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Solution Providers See ‘Huge Financial Benefit’ From Disruptive Gig Economy Marketplace

The on-demand talent model is opening the door for solution providers to add millions of dollars to their bottom line. With technical talent the biggest cost for a solution provider of any size, the ability to hire engineers on a contract basis has just changed the game.

Douglas Grosfield, CEO of Five Nines IT, a fast-growing Kitchener, Ontario, strategic service provider, sees the on-demand talent model opening the door for solution providers to add millions of dollars to their bottom line.

“There is a huge financial benefit for partners with this model,” said Grosfield, who sold his traditional MSP business four years ago to embrace the new strategic service provider model. “This is the Uber model being brought to the engineering market. The biggest cost you have as a service provider of any kind is your tech talent. All of the salaries, training, HR benefits, equipment and tools you have to pay for disappear in this kind of a model.”

That model is best known as the “Gig Economy,” a moniker that highlights businesses’ increasing use of freelancers and independent contractors and redefines the traditional employer-employee relationship.

Field Engineer, a New York-based startup that was launched in 2015, is banking on the Gig Economy to build its business. The company has developed a platform with an online marketplace where solution providers can find and hire engineers with the necessary training, expertise, work histories and certifications on a contract basis for specific customer jobs at locations worldwide.

“Field Engineer is consumption-based engineering,” said Grosfield. “It is the Microsoft Azure of tech talent. It gives you the ability to consume engineering resources based on your needs as opposed to trying to build out your own engineering workforce.”

Grosfield compared a solution provider in the old model to a tractor trailer company with a fleet of trucks, many of which are going unused.

“To use the trucker analogy, if you own a lot of trailers and you can’t fill them up, they are sitting against a fence,” Grosfield said. “In the IT world, if you have a large bench of technical talent and you can’t get their utilization up, then you have that same problem. You have trailers against the fence. This model allows you as a strategic service provider to scale up and down on demand to meet your engineering workloads.”

The marketplace model is critical for solution providers and MSPs looking to move to a strategic business-outcomefocused model, according to Grosfield. “Too many partners are still making the mistake of building their own engineering services benches that are expensive and difficult to manage,” he said. “This is the model of the future.” The marketplace model solves the problem solution providers have struggled with for decades—namely how to break beyond the average services utilization rate of about 65 percent to 70 percent for their engineering talent, he said.

How much does unused talent cost solution providers in sales? By Grosfield’s estimate, a solution provider with 20 engineers at $100,000 a year with a 70 percent utilization rate is losing out on $2.4 million in additional billable revenue. Reclaiming those hours would result in a financial windfall.

“When you start to extrapolate that 30 percent gain in efficiency with all of the MSPs in North America, that is a massive pool of wasted resources that is going to become much more efficient as a result of this kind of business model,” he said.

Solution providers said Field Engineer overcomes the challenge of finding and hiring telecom and networking engineers to provide top-notch installation and maintenance. What’s more, that expertise might be needed at a site halfway across the country—or even the world—from a solution provider’s home base, further adding to the expense.

One startup solution provider that plans to rely on the Field Engineer platform is DigX Solutions, founded by Steve Stark. The five-month-old Groton, Mass.-based company’s services will cover a range of infrastructure, collaboration, security, social cloud and analytics technologies.

Stark knows he’ll need a roster of engineers with skill sets that command a premium. But as a startup he can’t afford to invest in hiring high-priced technical talent that he might not be using full time. As he ramps up operations at DigX, Stark is turning to Field Engineer to hire freelancers to help fill his network configuration and Tier 3 support jobs.

“I want to have those resources whenever and wherever I need them. This provides me with the flexibility to have the right resource in the right area,” he said. “I can have much more scale, and I can go anywhere. These are resources that are nationwide and even global.”

By holding down his payroll costs as he gets DigX off the ground, Stark said he can devote more resources to sales and marketing to help reach his goal of realizing revenue of $500,000 this year.

“Cash flow is king for a company like mine,” he said. He goes so far as to say that without Field Engineer as a resource, he might not have had the confidence to start his solution provider business.

Field Engineer founder and CEO Malik Zakaria said that helping solution providers punch above their weight class is a key part of the company’s value to the channel.

“Solution providers that use our platform to beef up their services bench with freelancers can compete more effectively against rivals of a much larger size because of the cost efficiencies we introduce,” said Zakaria. “We help them act bigger than they really are.”

Greg Hanchin, a Denver-area independent project manager and business cloud architect, has been working with Field Engineer to find engineers with cloud and network operations skills to build virtual teams for pilot cloud migration and application development projects that generally last six to 12 weeks. He sees Field Engineer as one way that businesses—and the solution providers they work with—can find the expertise they need to help resolve “the total disruption and chaos” they are experiencing with cloud transformation.

For Shyam Raju, a channel consultant who previously was an Americas cloud executive at solution provider DXC Technology, the key success factor for any business is to realize efficiencies.

“Today it’s all about productivity and resource utilization,” Raju said, adding he has seen first-hand the issues involved in lining up engineers and technicians to service customers across the globe and is now recommending Field Engineer to his solution provider clients.

“This is a platform that can help solution providers achieve business efficiencies,” Raju said of Field Engineer’s services. And it helps maintain service-level agreements, he said, leading to high customer satisfaction. “I see tremendous value in this. To me, this appears to be a total game-changer.”

Grosfield compares the economic revolution taking place in the Gig Economy to the automation and machinery changes that forever changed the economics of the agricultural market.

“Look at the agriculture market with the leaps and bounds they have made building automation and processes into their business,” said Grosfield. “The automation they have implemented has made them so much more competitive in an intensely competitive market. Our industry is the same as the agriculture industry was in the past—very labor-intensive with a lot of bodies doing all the work in a very reactive mode. We need to ‘systemize and processize’ so we can become more efficient, delivering more automated services without the burden and expense of the labor talent that we have to maintain. Field Engineer is the next evolution that disrupts the old labor-intensive model. Similar to the agriculture industry, we are going to see a level of automation that really highlights how valuable it is to become more strategic in how you deliver your services.”

The on-demand talent model is becoming more critical given the accelerated pace of change in the technology market, said Grosfield.

“We are being forced to change everything in our business. You have to have the ability to deliver the technology, automation and the processes. Those are table stakes. That is no longer a differentiator. The conversations we are having with our customers are more and more strategic, business-related conversations,” he said.

“To be able to have access to very high-end and difficult-to-find talent in a model like this will allow even the smallest strategic service provider to play at the same level as the big boys,” said Grosfield.

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