Firms shop for 'bodies' at a discount
YOU are a top investment bank or an IT giant and a massive project has just come your way. But your headcount has been trimmed over the years as your company tightens its belt and, in any case, the talent that you seek is not readily available.
You can't skimp on resources to throw at the project. So...you body shop.
This flexible staffing practice could really take off if the constraints on manpower stay.
What it means, simply, is this: Instead of maintaining a high headcount or working existing staff to the bone, investment banks and IT companies simply "shop for bodies" for short periods of time. They could, for example, turn to a management-consulting firm and pay it a fixed rate to borrow some of its staff for the project.
One industry expert, who wanted to be known only as Mr P., said: "This makes more economic sense for the (sourcing) companies, since they hire only as and when they need to. It's very difficult to train or retain talent these days, especially those with specific knowledge-based skills."
The trend of hiring contract workers has picked up over the past three years, said recruiting companies.
Mr Michael Smith, country director of Randstad Singapore, said: "In some cases, it may be because the company is operating under leaner conditions, and sees hiring contractors per project as a more economical solution.
"For others, it may be a case of needing a swift solution in plugging gaps with a high level of expertise, as a result of talent shortages in their industry."
Hiring contract workers can benefit employers as it "provides the flexibility to hire per project and remain agile to meet changing workforce demands and business requirements", he added.
Mr Joel Hides, associate director of Robert Walters Singapore, pointed out that "firms also get to 'road-test' potential employees with temporary positions", before cherry-picking the best candidates for permanent hire.
Contracted workers, on their part, get the chance to upskill themselves quickly and expand their networks, he said.
"They can get their foot in the door of a new industry and, perhaps, even secure a permanent position in the event of a good performance."
For all its merits, body shopping may come with a downside for those on the receiving end. Mr P. pointed out that clients of companies that body-shop may be kept in the dark.
He said: "They're paying a premium for work they believe is being done by the employees of the company they've hired."
He added that some companies have gone so far as to build teams that are about 70 per cent filled with contract workers.
Another industry expert, who wanted to be known only as Ms Pillai, said that the practice could have profound implications for management consultancies.
She said: "With body shopping, the traditional role of management consulting has shifted from short-term diagnostic interactions to cover a wider scope for execution. It becomes more lucrative for the business."
But she added a caveat, saying that the business of consulting was becoming "commoditised" and differentiated only by price.
"Management-consulting companies can't afford to be generalist anymore. They have to build deep focuses across various industries, which is what sourcing companies look for these days," said Ms Pillai.