July/August, 2001
HUMAN CAPITAL:
Contract worker industry migrates to the web
Companies that help firms find and hire contract workers are using the Internet to improve service to customers. Online solutions for acquiring "human capital" can help buying organizations find and hire quality job candidates more quickly and cost effectively than is possible using traditional methods, according to these service providers.
But both analysts and firms that provide these online solutions caution that sourcing contract workers presents unique challenges, and that companies considering the use of such online services should:
- Choose service providers that select potential employees from human capital suppliers with which they are familiar
- Consider using on-site representatives from the service providers who can move quickly when candidates' resumes prove unworthy
- Understand that price should not be the deciding factor
As many companies face layoffs in the current weak economy, demand for temporary workers is rising. More than 10 million contingent workers now reside in the U.S. workforce, while more than half a million technical jobs are unfilled. Some analysts predict that by 2008, 40% of companies' technical staffs will be contract labor.
"People see value in this," says Katie Kolbeck, director of product marketing for human capital online service provider IQNavigator. "The contract worker is cheaper than the fulltime employee."
Buyers say the market is ripe for online tools. The speed of getting qualified candidates is proving to be of particular importance. "It's easier for job postings, job submittals, everything," says Craig Collins, director of recruiting for DoubleClick Inc., which delivers banner advertisements for the Internet, DoubleClick works with ForSoft, Inc., based in New York City, which partners with client companies and manages client staffing in an online setting.
ForSoft's service offering is one of several online models that are emerging in the human capital market. Through ForSoft's Internet-based tool, managers can define their needs for workers, quickly review an array of resumes and rates, and hire people, as they desire. ForSoft also provides online reverse-auction services, where suppliers enter resumes and rates, and bids are made for job candidates.
"We find the Internet companies are more open to it. They like it, versus the more traditional brick-and-mortar companies," says Joseph Musacchio, president of ForSoft, Inc.
In doubleClick's case, ForSoft has placed a consultant on site at the company's New York facility. That consultant works directly with Collins. ForSoft originally provided DoubleClick with candidates for full-time positions and now also screens and provides candidates for consultant positions.
IQNavigator takes a slightly different approach with its collaborative exchange for the buyer. Suppliers of human capital come to the portal, look at the status of job postings, see how many people are needed for a particular job, and then bid to have their employees take part. They offer their employees for what they see to be the best prices.
"We keep a pipeline of solid consultants available, and if a job comes up, my recruiters look at it, take a candidate we have already screened or interviewed, and stick them in," says Denise Surratt, lead director of business development, Information Industries Inc. "They then match them to a job." Information Industries is a provider of technical consultants for large corporations, and it has taken part in online reverse auctions with IQNavigator. "They streamline the process, put all the requirements online, and you are not inundated," notes Surratt.
Other service providers do not offer auctions. In the case of SkillsVillage, a hiring manager seeking to fill a position enters the requirements for that position and indicates favored suppliers. SkillsVillage then broadcasts the requirements to those suppliers-inspiring them to quickly respond-and breaks the list down to a chosen few. "If they get 100 candidates back, that's way too many," says Becky Mason, marketing manager for Skills Village. "I can get it to a list of five names."
The downside
But the system hasn't worked perfectly. Most agree that there are definitely stigmas to serving up employees in an online marketplace setting. Buyers entering these online arenas can find themselves making an awkward leap from auctions for other supplies. The online reverse auction is, by design, a time-intensive, carefully prepared process intended to give a company a good price on large portions of supplies. But the same process, applied to what are often temporary employees, takes on a slightly different tone. In such cases, these employees seem to become last minute, spot market entities. The result is skeptical buyers.
"This means a little more risk, and it can be a lot of trouble to spell out what you are expecting," says Emily Andren, senior analyst for Gartner. "Do you want to trust somebody you have never dealt with before?"
Analysts say it is true that buyers using these services are in fact going to be able to get better prices when they go shopping for job candidates. But there is a flip side to this. Andren says providers now find themselves coming up against the rate-versus-quality argument. In best-case scenarios, online auctions provide buyers with competitive prices after those companies have taken a strategic approach to finding qualified suppliers and inviting them to compete.
Marcy Weliver, senior vice president of corporate and product strategy for IQNavigator, says this same approach must be applied to auctions involving human capital. The best price may not always be the best deal. Buyers need to know well before the auctions which human capital suppliers are competing and how their employees are screened. In short, they shouldn't be working with providers who will hook them up to suppliers they are not familiar with, or have had bad experiences with.
"In the human capital world, it's not all about dollars," says Weliver.
