Staffing or Managed Services? Determining What Fits Your Client’s Needs
July 19, 2016
One of the major questions many consulting companies struggle with when servicing clients is “Do we focus purely on staff augmentation or take the approach of a project-based, true ‘consulting’ engagement?”
For a lot of companies, the answer lies somewhere in the middle; make staff augmentation a core business, while building services around certain practice areas to provide more value to clients. This provides a lot of challenges along the way, and if not done correctly can lead to not only financial losses, but also a damaged reputation with clients.
To start, let’s examine the key differences between staffing and managed services. Staffing refers to staff augmentation; the old “need a person, get a person” mentality. Business risk is low in this model, as ultimately the day-to-day management responsibilities still belong the client as opposed to the Staffing firm itself. Of course, every firm wants their client to be successful and their consultants to play a part in it, but at the end of the day, there is not as much skin in the game for a purely augmentation model.
Managed services, on the other hand, involves not only finding the right staff to accomplish the project, but also owning and managing the project deliverables and overall success. The “project” can be any number of things; perhaps a company wants to move to an Agile environment, or create a mobile application to further their brand/outreach.
In these instances, consulting firms will own the totality of the project, from how long it will take to the resources and types of resources they needed. The risk here is, of course, much greater, as the firm is responsible for the success or failure of the entire project. And we all know this can ultimately have an impact on the bottom line.
So with two very distinct options out there, the question then becomes, as a company, not only what do we focus on but also when do we play the staffing card vs. the managed service card? To help answer these questions, there are three things to keep in mind.
- Internally, is your firm’s process infrastructure set up properly to work managed service deals?
- When looking at staffing vs. managed services, what is the best option for your client?
- Can you deliver the proper resources if/when the project is secured?
Is your firm ready to handle managed service deals?
Prior to bidding on and winning any type of project work, you must first have the infrastructure in place to handle it. This includes everything from having SMEs on staff to help understand what the client needs, account executives trained in the company’s product offerings and expertise, and even a strong team of proposal managers and writers and legal team to ensure they can respond to requests for proposals properly.
Pursuing managed service deals can be risky with the mindset of “win the business and figure it out later.” (As is often the case in a staffing approach.) Without the proper expertise, it is very difficult to fully deliver on the project. This is why most companies competing in this space will focus on only select areas they excel in. Trying to focus too broadly will not only have higher costs for the firm, but may also be an area the recruitment/sales cannot secure resources for.
Which solution is best for your client?
Once a firm decides to take the plunge and focus on staffing and managed service work, the next challenge is figuring out which services to sell.Playing the wrong card can be off-putting to the client if it makes you look like you don’t truly understand their needs. This is where training for both the sales and recruiting teams becomes so important.
Before making that cold call or having a meeting with a client, the account executive has to be comfortable with the difference between the two approaches, as well as the distinct value both can provide.
One must also understand who the correct decision-maker is. Often times, staffing work can be handled through line managers, team leads or procurement.For managed services work, although those managers may be a “foot in the door,” there are more stakeholders involved and higher-level decision makers you must get in front of.
Once you’ve secured the correct meetings with the correct people, key areas to focus on include: Why are they wanting to get this work done? What is the budget? What does their current staff look like?Understanding these areas and answers will go a long way to helping steer the conversation towards the decision of managed services or staffing.
We won the project … now can we deliver?
The life cycle of a managed service deal can vary, but typically it is much longer than a staffing engagement.
Identifying candidates could become tricky as to when to begin the staffing process. Some firms employ a full-time bench of resources to ensure rapid deployment. Other firms use a hybrid approach of bench resources and other recruited directly from the active market. There are pros and cons to each. Keeping consultants on a bench can drive up total cost of project ownership; start the “just in time” staffing process too early and you risk losing candidates to other opportunities; wait too long and perhaps you cannot find the resources in time for the project kick off.
You must also take into consideration the recruitment team you have in place and the work being done. If it is a hot skillset or something you have historically struggled to find, you need to make sure you give the team enough time to locate candidates and also train them on those conversations to make sure the opportunity/timeframe is being conveyed properly.
With the staffing landscape so competitive and clients seeing that form of business as a commodity now more than ever, it is a good idea to diversify your product offerings. Managed service work gives a firm the opportunity to not only build a deeper relationship with their clients, but also reap greater financial gains. The key will be finding the balance between your service offerings, while also investing up front to ensure you are set up for success.