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The Value of Variable

WRITTEN by: Bill Sterzenbach |
categories: Research and Strategy

Dec 2009


Variable workforce - a fancy phrase for 'Now Hiring - sorta'. Contingent or variable workforces are a fantastic way to manage peaks in your pipeline without buying all-new plumbing. Of course we're talking about freelancers and contractors - those enigmatic folks who have the steel to stand outside the system and work on their own terms.

The variable workforce model is not for every business, but we've found that using contingent resources to get things done can be one of the hidden secrets of a successful service business, but you must know the techniques and rules of managing this often volatile workforce. I have worked on both sides of the technology equation - and I see the benefits and pitfalls of each. In technology I've been a freelancer, a consultant in an agency, and I've been a full-time employee as well. Over the last 12 years I've spent most of my time managing technology folks - both in-house and contracted. In this post I'll share some of my experiences with some practical advice from a guy who has been supplementing a great in-house staff with a great off-site staff for many years.

Some Terminology

I'm going to clear something up before we get started. I'll refer to most freelance/contract resources mentioned in this posting as 'outsourced'. These folks might live in the US or they might live in the UK, Bangladesh, or Pakistan - this fact is not important in our discussion. Regardless of where the person lives, the rules of properly managing and leveraging an outsourced contractor are the same.

Outsourcing is Not 'Cheap Labor'

Let's start with the most misunderstood concept behind outsourcing - outsourced labor = cheap labor. This is simply not true. If you are paying a local guy $75 an hour for a service, you simply cannot replace that person for $12 an hour for the sole reason that they live in another country or because they wear the freelancer cap. Yes, you can find technology folks who will work for $9 an hour, but you will pay far more for this misguided deal than you would pay for a quality person who charges a quality price.  More often than not, the $9 person will take roughly 6 times the hours to complete the same job as the $60 guy. When searching for contractors, don't shop on price, shop on integrity, experience, and personality. The true value of this model is in your ability to ramp up your output quickly without hiring a bunch of new folks, not in getting the work done more cheaply.

Some Tips

Scope scope scope! Be sure that all work is very well outlined including who is responsible for testing, what the turnaround time is for corrections, extended scope work-rates, etc.

Touching base. With short-term workers, it's best to touch-base very regularly - daily if possible. This prevents minor misunderstandings about a project from turning into deal-breaking disasters, and gives the employee a forum for questions, feedback, and suggestions on how to improve the project.

Try before you buy. Not quite as it sounds, but start with a very small project with very tight variables. Be picky, be strict. See how the individual works. If they are:

  • Competent
  • Able to work intuitively (make the right decisions when needed)
  • Friendly
  • Fast

Consider them for a larger project. Generally I will work with a person on 5 small jobs before I commit to a larger project. This isn't always practical, but depending on the need, can be a great model.

The Rewards

There are rewards for the hiring party as well as for the employee. In this post I'll focus on the hiring party.

Flexibility. The true value of a contingent workforce is in the fact that you don't need to hire full-time personnel to get over a period of heavy demand. You can scale up and back very quickly. This is good for your budget and great for your clients. We are able to satisfy a WIDE range of specialized needs for our clients using this model, and they look to us as a 'single source solution' for a lot of their needs.

Specialization. You can 'marshall in' valuable specialized resources very quickly and effectively. Recently I had an issue involving LDAP that I simply couldn't solve (it involved LDAP, Windows Active Directory, SSL, and Linux's OpenLDAP API). Finding and hiring a person with the extremely specialized skill set would be impossible at the least and prohibitively expense at the worst. I was able to locate a developer that had ALL of these skills in just a day and have the issue corrected within the next day. Total time-cost: 6 hours of development time, and 2 hours of project management time.

The Risks

Confidentiality. You must ensure that you don't share any sensitive data with short-term folks. You always hire people you can trust, but every now and then people can surprise you. Most often, the risk is not from a dishonest person, but from the very nature of 'mobile computing'. For example, you may hire a freelancer to work on a website project and they may have their laptop stolen. If they had access to your clients private data, you have an issue. Always setup a development environment with stripped-back data when you are using new freelancers, or when you are using any outside source that could pose a threat to your clients' valuable data.

The Reality

Take some time and think it through. You always must do a cost/benefit analysis on using any new type of resource. Sometimes hiring someone in-house is the best decision, other times it may make more sense to use a short-term resource. This formula should help:

  1. Do you have 'anchor' employees? This model does not work without a skilled team who will serve as the long-term 'anchor' of the system. We have many full-time personnel that are tasked with ensuring continuity and consistency across all aspects of our work, so bringing in a stringer from time-to-time is a great fit for us.
  2. Who is managing the team? You simply must have an experienced manager with technical skill in this position
  3. Is there sensitive data involved? Can this data be removed from the project without compromising the persons ability to complete the project?
  4. Is there a great deal of 'tribal knowledge' that must be learned?
  5. Will this person need to interact with my client at any time?
  6. Will there be a need to have this person on-site for a majority of the project (this changes some variables)
  7. Can components of the project be 'broken out' and parceled to workers in order to minimize exposure and speed development?

As with any advice I give on this site, please remember that I don't know your exact situation, so you need to make the final determination as to the usefulness of the advice.

And as always, please don't hesitate to ask me if you have any questions. Email or call anytime. - 937-206-3920

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