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September 18, 2007

A New Strategy For IT's End Clients

In the IT industry, as presently constituted, on  the one hand we have the “End” client (The final recipient of the IT services) and in the other hand, the Contractor and its Cartels of IT provider of services

We recommend that the “End” clients adopt a different strategy other than to become victims to the “Prestigious Ones” the name given by us to those organization that are trying to Monopolized the IT industry to maximize their profits.
 

This Strategy consist in using Peningo System approach of joining forces with the Consultant and the “End” Client and contracting among ourselves, by-passing the Prestigious ones and their excessive greed and Mark-ups which have lead to presenting only candidates that fit the Mark-up structure, disregarding the other talent that specifically are the ones that could satisfy the End Client’s needs which will never be presented because of their higher rates.  By eliminating the “Prestigious Ones” from the process, additional margin becomes available that could go to pay for the resource and at the same time provide savings to the End Client.
 

Additional reasons for adopting such Strategy by the End Client are:

Client controls systems projects that
support the client’s successful
business plan.


At Peningo, we expect the client to control all systems decisions, as we feel that those
decisions may impact the client’s “Business Plan”.  Systems contributions by Peningo Members should be limited to the development, enhancement and implementation of the systems that will deliver a client’s proven successful “Business Plan” intact.

There is a tendency on the part of the “Prestigious Ones” to try to control and influence the client’s “Business Plan” in order to be able to use their “package solutions”.  This efforts results in priority being given to systems solutions than to the client’s “Business Plan”.  

We have experience salvaging situations created by the “Prestigious Ones” in their
attempts to influence the client’s “Business Plan” in order to use the “standard solution” which results in totally inadequate business solution.  Again we re-state our view that systems decisions should be totally in the hands of client personnel and all systems must bow to the needs of the client’s “Business Plan”


The “Bench” Systems

The “Prestigious Ones” maintain consultants between assignments on the “Bench”
waiting for allocation to a project.   We at Peningo feel that the “Bench” system is totally wrong for the following reasons:

When a client states a requirement, there is an economic incentive, on the part of the ”
Prestigious Ones” to use “imperfect” matches to the client’s requirement in order to reduce the bench idle resources ,which are on their payroll, and are not billable to any client.  That is how the “Prestigious Ones” finds themselves offering “Oranges” when the client’s needs requires “Apples”

We have experienced replacing such mismatched resources presented by the “Prestigious Ones” and bringing the client back into harmony by delivering excellent matches to the client’s requirement.  In addition consultants are extremely unhappy to be placed on a “Bench” even when they continue to receive their pay.

We approach every client requirement without any limitations except to seek a very close match that has the pertinent skills at an expert level.    As we do not support the “Bench” systems we are able to bring upon the client’s needs the best solution available in the Market at that point in time.   Our consultants are compensated adequately so that should a situation developed of a gap between assignments the consultants may use their free time as they wish.  It is our experience that those that have dedicated their careers to consulting prefer this method best, as they do not like to be mismatched, resulting in personal failures at the assignment.


One single hourly rate

The “Prestigious Ones” when a resource home base is away from the client they offer the resource on an hourly billing rate plus expenses.  Such practices lead to extensive overhead costs in the part of the consultant, the client and the “Prestigious Ones”.

Peningo’s approach is to offer our consultant at a single hourly rate.  When the Peningo consultant home base is remote to the client we would have quoted the single hourly rate as all inclusive (no expenses to be added).  The client for all purposes may consider all Peningo resources as local.  It is up to the consultants to decide if they want to commute on a weekly basis or relocate in close proximity to the client’s site for the duration of the assignment,

It is our experience that the consultant and the client prefer this method and for Peningo, facilitate the inclusion of a nation wide pool of resources to respond to clients requests.

Markups

It is in the nature of the “Prestigious Ones” to function with extremely high overheads that leads to the need for large Markups.  As the consultants wants their earnings increased the “Prestigious Ones” finds themselves in the need to go “off shore” for resources that may fit their Markups requirements, with the consequent negative effect on quality of service.

By eliminating the “Prestigious Ones” Peningo will be able to share the savings with  the consultant and the client.  The client benefits by having a business formula that rewards the consultant, making it possible to retain the most accomplish resources available while receiving a substantial cost reduction.
 

If you wish to pursue this matter further please contact Peningo Systems Inc.

 

 About Peningo Systems:

Peningo Systems supports and provides Consultants with expertise in many areas including:

To see Peningo Systems areas of expertise, please go to the Peningo Technical Areas page.

 

 

August 02, 2007

Peningo Systems Selected to Provide WebSphere Commerce Development and Support Consulting Services

The Peningo Opinion Blog - Rye, New York - Peningo Systems has recently been selected to provide WebSphere Commerce Development and Support Consulting Services to a leading NASDAQ Bioscience Research firm.

Seeing the Light with Peningo Systems While pricing will always be a factor in the selection process by the “End Clients”, Peningo Systems was selected to provide WebSphere Commerce Development and Support services base on the combination of price and high level of quality and expertise in the Consultants that will be providing the services. The selection of Peningo System is an example of successful bypass of these Prestigious Names in IT Consulting and Professional Services, which Peningo often refer to as “The Prestigious One”.

Peningo will provide the WebSphere Commerce Development and Support services with a team of Senior Consultants with expertise in WebSphere Commerce development and system administration, based here in the U.S.A. . This level of Seniority and Expertise is rare to find when an “End Client” pays top dollar, utilizing the services from one of the Prestigious Names in IT Consulting and Professional Services.

The reasons these Senior level Experts are hard to retain when using one of the Prestigious Names in IT Consulting and Professional Services, is that their “Excessive Profit Margins” would NOT allow for these Senior Level Experts to be compensated properly. As a result, many of the Senior Consultants and experts in their respective technical fields chose to be employed elsewhere and are NOT available via one of the Prestigious Names in IT Consulting and Professional Services. To fulfill the Services to the “End Clients”, these “Prestigious Ones” look to retain resources who are:

  • Paid and command a lower salary. Many of these individuals are not Senior Level Consultants or Technical Experts.
  • On H1-B or L-1 Visa. Many times these Visa based Consultants are used because they are cheaper than Americans and Permanent Residents. As a result, the quality level of such candidates is suspect.
  • Resources located Offshore on the other side of the globe to provide the “WebSphere Consulting Services”.

For these reasons above, the quality of services from these “Prestigious Ones” has declined drastically. The founders of Peningo Systems has thrived for years in providing Consulting Services with the Senior Level Experts at rates that are below the rates of the “Prestigious Ones” with their sub-par to mediocre talent.

Aside from WebSphere Commerce, Peningo Systems supports and provides Consultants with expertise in many areas including:

To see Peningo Systems areas of expertise, please go to the Peningo Technical Areas page or go to the Peningo Websphere Consultants page.

 

 To see Peningo's other Blogs please go to

The Peningo Websphere Consultants Blog

The Peningo Opinion Blog

 

July 28, 2007

Myth About Consulting Jobs Versus Permanent Jobs in an H1-B - Outsourcing Influenced World


 In an effort to reduce costs of fielding consultants the Major IT Consulting organizations, which we refer as “The Prestigious Ones”, offer “Permanent Employment” with “Benefits” which comes with a low salary.

Anyone offering “Permanent Employment with Benefits” for consulting assignments is taking the consultant for a ride.  The reality is that consulting assignments have a beginning and an end.  For these reasons the ultimate Clients are willing to pay a substantial premium over the cost of their own employees.  When the assignment is over, the Consulting organizations will make every effort to have the employee transferred to another assignment, but such propositions are not based on certainty but in the hope that the exploitation may be able to continue.  When this fails, the Consultant finds themselves dismissed.

Every Consultant should expect premium compensation in their hourly rate instead of salary (salary employees work many overtime hours without compensation) and that hourly rate should include an amount taking into consideration the costs of self provided benefits, the fact that there are gaps in moving from one assignment to another and that there should be a premium for the difficult life (family wise) of a consultant that needs to travel away from home.   To settle for less means that someone is exploiting the Consultant as the organization will keep the premium for his/her sacrifices.
 

It is important for the Consultant to pay for their own “Benefits” as when they move to the next assignment it might not be with the same organization that provided the previous assignment.  By doing this the Consultant expand its Market and make it possible to achieve substantial earnings in keeping with the effort.
 

To make things worse the “Prestigious Ones” are attempting to replace the USA based Consultant by outsourcing offshore work which services the USA based clients. 

Blown Offshore to Mysore 
Obviously this is tax evasion as the offshore resources do not pay any Federal, State, Social Security or Medicare and the organization hiring do not have to match the Social Security and Medicare taxes  as if the work was performed by a USA based person.

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client. 

Peningo Systems solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.



 
To All Americans: 

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

July 14, 2007

Shocking H1-B Video may result in H1-B Reform Bill with no Quota Increase

I have been in the business of providing IT Consultants for 20 years, so needless to say, I have seen it all. The recent H1-B Video of the Immigration Law firm’s procedures to basically defraud America was shocking….but no surprise to me. For those of us who have been in the Business for years, we all knew this has been going on for years. It has been my opinion that the H1-B process is currently riddled with corruption and fraud.


Thanks to that now famous “H1-B Video”, the masses will understand what we mean by corrupt and unfair to Americans. That video is going to do more “GOOD” to the cause of bringing fairness and equity back to the Americans, than thousands of posts on these Blogs!! This video could not have come at a better time, when our nation is debating on how to handle the H-1B and L-1 Visa based worker. In my opinion, this Video exposes the true intent of the IT Industry Leaders who have been lobbying hard to increase the H-1B quota from 60K to 180K – 250K. If you have not seen it yet, check out the video below:



Some in the Senate support increasing the H1-B Visa Quotas. In my Opinion, with the amount of abuse and corruption in this program, increasing the quota would be a totally irresponsible act against the American People.


I am planning on requesting an Amendment to be added to the Immigration bill. I feel that my proposal should become America’s Proposal. I would like to have the Amendment referred to as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”.

 

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”:

- Any company that hires an H1-B or an L-1 Visa to work in the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an H1-B or L-1 Visa based worker. As it is, some of the H1-Bs, L-1s and their respective employers could be EXEMPT FROM PAYING SOCIAL SECURITY AND MEDICARE TAX! Also, many companies pay the employees on these Visas far less than an American, resulting in a lower tax overhead for the companies. Also by placing 100% of the FICA obligations on the company, even if the Visa holder is being paid less than the Americans, it gives some insurance that the hiring of such individuals is not strictly based on “Cost of Labor”. This Proposal is also very important, since it addresses an issue that is near and dear to every American, and that is, supporting Social Security.

- To combat the abuse of low pay to the H1-B and L-1 Visa holder, which results in the under cutting of the American based worker, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place. Then the H1-B or L-1 Visa holder MUST be paid in the UPPER 10% of the Salary range…that’s right…. the H1-B or L-1 MUST be paid in the UPPER 10% of the Salary range. This would insure that H1-B and L-1s are treated, in terms of cost, the same as an American and that the H1-B and L-1 Visa holder is truly a talent that is needed! Also, to combat the “Tax Evasion” aspect of these programs, by paying the Visa Holder in the upper range of the Salary Survey, the “Tax” base that the Employee is being paid at would be in par with what Americans pay. Let’s remember the “Spirit” of these Visa programs is to bring talent that cannot be found in the USA marketplace. If this is truly the case, then in the free market, these individuals should command a higher salary than Americans, since they are “SO SPECIAL”. Unfortunately, they only special quality most of these Visa holders have over Americans is that they “ARE CHEAPER” than Americans.

If we implement these 2 proposals, then the H-1B and L-1 would compete with an American based worker on the merits of his/her abilities and not solely based on the fact that the H1-B’s or L-1’s resume looks good and the H1-B or L-1 is 10s of thousands of dollars cheaper than the American.

This is a fair way to bring equity back into the US as well as protect our Tax Base from these Tax Evading scheme of hiring foreign workers and avoid paying for Social Security and Medicare tax.

With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page

Thank you

 

July 02, 2007

L1 Visa Abuses - A Silent Killer To The IT Industry In The USA

With all the immigration attention being turned to the current attempt by the Outsourcing Corporations to increase the H1-B Quota from 60K to 250K H-1B workers “PER YEAR” to enter and work in the United States, very little to nothing has been said regarding the workers entering the USA working on the L-1 Visa, which currently has NO QUOTA CAP.

As Outsourcing Offshore evolves many companies who have been entrenched in Outsourcing have learned that you need to have more control to have a remote chance to provide the quality of service that is needed to support operations in the USA. In response to this, these companies are now creating divisions overseas in the places like India. These companies are the name plates that we have associated with “Corporate America”, and by no coincidence are the same firms that often announce the laying off of thousands of American workers. The L-1 Visa allows companies with divisions offshore to transfer an employee internally from their division in the Offshore nation to the United States. Many of the qualities of the L-1 Visa are similar to the H1-B, with the exception that the L-1 can only work for the parent company.

Like the H1-B, the L-1 Visa employees may not have to pay for Social Security or Medicare or are paid at a lower salary based effecting the tax base. More importantly, the Employer of the L-1 visa holder may not have to pay for the “Employer” portion of Social Security and Medicare or are paying at a lower tax rate due t the low salary base. This is one of the “MANY” tax advantages and incentives that corporation have to “LAYOFF AMERICANS” and replace them with the L-1 (or H1-B) Visa workers.

Though it is clearly illegal in the letter of the law, many of the workers on either L-1 or H1-B are paid substantially less than their American counterparts….that they have replaced. It’s our opinion that as a result of replacing an American with an internal employee on an L-1 Visa, the company can save thousands, if not 10s of thousands per year, per employee when you factor in the cut in base salary and the savings from the lower tax base of the cut salary or possibly NOT PAYING FOR ALL OF THE SOCIAL SECURITY AND MEDICARE TAX OBLIGATIONS !!!! As you can see, this puts any American at a huge disadvantage!

We must remember the corporations really don’t give a “hoot” regarding the American based worker; they only give a hoot about making a buck …. as they should. It is the lawmakers of our land and the enforcers of those laws who have not step up to the plate. As a result, industries are being destroyed, as well as the lives of those who have worked in those destroyed industries. The true Traitors may not be the Companies who are currently stabbing us in the back……the true Traitors to us Americans are the Legislators and enforcers who do “Nothing” to combat this Corporate Scheme to “EVADE” Taxation while paying L-1 and H1-B Visa holders substantially less than their American Counterparts, which is in clear violation of the law.

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following:

- A CAP must be placed on the number of L-1 Visa based workers than can enter and work in the United States per year.

- Any company that transfers an L-1 Visa into the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an internal transfer from an Offshore nation who’s on an L-1 Visa.

- To combat the abuse of low pay to H1-B and L-1 Visa holder, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place.

I plan to personally deliver these proposals to my Federal Representatives.

If you agree with me, please feel with sharing these proposals with your Federal Legislators.

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance page.

May 10, 2007

Alternative Strategy For Offshore Outsourcers

This is an open letter to the Corporations who are engaged in the Outsourcing of our IT Jobs Offshore.

 

To All Firms Involved in Offshoring IT Jobs:


Your present efforts of reducing your operating costs by engaging in Offshore Outsourcing to support USA based operations is headed for failure.

The economic advantage of such a strategy is based on the fact that the offshore resource is not subject to USA Federal, State, Social Security and Medicare taxes and that you will not have to pay matching Social Security, Medicare taxes nor pay the unemployment insurance taxes.
 

You must be aware by now that such a strategy is doom to failure as it is based on a Tax Evasion effort and as the effort to offshore grows, the tax burden left in the USA based employees will have to increase to compensate for the “USA Tax Exemption” that the offshore resources and you illegally  enjoy.  That will generate a backlash in the USA to have the laws respected and enforced and you will be in the wrong side of this battle.   The use of cheap labor in large quantities is not a winning strategy and it is condemned to failure.
 

A more enlighten strategy will be to use the old and proven method of improving costs and productivity by systematization and automation.  It is true that such efforts will lead to increased productivity by the fact that fewer employees will be able to do more work.  This process takes time to implement and that delay in the process allows for the labor force to relocate to new endeavors where their services will be in demand without a major disruption and the increased productivity by allocating the employees to where they are needed will raise the standard of living of all concerned and guarantee your organization’s continued acceptance in the USA market.
 

As to the Offshore efforts, it will prove very beneficial to the USA and your organization if you develop the Third World creating new markets but not by having your efforts financed by the USA taxpayers.
 

It is understandable that most of our CEOs are the product of the bureaucracy and that the time of the owner-entrepreneur is past and therefore with that we have lost the vision that those entrepreneurs possessed.  It will serve us well to re-learn those skills or face the decline and fall of those that insist on using the general public as indenture servants.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

 

To All Americans: 

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

 

May 01, 2007

Strategy For An American IT Consultant In An Offshore World

 

Ant vs. TurkeyWith all these “prestigious” names in Information Technology doing all they can to monopolize our IT Consulting Industry…….while driving down the Consultants hourly rates…….and……shipping  as many jobs as they can offshore…it’s enough to drive one crazy!!!

Driving the effort to Offshore jobs is the fact that an American corporation can offshore jobs to individuals that are not subject to Federal, State, Social Security taxes and the employer does not have to pay matching Social Security and Medicare taxes, as well as, avoid paying Unemployment insurance.  These offshore resources are then used to support operations in the USA, that if supported locally, will be burden by the associated costs of taxation.  This tax evasion could not be perpetuated without the participation of all of our Government regardless of political stripes.  It is not important to the IT Consultant why is this happening, but the need to face the reality that it is happening.

Those that claim that this is free enterprise let us assume for argument sake that in order to level the field of competition…. from now on all Americans are exempt from taxation.  Obviously this is not a satisfactory proposal, but that is what the Outsourcers believe except that this “American tax exemption” is only for offshore resources.

Peningo’s solution to this problem is to bypass these “Prestigious Ones” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

Peningo seeks to join with the individual Consultants and the End Client together to reverse this trend by cutting out these “Prestigious Ones”,   Let us fight back by Outsourcing the Outsourcers!!

“One Ant can not take down a Turkey but thousands of Ants can”

Peningo advocacy is concentrated in the IT Industry and within that for that segment of the market that provides advance software support and development.  For the larger market of Americans who are besiege by a similar problem we invite them to join our Grass Roots movement to change the minds of our Government and the CEOs of American corporations who are engaging in blind Offshore “selves flagellation”

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

Many of our Representatives are not leaders, they only follow trends and it is up to us to create a new trend. 

April 30, 2007

Offshoring Software and Confidentiality Rights Is A Bad Idea For The IT Industry

In the past the IT Industry and specially Peningo Systems Inc. have been very careful to secure the Client’s rights in works developed for the Client by the Consultants working in the development of  computer based systems as well as securing confidentiality agreements over such works. 

The larger IT corporations in America (which we refer them as  the “Prestigious Ones” ) in their efforts to engage in “Tax Evasion” by outsourcing offshore the development work  of software (The offshore developers are not subject to USA taxes and the US corporation avoid paying matching Social Security, Medicare and Unemployment Insurance),  fail to secure the Software Rights and Confidentiality, agreements that would be protected if celebrated under USA laws.
 

The offshore developers are not bound by USA laws, therefore, there might be some surprises to those using American Firms that have engaged offshore resources and the foreign developer may want one day to claim royalties over the software that you the “end client” have paid in full.   As customary in our USA based industry such works are contracted as belonging to the “end client”. Under the offshore circumstances it will no longer be so.
 

In addition, and for the same reasons stated for the Software Rights, confidentiality of the “end client” information, including that of its Customers may be compromised, as the foreign elements offshore will be free to sale such information to other organizations in the USA or world wide.
 

Peningo’s solution to this problem is to bypass these “Prestigious Ones”, and with the support of Peningo Systems Inc., contract directly between the consultant (a USA person) and the “end client”, thus, eliminating these “Prestigious Ones” who are failing to secure the “end client’s” Software Rights and Confidentiality and will leave the “end client” and their customers exposed to the abuses of foreign nationals who are beyond the reach of USA law.