Services Procurement

IMPORTANT… and I need this done by YESTERDAY

When was the last time you thought you had more than enough resources and time to do the job you are asked to do?

That’s just what I thought you’d say:  “There is too much to do, too little time and no idea who’s going to do all this work!”

These days business growth and productivity challenges are intertwined – to grow our business, we need to make investments while at the same time finding ways to do more with less.  So, how do you begin to staff your most important projects with the proper resourcing?

Your first critical step is to define what you need done.  This seems so elementary but failing to clearly outline your objective may result in misplaced talent and missed deadlines.  Then ask yourself some important questions:

Is the project duration long-term or on-going? Can it be done with the skills and competency your company already possesses and are internal resources available? Does the project involve some new innovation or intend to result in something beyond the current state of the art?  And what level of control do you want or need to have in the way the project is performed or completed?  If you see a long term need to have internal company competency in this project area, you will likely want to hire additional company resources.  If not, and you choose to source externally to meet your needs, here are the options you might pursue and rational for each.

Contingent/Temporary Staff Augmentation or Freelancer (“Hands On”):  Choose this path if:

  • you need qualified, talented professionals whose individual skills are more important than the offering of a service company,
  • you choose to be highly engaged in the way Services are performed and/or delivered, specifying the what, when, and how either because you are the executional expert or because the risk of error or poor performance is too high to relinquish control,
  • you intend to hire individuals such as one developer, one scientist, one designer to supplement in-house team.

Unlike full time hiring, contingent staff augmentation means only a temporary use of resources (typically less than one year); there are co-employment laws ensuring temporary staff are offered the benefits of long term employment when it appears they are acting as your employees. Your Sourcing Professionals will help you find staffing agencies or freelance companies that are qualified to perform the work required.  They will ensure you are paying pre-negotiated market rates and have the proper privacy, security and confidentiality protection.

Service Provider or Service Company (“Hands Off”):  Choose this path if:

  • you prefer the execution of entire project(s) using the resources of another firm,
  • your company does not have or does not choose to develop the skill set or infrastructure to perform the work needed,
  • you can define the deliverables at the end of the contract where the Service Provider takes responsibility to deliver the project,
  • you are willing to relinquish control of how the project is performed and trust in the Service Provider’s competency to provide a quality output.

Unlike Staff Augmentation, carefully selected and innovative Service Providers can become long term partners who help your company succeed both short and long term. Be sure to engage your Sourcing Professional to help you find the right Service Provider who can competently meet your needs today and in the future.  Your Sourcing Professional will also protect you from giving away your competitive advantage by setting up the appropriate property rights for patentable or confidential company know how.

Contingent Staff Augmentation/Freelance vs Service Provider
Increased Control & Responsibility for Risk & Resources Allows for full control on key aspects of the project team. The project manager monitors who is allocated to what type of work. Controlling the process can also translate to controlling the quality of the end product. While there tends to be more cost transparency when paying Time & Materials for staff augmentation, project costs can spiral out of control if not properly managed relative to the project results expected.
Greater Flexibility & Skill Accessibility Dependent on availability in a given market, it is relatively easy to add or subtract resources to match demand. This greater flexibility allows you to accept new projects, particularly those that are large, require a fast turnaround or require unique skillsets. By adding new skill sets to the team, a company can take advantage of both external and internal resources for project completion. Staff augmentation is an efficient way to fill in-house skill gaps. This also allows the in-house team to increase their skill level over time.
Improved Speed Staff Augmentation allows you to acquire skilled resources quickly.  A responsible business leader will always outline their requirements before committing company resources, outlining skills needed for a project is often easier than defining the project result you endeavor to achieve.  It may also be more effective to integrate staff augmentation resources with existing business processes than to align those processes with external project teams under a Service model.
Potentially Lower Cost Staff augmentation reduces the cost of full time hiring, investing in internal skill development and the on-going loaded salaries of direct employees. When properly managed, with staff augmentation you pay only for the required work when you need it, and for the expected skills at the right time.
Service Provider vs Staff Augmentation/Freelancer
Reliance on External Best Practices Taking advantage of industry best practices can be accomplished simply by using an innovative or industry leading Service Provider. Service Providers typically shoulder the responsibility of investing in the adoption, maintenance and improvement of best practices.
Results Centric Model The responsibility and risk for delivering results lies with the Service Provider based on upfront defined requirements/deliverables. Because of this, you can be more ‘hands-off’ and stay focused on their core business. Your largest time investment is upfront and then at critical milestones throughout the project to ensure the Service Provider is on track to achieve your objectives.
Ease of Management & Compliance A Service Provider assumes day to day management/oversight and skill development of the resources assigned to the project which saves you time spent on controlling resources. Hiring a Service Provider to deliver the project output also reduces the concerns of navigating the legal landscape of co-employment.
Knowledge is Preserved with Third Party Org Outsourcers who manage operations on-going develop an understanding of customer processes, needs, culture etc. For work where this brings on-going value there are benefits with outsourcing vs staff augmentation.
Economies of Scale When hiring a Service Provider, you are choosing to work with resources who serve you and others like you in the market place so Service Provider’s overhead and risk is spread across their large client base.  As a company’s need for resources increases the cost structure will not improve under a Staff Augmentation model since resources are added incrementally and rates are negotiated on a per resources basis.

 

 

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