Why labour broking works in the software development industry

A study by the Development Policy Research Unit at the University of Cape Town has shown that 20% of all jobs created in South Africa since 1994 have been for temporary employees and were generated by labour brokers.

December 9, 2011

By Chris Wilkins, CEO, DVT

A study by the Development Policy Research Unit at the University of Cape Town has shown that 20% of all jobs created in South Africa since 1994 have been for temporary employees and were generated by labour brokers. In all, labour brokers have generated about 600 000 to 700 000 jobs over the past 17 years. This is about the same number of jobs that have been created by the country’s construction sector, and more than double the number generated by manufacturing, which created 271000 jobs over the same period.

Chris Wilkins

Chris Wilkins

Nonetheless, despite its important role in employment creation, labour broking has a bad name. But the general practice, definition and implications of labour broking are vastly different across different industries.

In the software development business, the term labour broking refers to the practice of well educated, high-end software professionals touting their trade as independent consultants. This is a choice of career that is made by the professional, and the professional alone. The shortage of good skills ensures that there is enough demand for the more entrepreneurial and ambitious in the industry, making this type of business a mainstream activity.

The benefits for the software industry as a whole are enormous, reflecting the completely different circumstances enjoyed by this sector compared to other industries. For the individual, the ability to operate as an independent consultant provides an opportunity to become an entrepreneur and small business owner. These professionals increase their personal income due to better rates, improve their job satisfaction through extra variety and choice, develop entrepreneurial and commercial skills, and enjoy flexible working hours because they can choose how often and when they work.

The benefits for companies include a ready supply of experienced and motivated professionals, an ability to purchase the exact skill for the right period of time, an accurate match of skills and needs in an industry where salary costs are high, and an ability to service ad hoc and costly projects efficiently. This makes the cost of these projects attractive enough to invest in, thereby driving up demand for other, associated jobs.

Therefore, in the software development and associated services industries, what is termed labour broking is, in fact, an invaluable and established part of regular business. The individuals themselves can decide whether to take permanent employment or become a independent consultants. There is a high demand for software development skills, which means equal opportunity for finding a permanent job or becoming an independent consultant.

In addition, independent consulting in software development is a global phenomenon. It’s often the career vehicle of choice for younger, mobile professionals who want to find non-permanent work in other countries so that they can gain international experience and exposure for a limited period of time.

In short, independent consulting or labour broking in the software industry is not only valuable to individuals and companies alike, it is also a mechanism to trigger the creation of other jobs as a result of cost savings and flexible work practices in an industry that continues to cry out for specialised skills.