midst of the current economic downturn.