Hiring through outsourcing
Over the past couple of months we’ve noticed an interesting thing when it comes to developing RND projects within large organizations. We noticed it just recently which means that it was probably going on for years but it’s fascinating that in the span of a few months we’ve had two very similar proposals.
A senior employee of a large organization will get the buy-in of the organization for an RND project. They will then head the project but would either be given a skeleton crew or in fact no team at all.
They will report directly to the head of department.
They will have decision-making authority within the greenfield project but will effectively not be allowed to hire anyone.
They will engage a consultancy for the project and set a specific duration – in one case the suggested timeline was six months in another it was twelve. The consultancy then has to guarantee employee availability for it’s duration which with other workload more often then not would mean that it has to hire even if on contractual basis. The client however will get to review the employees assigned to the project.
The consultancy will then be tasked with producing a proof-of-concept that will be overseen by the client. The requirements are more fluid but the goals aren’t as clearly defined either.
At the end of the project – either when the time is up or when a satisfactory proof-of-concept is produced – if the client “likes the end result” they’ll just absorb the entire staffing structure that the consultancy has set up. They often encounter little resistance to this since they can pay well, would offer good positions, have the reputation and the work would effectively be the same.
For the client this is of course a dream come true. They get an RND project done with minimal downside. Their entire investment is one senior employee and some money (which they have plenty of). They don’t have to worry about the hiring process or training or real-estate or downside (such as lay-offs, re-assignment, equipment) in case it doesn’t work out. Really perfect.
For the consultancy the upside seems somewhat superficial. Obviously the fee would be quite substantial. It could potentially be a great long-term relationship with a wealthy client. It would be a good opportunity to expand if the newly hired staff could be leveraged into a new project immediately.
The downside seems substantial however. First off, if people are hired for the project specifically, they’d nearly impossible to retain if the project is a success. If it isn’t they might or might not be suitable for re-assignment depending on skillset. This could potentially be mitigated by hiring people who’re suitable anyways but that’s not possible in every case. Next, lay-offs could be expensive. This could be countered by hiring on a contractual basis but that just seems quite unfair.
It seems and interesting scenario where the success of the project and failure of the proof-of-concept itself is the best outcome for the consultancy provided hiring is done right. If the proof-of-concept is successful it’s only a short-term monetary gain. If the hiring is done specifically for the project and it fails it could probably tank the consultancy.
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