During the Super Bowl, television networks rent extra equipment they need to provide the best coverage for the big event. During the summer months pool builders rent extra backhoes to keep up with their busy excavation schedules. During the Christmas rush, UPS has extra trucks available to meet the frenetic holiday delivery schedule.
“Businesses routinely use their economic resources on an ‘as needed’ basis. Why not do the same for employees?” asks Erik Vonk. He is President and Chief Executive Officer of Randstad North America, a human resources outsourcing firm based in Atlanta, Georgia.
Employers make long-term commitments whenever they hire a permanent employee. This commitment includes providing a paycheck regardless of the workload. When that workload dips and soars like the price of a dot.com stock, having a fixed number of employees can be unnecessarily expensive. Vonk believes businesses as well as the federal government would benefit from using talent only on an as needed basis.
Many government agencies have seasonal needs just like a bathing suit retailer. The Internal Revenue Service experiences two enormous peaks: one at year end, the other during the spring tax season. By outsourcing, the IRS can anticipate its volumes and make sure the correct number of people are there to handle the blizzard of paperwork in April but are not there in the heat of August. “It’s this flexibility that saves dollars,” explains Vonk.
Paul Tuccio, CPCM, estimates government agencies using Randstad’s personnel can save about 30 percent of a civil servant’s salary.† “It’s very difficult for the government to compete with the private sector here,” says the Director of Contracts, who is based in Washington, D.C. Outsourced employees – from the starched shirt executive to the worker with his or her name sewed on the shirt – “are more productive than the typical civil servant,” he reports.
Attracting the Best Employees
But there are other benefits, too. Outsourcing can provide some of the best local talent available. “Today, the most capable employees aren’t looking for long term assignments,” reports Vonk.
Also, the outsourcer has expertise in managing people and projects. “We specialize in hiring managers and motivating the work force using the latest technology,” Tuccio says.
What agencies are the best candidates for outsourcing? Tuccio says any large agency whose budget is shrinking but whose service mission is increasing can benefit from outsourcing. The IRS, for example, must handle more tax returns with a fixed permanent staff. And these are returns are becoming increasingly more complicated. “They have more money to chase but less people to do the work,” says Tuccio.
Currently Randstad is bringing in people who have experience handling Internet based tax returns. These collectors are familiar with the latest technology and know how to use it to solve collection problems.
The same applies to the Social Security Administration. America is aging, which increases the workload for the claims department.
The U.S. Census Bureau is another good candidate. The government will need an enormous number of people to conduct the upcoming Year 2000 census. “Outsourcing is perfect for any entity that needs certain horsepower for a limited amount of time,” says Vonk.
Creating Job Stability
One of the obstacles to outsourcing is the reluctance of government employees to accept the change. Vonk says civil servants are afraid for their own job security. But the executive says an inefficient organization is inherently more unstable since its costs are higher than they need be. “Outsourcing actually creates more job stability,” says Vonk.
Government employees are particularly vocal about change, he continues. But education typically calms their qualms. Randstad managers explain how they create career continuity for government employees. Randstad not only places its employees at agencies during their busy periods but also guarantees employment at the end of the project. “We worry about what’s good for the agency as well as what’s good for the person,” says Tuccio.
Randstad can attract top people because it continues to provide generous employee benefits between assignments. “America already has too many people without health insurance,” he says. In between assignments, Randstad employees can attend the company’s internal university to improve their current skills or learn new ones.
The company can afford to keep paying “leading edge benefits” because its business development executives continue to bring in new contracts to fund them. Tuccio says outsourcers like his firm will be increasing their government assignments as time goes on. He says the trend to shift work from the public to the private sector, which started in the 1980’s, should continue through 2015. “The prospects are nothing but bright for government outsourcing,” he says.
Lessons from the Outsourcing Primer:
- Outsourcing creates job stability in government agencies because the employer pays less for a more productive employee.
- Outsourcers are familiar with the latest in management theory and information technology systems. They bring these skills to government agencies.
- Outsourcers create cost savings by staffing agencies on an “as needed” basis. Many government agencies have wide fluctuations in labor demands.
- Outsourcers can attract and keep talented employees because they find all the assignments and continue to pay benefits between assignments.