Jeremy Langevin, who runs the staffing arm of consulting firm Horizontal Integration is optimistic about the future of the staffing industry.
Why? Because he says more and more companies are building a contingent workforce component into their overall hiring plans.
“Obviously the economy is starting to turn for the better, but the way companies utilize human capital has changed the last few years and I look for that trend to continue,” opined Langevin, who spent a decade at TEKsystems before coming to then three-year-old Horizontal Integration in 2006.
“Companies are going to have 70% full-time employees and 30% contingent as a normal course of business. They are using the contingent workforce for specific projects, for peak times of the year, and/or to take on legacy projects freeing up employees to work on newer, strategic projects.”
The original strategy behind Horizontal Integration was to integrate business and IT.
Indian-born company founder and CEO Sabin Ephrem, who came up through the consulting ranks at Oracle and Ernst & Young, understands a client’s business objectives and online needs. Staffing grew organically out of that.
“When I came on with the company they were primarily doing web design and development,” says Langevin.
“We were meeting with companies who told us, ‘We like you, and we like what you do, but we’re not ready to turn over our entire project to you. What we do need though is a developer or a designer and some resources.’ So it was a necessity to get in to the staffing end of the business, back to my roots.”
Langevin says that served two purposes. The first was that they found with staffing they could get some revenue coming in quickly to help cash flow. The second is that by earning the respect and trust of clients with smaller pieces they were often later brought in to work on larger projects.
“Once you start to get into staffing you can’t really dabble in it. Recruiting is so key to delivering good resources so you have to hire recruiters and ramp up.
Then once we got one recruiter we got more staffing opportunities. Then it was an effort to get on the large company vendor lists. You get on one, then you need more recruiting, and you get on a second, and it just grows from there.”
The company works primarily in IT staffing, although over the last two to three years they have ventured into the creative and marketing space as well.
“When you look at our competitors there really isn’t a single company besides us that does IT staffing, as well as marketing and creative staffing, along with web design and development,” said Mike Hoolihan, director, global client services. “There are tons of competitors in each segment, but not one that plays in all of those areas. And that’s valuable to our clients.”
Speaking of value, since margins are such a hot topic in the staffing business these days, I asked how they are at Horizontal Integration.
“As far as our margins are concerned, we are working less on a markup and more on a bill rate,” explains Langevin. “I don’t think our margins are squeezed at the moment, I think that time might be over.
We’re pushing our markings back up. Because the unemployment rate in the areas we serve, IT, marketing and creative, is really going down.”
Langevin went on to say that when they identify a really good developer or design candidate they might be considering two, three or four offers at any given time.
“With some of these enterprise accounts, the talent is getting scarcer so you can push bill rates, concurred Hoolihan. “However, we’ve also seen that the more competitive we are with our big clients the more traction we’re getting. So if we are willing to come down a bit we get more business.”
Both guys say the company works off a direct labor and bill rate so they don’t consider it a true markup.
They also stated they’re not aiming for $35/hour margins, but rather pricing themselves competitively for where they think the market is.
“Yes, of course we are in the business of making money,” Hoolihan said in closing. “But we’re not in the business of gouging our clients, or our consultants. And it does seem like the more competitive we are with our bill rates, the more success we have.”