Northern Trust Relying Less On IT ContractorsNorthern Trust Relying Less On IT Contractors

Northern Trust Corp. already has one New Year's resolution: continue to decrease IT consultant head count.

The Chicago bank, which processes about $200 billion in security transactions each day, has already trimmed its roster of IT contractors. Of the 300 consultants it had earlier this year, the bank hired 70 as full-time employees. And it may replace another 50 of its current 230 consultant positions with full-time employees, says chief technology officer and executive VP Tim Theriault. In addition, the bank is experiencing increased leverage with IT vendors during the economic slump, resulting in about a 20% price improvement for renegotiated contracts this year.

One driver behind the in-house shift is the desire to have more control over expertise needed for specific projects and applications. When companies bring in consultants to build new systems for a fixed period of time, the consultants usually acquire detailed knowledge that compels customers to keep them well beyond project completion. "Sometimes you don't lose them as fast as you would like to," says Theriault. Plus, employees have a stronger incentive than consultants to complete projects quickly. For Northern Trust employees, faster project completion enhances IT group performance, as well as individual performance reviews. But Theriault points out that for consultants, every additional hour spent on a project usually means additional revenue. That doesn't jibe with the IT department's need for speed.

When it comes to expanding in-house talent, Northern Trust isn't alone. Bank One Corp., the nation's sixth-largest bank, said last week it plans to decrease its reliance on contract workers by hiring about 600 IT workers during the next three months.

Theriault has no intention of eliminating consultants entirely, though. Northern Trust will always rely on outside help for any unique skill sets it lacks in-house--such as developing the electrical requirements for setting up a new data center next year. Plans for the data center should be finalized later this month, Theriault says. The planned data center would be built about 20 to 25 miles west of Chicago as part of the bank's business-continuity plans, which were in the works long before Sept. 11.