A better way to work?

As the basis of the global economy has evolved from agriculture to manufacturing to information, we see a constant need for specialized IT skills and capabilities. Increasingly, companies are coming to regard the knowledge of the workforce as a strategic asset, the value of which is enhanced with each new project.

It would only be appropriate if our employment models were in sync with this philosophy, but unfortunately they are very much rooted in 20th century assumptions, particularly in regard to the contingent workforce. The staffing industry operates essentially in the same manner as it has for the last half-century: businesses need certain skills or talents, so they engage staffing firms, which task recruiters to line up contractors to fill requirements. End of story.

This model of "finding people to fill jobs" seems straightforward and expedient, but in fact it's incredibly inefficient, whether you consider it from the perspective of the hiring company or the consultant who is contracted to work on the project.

First consider the problem from the perspective of a manager looking for outside contractors. When businesses need to bring on additional developers, project managers or database specialists for a project, they usually look to multiple staffing firms to provide candidates. Since the majority of IT work is performed locally, recruiters from multiple firms, end up chasing after the same pool of resources for any given project or role; and they do this for each new requirement. Ultimately, only one recruiter will fill a particular requirement, so the efforts of all the others ends up being wasted; it amounts to time spent on unprofitable pursuits. It has to be accounted for somewhere, so it is factored into the bill rate that staffing firms charge, as part of the assumptions underlying undisclosed operating costs. In effect, the cost of talent is inflated because of the inefficiencies of the conventional staffing model.

This doesn't work any better from the perspective of the consultant. Once a requirement is filled, the recruiter moves on to the next client requirement, racing again to find a good candidate. The first strong candidate to the finish line wins. So recruiters have very little time to build long-term relationships with candidates, even though they are the logical resources to do follow-on projects. The recruiter's focus on any given consultant is short-term, and it ends as soon as the requirement is filled. But consultants need to make a living, so as the current assignment nears its end date, consultants must start working to market themselves and line up the next gig. They may jump ship early, moving onto a new assignment in order to ensure steady cash flow. This not only creates a distraction for the consultant; it also has a ripple effect on the client's business, as that current project is disrupted and the consultant's knowledge is now lost to that company, an impact that translates to additional costs. As new people are recruited for each new assignment, ramp-up time and learning curve also affect the total cost.

So at the end of the day this time-worn 20th century model works but not very efficiently for any party involved in the transaction. The staffing firm works hard to fill requirements, but is only compensated for the candidates who actually end up getting placed. The rest is lost opportunity cost, which has to be absorbed somewhere, and ends up being factored into the overall market bill rates. On the other end, consultants often feel pressured to accept lower pay rates and often feel they are treated like commodities or interchangeable parts.

Is there a better way to do business, a 21st century model in which every party feels it is treated fairly and equitably? We think we've developed that model and we're inviting you to be part of it. If you're a working consultant, the first step is to go to the New Equities website and start a candidate profile. If you're a business that needs outside IT resources, you can learn more here. Or contact us directly to learn more.