Here’s a prediction for you… the number of opportunities for contractors will significantly reduce by the end of the decade and will be replaced by a radical new model for managing fluctuations in the demand for staff.
Don’t get me wrong. Clients will still need to use temporary staff to manage the growth, ebb and flow of their organisation’s staffing needs. However, and we’re already seeing it, clients are now making some extra demands that, to be frank, will seem impossible to meet using the old school staff augmentation/body shopping models.
You see, staff turnover, whether permanent, consultant or contractor, is bloody expensive.
Clients spend money, time and effort recruiting, training and acclimatising the temporary staff to the methods and culture at their organisation, and then as soon as they have finished their assignments – and proven their worth – they commence their next assignment elsewhere and are no longer available to the client when they need them next. And so the cycle begins again.
The first stage of the swing away from using contractors is gaining momentum here in Oz.
We’re seeing clients turning towards the third tier consultancies for their staff augmentation needs to achieve greater consistency and build a stronger, less transactional, relationship with the vendor. As a result, in addition to the reduction in contractor demand, over the coming few years you’ll start seeing the resourcing companies announcing their own consulting divisions to try to stem the flow.
The second stage will be a doozey and will dramatically change the staff augmentation landscape.
We’ve recently observed clients starting to demand the same proven consultants back. They’re wanting the benefits of permanent employees but with the flexibility of contractors.
In fact, one of our clients raised this with me and asked if there was any way we could keep their consultants, in effect, “on the bench” for him and available exclusively to him as and when needed.
And just to make sure I understood his needs, he added “And I don’t want to pay any more for them than I do today – oh, and I want them to be experienced, no young wannabes – I want grey hair and scars on their backs”. For a moment I thought I heard the jingling of a sleigh and someone singing Here Comes Santa Claus… but I digress.
From a client’s perspective this is close to nirvana. Staff available on-demand, that know their business, the systems, the cultural fit, who to talk to, already on-boarded and are productive from day one.
Now, it doesn’t take a CPA to tell you, given current models and margins, this is unsustainable for most consultancies. Sure you could try to load up your rates, run the gauntlet and place them elsewhere, or even hire less experienced (read cheaper) staff; although, I doubt your client will put up with that for long. No, to meet this demand a new model will need to be developed.
So there’s my prediction: contractors will be [mostly] replaced with a new flexible workforce model that provides clients with the benefits of permanent staff with the flexibility once provided by contractors. That’s different.
What do you think? I’d love to hear your thoughts.
Oh, and yes, we did secure the business. 🙂