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For staffing contracts, he aims to have five suppliers because "I'm always getting rid of one or two" for various reasons. Sometimes they shift strategy and focus on different markets; sometimes HISNA gets too big for them.
But why should a CIO have multiple vendors at the ready even though one vendor stands out? Because, Hoffman says, eventually you may have to drop even some of your best vendors. When a vendor changes leadership, its performance may suffer. And with mergers and acquisitions and -- until recently -- leveraged buyout activity, there has been no guarantee who will own today's trusted vendor tomorrow, or what changes a new owner might bring.
Hoffman picks his vendors based on a slew of metrics, technical and otherwise, including the vendor's certifications, years in the business, and track record meeting budget and deadlines on previous contracts. But he also tries to keep size in mind. With offshoring, for instance, "we work best with the Tier 2 companies. We're not big enough for the Tier 1s to make them happy, and the Tier 3s don't have the competency." (In this case, a Tier 1 company would be Tata Consultancy Services, the Mumbai-based IT services company with more than $4 billion in annual revenues.)
Hoffman says he can get a lot more respect from a Tier 2 company like Infogain Corp., a Los Gatos, Calif., company with hundreds of software developers in India. "We're big to them. We get their attention and we get their best," Hoffman says. "If I go to Tata, I'm getting their fourth-string guy because I'm not GE."
Outmanaged? |
Some staffing agencies feel left on the sidelines with automation.
One of the main dangers of vendor management systems is the risk that the automated part of the process will drive away good vendors.
This is a major complaint of staffing firms that supply IT consultants specializing in .NET, Java, SQL, Oracle and of other areas. These are highly skilled workers, and salaries can range to $300,000 for software architects proficient in Teradata, SQL or database re-engineering, to name a few.
In past years, employers have gone to great effort to woo such candidates, but now they are increasingly seen and hired as commodities. CIOs and other executives are using vendor management systems to order up these applicants without allowing the placement agency to have any contact with the hiring manager.
IT organizations are among the heaviest users of VMS. A recent survey by researcher Staffing Industry Analysts found that more than half of IT users had adopted some form of VMS. "This makes sense because they typically have the most dollars at stake and the most to gain by ensuring that rates are competitive," says Barry Asin, chief analyst at Staffing Industry Analysts. "The adoption rate of VMS has been much faster in technical areas than in other areas of contingent work usage, in part because technical organizations are just more comfortable with technology."
How It Works
When a staffing agency is invited to bid, it must submit only its top two or three candidates and hope for the best. While CIOs and vendor management offices find this method efficient -- especially when the alternative can be a ream of unsorted résumés -- the staffing agencies are finding the arrangement increasingly unworkable.
"A complete prohibition on speaking to the hiring manager under all circumstances is not a good policy. What people are doing is throwing résumés over the wall and hoping one sticks," says Mark Roberts, CEO of the National Association of Computer Consultant Businesses, based in Alexandria, Va.
In a poll, the group's members reported placing one in three candidates when they had contact with a company's hiring manager, but only one in 10 candidates when working through vendor management systems.
And that means staffing vendors, for one, will increasingly bypass vendor management systems.
In 2003, when hiring was slow, staffing companies had no choice but to go along with anything the vendor management systems demanded. But now, "in a marketplace where talent is scarce, people have options," Roberts says. "You've got to make sure that it works for all stakeholders in the process. If you don't, you're not going to have a successful VMS."
-- JR
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