Are Outsourcing companies going dead soon?

Gonçalo Sequeira just published a great article titled “The reason why Outsourcing will be dead soon” and it got my attention since one of my businesses is KWAN, an IT staffing company.

I loved the article, I sense Gonçalo has great intentions, is passionate about recruiting and loves what he does. Like most people in the market, he most likely heard and deals with so many horror stories about outsourcing companies and wonder why the f*** they exist anyway. Guess what? I used to struggle with the same question and I’m an owner of one of them!

So, Gonçalo, you are absolutely right about feeling the way you do, I’d be feeling the same thing if I were in your position.

Since I’m not let me share with you my thoughts on working as an owner of an “outsourcing” company for 13 years now.

First of all let’s get around vocabulary: Staffing and Outsourcing are two completely different things. 

Outsourcing means you’re going to delegate a part of your business, that you don’t consider to be your core business to an outside supplier.

For example, a Bank core business is to sell money and, for some reason, they don’t consider that doing bank databases is part of their core businesses so they outsource to a consulting business – let’s say Accenture or Deloitte – the development of their database.

Of course, one can argue that in 2020, every business is a software business and that it doesn’t make any sense to outsource to a third party. Yet, Accenture and Deloitte are still thriving and growing by helping customers get their business into the digital era.

On the other hand, “staffing” means that I’m going to hire a company that will help me “staff” my current open jobs and fulfil my headcount goals with a level of talent that I can’t easily hire overnight.

Now, a Staffing company can do this in many ways by providing different levels of service.

You can hire a staffing company to do a permanent placement job, where you pay a fee and the hired person goes to the payroll of the hiring company.

Or you can go to the more complete level of service,  where they take care of everything from recruiting, legal/contracting, payroll, career, and sometimes even relocating from another country or city (Yes, some staffing companies also help people find a home or take care of legalisation)

So, Staffing and Outsourcing are two different things. And Staffing is here to help companies fulfil their job openings.

Now assuming, Gonçalo is speaking of Staffing companies here are some insights from the article that I would like to comment.

Regarding the question of “Will Staffing companies be around in 10 years?”: Unless the balance of supply/demand of developers gets solved, my guess is that hiring companies will still need help to find the right talent through Staffing companies. 

Will they use a higher or lower level of service? Don’t know, only the future will tell.

“But the market has been changing in the last couple of years. Some people don’t want to represent a company and be paid by another. It isn’t cool or fulfilling…”

Yes, it’s not cool or fulfilling. But should it be? Does fulfilment have anything to do with who pays your salary or the company you work for? I don’t think so.

Fulfilment is giving what you’ve got and Success is getting what you want.

This means that in the endgame being fulfilled is more about an internal journey than it is more about an external journey, like who is paying my salary.

• How I do my art, my work, my love, is what is going to fulfil me.
• How I feel I grow, and progress with my work is what will bring me joy, happiness and fulfilment in the workplace
• How I connect with my team, and feel that I belong to a tribe is what will bring me peace and loyalty to my employer.
• How I find purpose on my work is what will bring me fulfilment

It has nothing to do with who pays my salary.

There are many good arguments for working to a final client. Who pays your salary isn’t one of them in my opinion.

“Outsourcing companies are also starting to realize that they are not able to motivate, retain and even hire with the same quality.

…

With an amazing brand, the right people and the right tools and processes, big companies can have the right hires, who are more motivated and more willing to achieve great results.”

What about Google? Are they a cool company with an amazing brand to work for? How come they have such high attrition? (https://www.quora.com/Why-is-Googles-employee-turnover-so-high)

What about Amazon, Facebook, Apple or Microsoft? Aren’t they big enough names and brands? How come their turnover is so high?

They don’t use Outsourcing companies and yet they also aren’t great at motivating, retaining and even hiring with the same quality.

It turns out that the key for retention is NOT the cool brand, the cooler tech stack, the perks that bigger brands are able to provide better than, let’s say, an outsourcing company.

Hell, I’ve even made a video about this. The right culture is what makes people want to stick around. And guess what? Smaller companies have a better fighting chance than bigger ones.

“And by the way, what are outsourcing companies doing to get over the stigma they have in the market?”

I don’t know about the other outsourcing companies, but here’s what we at KWAN are doing:

1. We’ve stopped pretending that our developers will have a bigger connection with us than with the client they’re working for;
2. We’ve position ourselves to become their agents and finding the best possible workplace for they’re ambitions and dreams – that includes MB.io;
3. We treat our people like adults and not children: we do what we say and don’t make promises we can’t fulfil;
4. We coach, mentor, listen, give them tools, strategies and value to become better professionals at what they do;
5. All of our ambassadors of KWAN have – or have planned – coaching training to help our developers achieve what they want in their careers
6. And yes, we used to have the coolest parties before COVID-19 just because we like to party too.

So yeah Gonçalo, some staffing companies also make me sick and I hear the same horror stories as you do. I get you, they need to change or get extinct. We’re doing our part to treat people as they deserve.

So here is an open invitation to you, if you ever hear one of those stories about KWAN, let me know. I care.

Loved the article Gonçalo! Hope my thoughts helped the discussion.