Workforce Strategy: Leveraging Contract Staff and Managed Services

By Tiffany Hague and Vladimir Petreski
September 19, 2023
Season 4, Episode 35

In this episode of the Business Excelleration® Podcast, how can IT organizations most effectively leverage contract staff and managed services? A discussion with two experts from The Hackett Group’s Technology Transformation Practice, Director Tiffany Hague and Director Vladimir Petreski.

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Group Global Communications director at The Hackett Group. Today’s episode will discuss how information technology (IT) organizations can effectively leverage contract staff and managed services. Gary is joined by two experts in the field – Directors Tiffany Hague and Vladimir Petreski.

To begin, Tiffany unpacks the clear differences between contract staff and managed services. Companies are faced with many challenges in 2024 planning, and IT leaders are being asked more than ever to do more with a lot less. They are feeling the pressure to optimize costs, innovate, automate and smart-staff their teams. One way they can do that is through contract staff and leveraging managed services. A key part of a workforce strategy is being able to use external resources. The Hackett Group finds that clients can save 20%–35% in costs if they effectively and correctly utilize external staff. There are best practices that IT leaders should go through before engaging with external resources. From a contract staff perspective, they should ask themselves if there is a clear start and end date, or is this a one-time project? Is there an urgency to fill the role quickly? Managed service providers can often fill a niche where IT services are more commoditized, require general knowledge and can be completed remotely.

At the core of the relationships between corporations and external service providers, Vladimir shares it is important to consider the inherent conflict of interest. The company wants to perform things cheaper while maintaining a great service, while external providers want to grow their business. Understanding this dynamic will help companies get the most out of external providers. If there isn’t an alignment with what the overall company strategy should be, the business may not be met with their needs. Communicating that overall company direction will help align common goals between the two parties. Another critical element is incentivizing suppliers to provide excellent service.

Next, hear the difference between hourly staff versus fixed fees for contract staff and managed services. A managed services contract is to look at the outcomes and get them as a business, which is where relationships are crucial. The biggest advantage of fixed-fee contract staff is when work is only needed seasonally or when a project has a clearly identified beginning and end. Corporations and suppliers alike should see to overtime, sick leave, etc., for contract workers. Understanding and integrating contract staff into existing teams and workflows can yield positive results and achieve cost-efficiencies. To do this, companies should monitor their performance, provide feedback and guide the contract staff down proper onboarding processes.  They should be seen and treated as an extension of your team.

Then, Vladimir unpacks where contract staff and managed services may be preferable over the other. IT leaders are faced with the challenge of maintaining a positive company culture between permanent and contract staff. Onboarding will help contract employees feel aligned with the company’s goals and objectives. They should also be included in team meetings given feedback on their performance and feel that their autonomy is being respected. Simply meeting the team in person will automatically make them feel more aligned with your team’s culture. Finally, hear how contract staff and managed services can contribute to innovation and problem-solving.

Time stamps:

  • 0:49 – Welcome to this episode hosted by Gary Baker.
  • 1:15 – The key differences between contract staff and managed services.
  • 5:13 – Managing contract staff and managed services.
  • 8:30 – Hourly vs. fixed fees for contract staff and managed services.
  • 11:30 – Integrating contract staff into existing teams and workflows.
  • 13:19 – Where one approach is better than the other.
  • 15:05 – Maintaining a positive company culture.
  • 18:02 – How contract staff and managed services can contribute to innovation and problem-solving.