Strategies Required for Services Success in 2023 and Beyond: Build a Stable Bench of Independent Contractors
Challenges, Trends & Best Practices From Our Recent Webinar With TSIA
With 2023 coming in just a few weeks, business leaders are preparing for some of the unique challenges and opportunities that the new year will bring. This topic was discussed in Kantata’s most recent webinar with TSIA, where TSIA’s VP of Technology Services, John Ragsdale, sat down with Kantata’s VP of Global Advisory Services, Uriah Hakala, to discuss what can be done to set professional services organizations up for not only 2023 but the years to come.
The blog below, the second in a three part series, summarizes the highlights of their conversation, focusing on the second of three key opportunities they outlined, building a stable bench of independent contractors, as well as four actions businesses can take to ensure they’re positioned to take advantage of those opportunities. To read the first blog in the series, which covers doubling-down on customer success, click here. If you’d like to dive deeper into the topic discussed below, follow this link to watch the entire webinar.
Strategy #2: Build a Stable Bench of Independent Contractors
New research from Kantata’s report Staying Ahead of the Changing Dynamics of a Modern Services Workforce was presented on the webinar, and it shows that in the wake of changing expectations about work in the professional services workforce, the allure of the contractor workforce is strong. Some stats Uriah presented that show this include:
- 76% of independent contractors surveyed were full time employees 1 year ago
- 43% of full time employees are considering becoming freelancers or independent contractors
- 43% of full time employees admit they are jealous of the freedoms that come with working as a contractor
- 43% of full time employees admit the safety of a steady paycheck is the only reason they have not made the leap to contract work
According to Uriah Hakala, “Covid exacerbated the flexibility allowed by contracting and the explosion of remote work. There’s been a shift towards wanting to be a contractor that can float around and set their own schedule. From a company standpoint, having a stable bench of contractors allows for more flexibility to deliver more or less, dependent on demand.”
Action Item: Map Skills Usage To Guide Where (and Where Not) To Hire
Some projects require specialized skills or roles that only come up sporadically, making those roles poorly aligned (from a financial perspective) with maintaining a full-time employee on staff. According to Uriah, “when that demand does arise for a specific skill, role, or type of expertise, you can turn to an independent contractor and count on them to deliver. Nobody really cares who is delivering the work, as long as it’s valuable and you are delivering on their expectations.”
Action Item: Reduce the Margin Gap Between Contractors and Consultants
According to John Ragsdale, “One challenge with working with independent and sub-contractors is that their margins tend to not be as high as full-time consultants.” One way to close the margin gap between contractor and full-time worker margins is giving contractors more tools and insights. This includes shifting contractors towards more fixed-price, repeatable projects that require less customization, and more out-of-the-box implementations, which ultimately reduces the cost for the customer.
Action Item: Lean on PSA Solutions To Document Repeatable Delivery Steps
Key to increasing the number of repeatable, fixed priced projects that can be executed by contractors without reducing the value of the work being delivered is capturing the steps that lead to successful project delivery from one project to the next. John explains that to close the margin gap and get the most value from contractors without increasing the cost, “we need to capture exactly what we did for these fixed-price projects, including tips and tricks, which requires access to professional services automation (PSA) for project data replication. With PSA, you end up with a prescriptive project plan that allows for subcontractors to actually deliver and execute on the project while setting them up for success. If more companies do prescriptive project plans, document them in a PSA, and enable subcontractor and consultant collaboration, the gap in margin can be reduced.”
Action Item: Leverage Contractors to Deliver Projects at the Same Cost and Value to Customer
According to Uriah, “because fixed-price projects are repeatable, it’s much easier to capture the processes, collateral, delivery plans, content, and knowledge required to deliver value.” Having a blueprint, including the lessons learned from each project improves efficiency and allows you to turn to a less expensive contractor when appropriate. Uriah shares, “You don’t necessarily need that highly experienced and expensive consultant to deliver the same package 12 times. You can now turn to less experienced, less expensive contractors to deliver the similar projects while keeping the cost of the project the same. Customers will pay the same for the project regardless of who is doing it if they get the same results. More fixed price, repeatable, blueprinted projects lead to higher margins across the entire business.”
Delivering more fixed-priced projects and documenting the processes in a PSA does not mean full-time employees will completely cede delivery of these types of projects to contractors. Uriah shares that having these processes mapped out in a PSA “makes full-time consultants more efficient as well. What may have cost you 100K the first time will go down to say 80K by the 5th or 6th time delivering the same templated or documented fixed price project.” However, you now have the option to turn to a contractor if your full-time consultants are busy delivering projects that are not as repeatable.
Learn More
This is the second of three key strategies discussed in the webinar. To learn more about how to build a stable bench of independent contractors, follow this link to watch the entire webinar. To read the first blog in the series, click here. Look out for the third and final part of the blog series, set to go live before the first of the year, to find out the third strategy and action items to set professional services organizations up for success in 2023 and beyond.