Sunday, March 16, 2008

IT Staffing Industry Ecosystem

Several staffing customers do not necessarily understand the IT staffing industry ecosystem as well as they know the off-shoring or outsourcing industry. This is very counter intuitive considering that the IT Staffing industry is approximately $19 Billion in size. However it is a very fragmented industry with very low barrier of entry and very unstable much like the restaurant industry. Single customer players survive for years and gets wiped out as the competitive environment shifts. Even large players are constantly fighting to sustain and grow their business under challenging industry environments as highlighted by the recent Chimes bankruptcy incident.

The staffing industry gets very little respect (from both customers and consultants) which can be attributed to the fact that they are not responsible for delivery unlike outsourcing or consulting vendors. They also do not necessarily invest in thought leadership highlighted by the fact that there is very little knowledge base online. However there exists a dynamic ecosystem which is built around the access to talent and speed and agility of response. Due to the fragmented industry, there has been a continuous drive towards consolidation as shown by several M&As of staffing providers. Breadth of services/talent and Cost has a substantial influence in the industry in the absence of any perceived value-add. Several successful players have identified a niche where they are really good at identifying talent and can hence demand a premium.

The Need

This industry exists to cater to the need of small, medium and large organizations for qualified consulting talent which need to be scaled up or down based on the projects that these organizations undertake. The consultants are usually contracted from the staffing company for a period of 6-10 months to complete projects and are released subsequently. This eliminates the overhead of hiring and letting go of employees and also addresses the legal implications.

The Ecosystem

Small, medium and large staffing providers are prime vendors for organizations which means that the requests for talent (aka requisition, orders) go to these selected few organizations to be filled or serviced. The prime vendor or vendor list has been put in place to deal with the proliferation of providers and normalization of IT procurement costs. These organizations first try to identify consultants who are already on their roll to satisfy the order. If the orders remains unfulfilled the recruiters scour their consultant networks to identify the right fit; if it still remains unfulfilled the recruiters open it up to partner providers (We call them SCPs or Sub Contracting Providers) who have a pool of talent that they can tap into. This end to end process occurs within 48 hours and the prime vendors submit the short-listed consultants to the customer for evaluation. Customer interviews the candidates and identifies the best fit (prices, quality) and on-boards them onto the project team. Understanding this ecosystem is critical to understanding the cost structure of identifying the consultant which in turn affects the quality and cost of customer service.

About Ishi Systems

We are first and foremost a technology company with deep understanding of the talent and processes required to deliver high quality IT projects. This is evidenced in the fact that a large component of our revenue is from outsourced IT projects. We have leveraged this understanding to deliver top quality consultants to our customers which has resulted in the duration of our customer engagements being double the average duration of typical consultant engagements. Our customer satisfaction is so high that our consultants have become trusted advisers to our customers. If you are a hiring manager and would like to understand how we can help you, please contact us at 2015213119 or email saju dot thomas at ishisystems.com.

Add to Technorati Favorites

No comments: