Monday, January 4, 2021

Lesson #333: How COVID-19 Has Changed Staffing Decisions Forever

Posted By: George Deeb - 1/04/2021


& Comment

COVID-19 has impacted the business world in many ways.  Some industries thrived (e.g., healthcare) and other industries got clobbered (e.g., hospitality).  But, one thing that was consistent across most companies, is many of them were forced to have their employees work from their homes for the first time.  And, a very interesting thing happened . . . it worked!!  Both for the employers in hitting their goals and for the employees looking for more flexibility in their jobs.  But, this is just the beginning of what should become a long term trend towards continued teleworking and increased outsourcing and offshoring even when COVID-19 is behind us.  Allow me to explain.

Teleworking Success During COVID-19 Has Opened the Eyes of Employers 

In the wake of COVID-19, employers are dramatically rethinking their staffing decisions.  In the "old days", most companies would think with a "home office" mentality, looking for staff in their headquarters or regional office locations.  But, COVID-19 forced many companies to experiment with teleworking for the first time--allowing their staff to work from their homes.  And, once they learned it was pretty much "business as usual" in terms of getting work done and driving revenues, they quickly started thinking "do we even need staff to return to the office".  A long term teleworking model would require a lot less home office space.  And, for staff that does need an occasional office, it can be provided with a "hoteling" model where you can reserve a desk for the day (not have your own dedicated desk), helping to reduce your monthly rental expense.  Additionally, they are starting to see the benefit from being able to recruit talent from any location, opening up a much larger talent pool of candidates for them to choose from, far beyond the constraints or limitations of their home office location.

This Has Also Opened Employers' Consideration to Alternative Solutions Like Outsourcing

But, this is just the beginning.  According to my colleague Jeremy James, a Partner at the outsourcing firm Staff Street (who helped me research the topics of this post), now that employers' "beaks are wet" with this concept, they are now giving the idea of outsourced staffing models much higher consideration than they have in the past. Why?  Because it is a similar "out of the office" solution that can help them expand their bottom line with lower-cost talent sources (save as much as 55% according to the Bureau of Labor Statistics), they can handoff secondary roles in order to enhance their core business functions, and it can help them accelerate their recruiting needs with "on-demand" talent to keep up with their growth demands without having to internally recruit or train those same roles.  Companies are starting to rethink every aspect of their talent needs--with a bias towards hiring employees for your core competencies (e.g., hire accountants for accounting firms, hire engineers for automotive manufacturing), with the flexibility of letting those employees work from wherever they want (at home or the office), and outsourcing everything else.  According to the BLS, around 45% of all jobs in the U.S. can be done remotely.  Not good news for the corporate real estate market!

The World is Quickly Becoming an Employers' Oyster . . . Literally!!

With employer's becoming more amenable to teleworking and outsourcing, it really raises a bigger question of where the talent needs to be located.  In many cases, the best solution may not be in the United States.  Hiring offshore and nearshore talent can often be the most effective and budget-friendly solution for your needs.

Offshoring is when outsourcing companies find solutions, whether it’s recruitment or program development, outside of the country their client is incorporated in. Many think the decision to offshore is solely concerned with being able to save costs or expand their bottom line. But offshoring doesn’t just mean cheap labor. Educating the world over has improved in the last 20 years and the global labor force has only grown in talent as well as in the competition for that talent. By finding the right offshoring strategy, companies are able to tap into that global talent pool and benefit from the general advantages of outsourcing, such as making fixed capital more variable and your organization more flexible and nimble, as well as the diversity and expertise in skills and ideas of globally competent workforce. Jeremy has found that the best outsourcing talent pools are based in the Philippines, Mexico and Eastern Europe. The Philippines and Mexico primarily specialize in customer service and back office support, working during American hours of operation.  And, the firms in Eastern Europe are phenomenal with technical tasks such as web and app development.   All at a fraction of the price of U.S. based talent.

Nearshoring is similar to offshoring in that companies find their solutions in other countries. But while offshoring companies look to the labor force in places like India, the Philippines, and Ukraine, or other places across the world, nearshoring’s competitive advantage is working in countries that are in the similar time zones and geocultural zones as the countries the outsourcing companies are incorporated in. They navigate the common problems that arise from conflicting time zones or cultural differences, things that can compromise company cohesion and agility.  For example, there is a large and cost effective technology coding community in Costa Rica that perfectly aligns with the time zones in the United States, making it easier to do business and collaborate on calls during the same working hours.

There is literally an offshoring or nearshoring solution for most any talent need you have.  Each with a different: (i) industry expertise; (ii) role focus; (iii) talent location; and (iv) costing model.  So, do your homework to find the partner that has the best mix of the above to meet your needs.  

How To Decide The Best Path for You??

The first real step to choosing the right talent strategy for your operating or growth needs is to have a clear organizational map and a clear growth objective. A good grasp of organizational needs and strengths helps companies and businesses determine which functions can be done in-house and which can be outsourced. It also helps you find the right outsourcing company to work with based on competencies in strategies and staffing solutions, as it can be a really confusing and daunting process for finding that right outsourcing partner.  So, map out your talent pool of options, figure out your core competencies, figure out how remote/outsourced staff will impact the business or culture and set a recruiting or outsourcing plan from there.

Closing Thoughts

So, now that we are starting a new year.  This would be a good time to rethink everything you are doing from a staffing perspective and figure out which of the above strategies would work best for your companies long term.  If you embrace the above concepts, that our home office is no longer a requirement for employment, there are surely better efficiencies to be had in helping you hit your sales targets and talent goals, with a materially better cost structure.  Which leaves more money in your pockets to grow your companies with.  Thanks Jeremy for helping me with this post.  Feel free to reach out to Jeremy's team at 213-537-8804 with any questions from here.

For future posts, please follow me on Twitter at: @georgedeeb.

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