The IT world is evolving very rapidly. New technologies are emerging and existing solutions are being enhanced to meet constantly growing demands for faster and better networks to develop and deliver a new breed of applications, services, and communications, all with the goal of optimizing business processes and opportunities.
The move to cloud-based solutions is also changing the way IT is delivered – and who is delivering it. Traditional VARs are getting into the services business, and existing MSPs are expanding their service offerings to generate more recurring revenue, retain customers by becoming a one-stop-shop for all their technology needs, and recruit new customers by offering a high-quality, all-encompassing services and support offering.
But, as these companies grow their services businesses, they are faced with the challenge of keeping up with demand, not only from a sheer staffing perspective, but also due to lack of geographic workforce availability and access to the right IT expertise. It’s one of the reasons more and more IT services organizations are looking to contingent workers to help deliver their field services – either entirely or to supplement in-house teams.
“There is a lot more awareness from the enterprise of the value that contingent labor brings,” said Wael Mohammed, executive vice president of product management at Field Nation. “They have a greater understanding of the cost advantages, the diversity of skills, and the fast access to talent, particularly through a direct-to-contractor model.”
The growth of the contingent workforce model has been driven by two factors. There’s been an increase in gig economy workers, where workers have greater flexibility and control over their work hours and conditions, and have an ability to work as little or as much as they want. The model really took hold with the emergence of Uber and Lyft and other companies that popularized the contractor model.
There’s also the business economic factor. When the 2008 recession hit, companies were forced to take a hard look at their operating models and cost structures, looking to find ways to reduce overhead. For many, that included re-thinking their labor models, and many companies moved from a predominantly in-house field labor force to an on-demand structure. The model allows them to scale up and down as needed quickly and efficiently, regardless of current economic circumstances.
Driving Service Business Growth Today
There are many ways services businesses are driving growth, and the contingent worker model supports them all. It allows them to:
- Expand geographically
- Expand service expertise
- Increase wallet share from existing clients
- Bid on larger RFPs
- Fulfill entire RFPs instead of only a portion
The thing about contingent labor is that it doesn’t require capex to grow and expand – it’s very balance sheet friendly,” according to Mohammed. “One of the major benefits of using a direct-to-contractor model is that it is so capital-friendly.”
The key is to find the right balance between W2 and contingent workers to ensure there is enough capacity at all times to handle any situation.
At Tech Data, for instance, its IT workforce has evolved. Like many, the company initially used an entirely in-house W2 workforce, but then started leveraging on-demand workers, and even moved to a predominantly on-demand workforce at one point. Since then, Tech Data has found an ideal middle ground that is a near-50/50 mix of W2 and on-demand IT talent, ensuring scalability to meet peak demands everywhere it offers services and allowing it to expand services into other markets and technologies without having to set up a local office. Tech Data uses the Field Nation platform to support its contingent labor force.
“We will typically use contract workers where we have excess capacity with our W2s, or places we have difficulty reaching with our W2 workers,” explained Donald Reblitz, director of sales operations at Tech Data. “When you get out into some of the remote or rural parts of the country, there are still data centers, PCs, and networks, but there isn't always a match between where our techs are and where the clients are, so we often use nearby contract workers.”
The other benefit Tech Data enjoys through its use of contingent workers is a broader range of skills. With new technologies come new talents and new certifications that W2 workers may not possess. An on-demand model provides access to talent with the specific skillsets required for jobs with a cost model that makes sense.
“There are certain certifications that may be required to simply get into certain types of data centers that we may not hold within our W2 workforce,” Reblitz explained. “Maybe they need a special security clearance in order to get into certain data centers or need to be certified on a piece of equipment for the job. We can find on-demand technicians with those qualifications on the Field Nation platform.”
“It’s a model that ensures services businesses have fast access to talent, coverage, quality of outcomes, and cost advantages,” Mohammed added. “It can deliver anywhere from a 30-50% cost savings over a permanent labor model.”
Read Part 2 of this series on contingent and blended workforces in the IT services industry, Managing Contingent and Blended IT Labor, where we’ll discuss actually managing your jobs and technicians, whether you’re using a blended workforce or have gone entirely on-demand.
Field Nation will be among the many technology vendors and service providers on hand at MSP Expo in Ft. Lauderdale, Florida, as part of the TechSuperShow taking place February 11-14, 2020. You’ll be able to hear from Field Nation’s leaders during the conference program at MSP Expo, and visit the company in booth #221. MSP Expo, Future of Work Expo, and other collocated events at the TechSuperShow will feature four days of content to help MSPs grow their businesses leveraging the latest technologies and trends to enable more efficient operations and new revenue opportunities. In addition, events like SD-WAN Expo, ITEXPO, AIOps Expo, and more will give business leaders and decision makers a chance to learn about the latest tech trends impacting businesses, and meet with the companies bringing those products and services to market.
Edited by Erik Linask