Outsourcing will be more likely than hiring new employees in today's economy

You have a project coming up. Your management knows that you do not have the expertise to be successful. Do you hire or outsource for technical support? Maybe there is a hiring freeze? Is it hard finding the right person to hire?

In today's personnel market, there are many people looking for a job. However, most enterprises are reluctant to add permanent staff. So outsourcing for project support is the only avenue available. The project may be high priority or on a tight schedule. There may not be time to train an internal employee. All of these considerations make outsourcing a logical choice.

You may find that a high priced consultant is less desirable than contracting for technical support directly or through a staffing agency. The longer the assignment, the more likely the contractor's hourly rate will be lower after negotiations.

The enterprise will have to deal with two sets of questions.

1. What is the duration and schedule for the project? What are the minimum and maximum time requirements? Is the outsourced person/contractor assigned full or part time?

2. There will be cost for outsourcing. Which would be more cost effective, using an outsourced person or training an internal person to perform the work? The internal employee would have more skills after training and may expect a raise or may move to another enterprise for a higher paying job.

Outsourcing requires a well defined set of tasks. It will also require that the labor budget be calculated to determine the eventual cost. You have to be more precise for the contactor's budget than when the labor budget is calculated for an internal employee.

The outsourced person/contactor is paid by the hour or day with no benefits coming from the enterprise. This may be less expensive than the internal employee where the enterprise has to cover payroll taxes, insurance, vacation time and retirement contributions. It may be cheaper to pay twice the hourly rate of an internal employee to a contractor than to pay the internal employee with benefits.

The contractor will have to have working space and pass the enterprise security requirments, which may be an additional cost. Some management effort/time will need to be expended to manage the contractor, another additional cost.

The role, authority and responsibilities for the contactor should be well defined and agreed upon by the contactor and agency. The internal employees should be briefed about contactor’s position in the project. Make sure that bringing in a contactor does harm the morale of the internal employees.

The contractor must be briefed on the functions and deliverables the contactor will be responsible for. There should be no ambiguity. There should be provisions in the contactor agreement to shorten or lengthen the project time expended and schedule. The contactor task descriptions should be written so they can be modified during the project as conditions change.

The contactor may prove to be so valuable that the entrprise make want to make the contactor an internal employee. This provision and any fees to an agency should be defined in advance.

If the contactor is provided by an agency, that agency should have a backup plan in case the worker cannot or does not want to complete the project. You should negotiate the freedom the enterprise has for dismissing the contactor and getting a better person on the project.

Qualifying the contractor is extremely important because contactors' skills, knowledge, experiences and availability are usually why you went outside the enterprise.

* Look for past expertise in this type of project.
* If the vendor has already been selected for the hardware/software, does the potential contactor have experience with the products?.
* Has the contactor worked in your vertical industry?.
* Does the contactor understand how the project is to support the enterprise?.
* Investigate the contractor’s references..
* If hired through an agency, does the agency have staff in depth so if the contractor can not complete the project there will only minor interruption to the project schedule?

Outsourcing will be more likely than hiring new employees in today's economy. It may be easier to convince management that a contactor is more cost effective than trying to create the expertise internally. A contractor can be dismissed much more easily than an employee if the financial or market conditions for the enterprise deteriorate.