Fewer Contractors, More StaffersFewer Contractors, More Staffers

Repeat after me: Focus on core competencies, outsource the rest. That's been the justification for countless IT outsourcing efforts. But at Freddie Mac, IT leadership decided it had gone too far with outsourcing, and it was time to put more of its own full-time people on projects and cut the contractors.

"Freddie Mac staff has the most to gain and lose as we take these initiatives," says Joe Smialowski, executive VP of operations and technology. The company has been hiring tech talent over the past year--its Careers page at www.freddie mac.com has a quick link to "programming jobs," of which there are dozens in northern Virginia and Chicago. The company is considering an IT office in Dallas. It now has roughly 1,700 full-timers to about 1,000 contractors. That puts the ratio at more than 60% staffers, but Freddie Mac wants that up to 70%. Smialowski will rely on contractors to smooth the peaks and valleys of project work and to provide short-term specialized skills that the company needs.

Freddie Mac will outsource business processes where they make sense; it just inked a huge deal with JPMorgan Chase for investment portfolio management. But in a specialized industry where every product depends on IT delivery, Freddie has decided it needs the knowledge gained from projects to stay in-house. It's why every IT employee must do 40 hours of training a year to keeps skills up to date, and why staffing is one of the six "levers" on Smialowski's and other executives' dashboards. An in-house emphasis isn't the right model for every company. But neither is the knee-jerk reaction of when in doubt, outsource.

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This story was modified on Aug. 28 to correct Joe Smialowski's title.