What? The bloated bureaucracy didn't save you?
At this point, IBM Global Services consultants flooded our conference rooms. Overnight, we ended up with twenty consultants. When I asked how much these consultants were costing us, I was told $250/hr. This information proved to be incorrect – they were actually charging us $325/hr.
What were we getting for $325/hr? People hired off of Monster and Careerbuilder. Seriously.
Management was under the assumption that we would be getting real implementation experts from IBM. In fact, we were getting employees from a subcontractor. We paid IBM $325/hr, and they paid their subcontractor about $165/hr. The subcontractor then paid its people salaries of $90,000 to $110,000/yr, the market average, which equates to about $75/hr when benefits are included. We were paying a markup of about 333%.
Were these people experts? A few were. Most were just Java programmers or Websphere administrators. And a few were essentially useless. It was a fairly typical distribution of employees – some stars, most fairly average, a little dead weight.
This is a defense contractor. There is so much wrong in this story, the outrageous rates from IBM is only part of it. The author makes it sound like they got roped into a scam by IBM hucksters who did a song and dance that them good decent folk weren't accustomed to. Shady salesmen? Well I never! Really the biggest problem appears to be the company management who basically just wants to pay someone else to do their job and make all the problems go away.
Posted September 30, 2005 1:17 PM