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Technology Stocks : Discuss Year 2000 Issues
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To: C.K. Houston who wrote (122)8/20/1997 12:07:00 PM
From: Bill Ounce   of 9818
 
Y2K project cost containment negotiated by Trigon Blue Cross/Blue Shield

This article points to some potential problems for Y2K integrators. What happens if customers gang up and insist on fix-priced contracts?

The article is at cwlive.cw.com:8080/home/print9497.nsf/All/SL33cost

Excerpt:

When Trigon Blue Cross/Blue Shield outsourced its year 2000 conversion work to Cap Gemini America last year, it made sure to build in one condition to the fixed-price contract: that the insurer wouldn't end up bearing the brunt of inflating programmer salaries.

That simple clause could help the company save as much as 5% to 10% in additional labor costs by the end of the multimillion-dollar project.

Such savvy negotiations will become increasingly important for companies in the coming months.

[...]

To control costs, his company recently started working with its integrators to not only recruit programmers, but also to fix their salaries.


personal comment
Top Programmers will migrate to Top Dollar positions. Y2K integrators with fixed contracts will either lose talent needed to complete such projects on time, or watch their profit margin evaporate on such projects. May be a good idea to keep an eye out for this if one invests in the Y2K integrator sector.
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