Building a stronger federal workforce in an era of cost-cutting

With 62,242 announced job cuts across 17 agencies last month and continued efforts by the Department of Government Efficiency (DOGE), many agencies are scrambling to find new ways to deliver mission-critical operations and implement Administration priorities. While this challenges those heavily reliant on technology resources from major contractors, it also creates an opportunity to streamline processes and reduce costs to the government and taxpayers. This inflection point gives agencies a new mandate to focus on strategic workforce development in alignment with innovative modernization efforts.  They can reconstitute their teams to match the evolving technology and policy demands without sacrificing essential operations.

While the federal government is known for relying on contractors to manage specialized tasks and bridge skill gaps, this approach is too expensive as a long-term resourcing solution. In FY2023 alone, DOD contract obligations and payroll spending totaled $609.2 billion – 2.2 percent of the country’s gross domestic product (GDP).  For federal workers with a master’s degree or higher, their total compensation is, on average, lower than that of federal contractors with similar education and skill sets. Contractors can be useful in providing specialized knowledge, but they are also more expensive than federal workers – and they don’t offer the same cost-effectiveness and mission commitment as a well-equipped and upskilled internal workforce.

At many agencies, contractors outnumber federal employees by more than two-to-one with an estimated government spending of $427 billion on contracted services last year alone. As federal agencies have seen their internal workforces diminish, their technology workforce becomes largely composed of contractors. This leaves agencies vulnerable to inefficiencies and high costs.

To meet new mission needs and manage the escalating risk and threat environment, it’s more important than ever that federal agencies harness the power of technology platforms, AI, automation tools, data and modern services. Accomplishing this requires skilled people that know how to use these capabilities efficiently. While reforming the footprint of government agencies must in tandem prioritize upskilling their workforce.

While it may seem easier to rely on contractors for short-term projects and technology deployments, getting the maximum value out of tools and platforms happens after an implementation. Creating expectations for internal staff and defining a sustainable pathway for continuous learning and skills development is key to changing the cycle of technology stagnation or contractor dependency. 

There is and always will be a place for highly specialized contract workers in government, but that is not a cost-effective, scalable solution when agencies have significant use of technology critical to delivery on mission priorities. Government agencies spend an average of $36,956 on hiring and training a new IT employee – and only $20,269 on upskilling an IT employee. With greater focus on training the employees they have, agencies strengthen their teams and build federal employees who are well-versed in the latest technology platforms, can further drive internal modernization and are positioned to achieve the value promised through technology investments.

In today’s fast-paced technological world, IT employees need targeted, high-impact training that equips them with the specific skills required for the tasks at hand.  This skills building becomes more crucial when cost-cutting efforts impact both internal and contractor workforces. Partnering with upskilling and reskilling companies as an intentional part of technology deployment offers a cost-effective approach to getting the right skills aligned to current priorities. Through strategic workforce investments, federal agencies can strengthen their mission delivery, improve efficiency and create a sustainable path forward – benefiting the organization, its employees and taxpayers in the long run.

Suzette Kent is a global business transformation executive and former U.S. Federal Chief Information Officer. She now runs her own advisory firm, guiding clients across industries in technology modernization, cybersecurity, and digital transformation. She serves as a strategic advisor to multiple organizations, including SkillStorm, a leading tech accelerator, that helps businesses and government agencies fast-track IT modernization by building custom tech teams and upskilling their workforce.