SOW: It’s Here, There and Everywhere

If buyers love it, can staffing firms be far behind? No, I am not talking about customers’ appetite for cutting costs, but rather the fascination with anything SOW — statement of work consultants.

This year, for the first time, we surveyed staffing firms about SOW and found that they are pursuing statement of work consulting with a vengeance. And it’s not just in IT or engineering; it’s in other segments like office clerical and industrial as well. SOW is no longer just the exclusive ambit of specialist companies like Wipro,Infosys and Tata Consultancy Services

What firms are engaging in SOW? The survey revealed that different dynamics come into consideration.  Overall, forty-seven percent of traditional staffing firms do at least some SOW; the median percent of total revenue from this segment is 10 percent. Of course skill segments do still make a difference, penetration in IT is the highest, and larger staffing firms are also more likely to do SOW.  Among companies with less than $10 million in sales, 35 percent have some SOW. Among companies with $500 million or more in sales, that rises to 82 percent.

The numbers are not startling given these facts. What’s not to like about SOW? These consultants are easy to manage (i.e., you don’t manage them); you only pay when they deliver.  Too, they are not your employee so you don’t run the risk of misclassification.

And buyers are liking it more and more. Staffing Industry Analysts asked buyers going forward what types of labor they plan to use over the next two years. They replied that they were going to make the biggest investments in SOW.

The SOW boom is on.  It may just be the next evolution in staffing.

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Project One

Gary Zander 12/03/2013 04:59 pm

Staffing firm business models are vastly different from Solutions/Fixed Price business models.

The core competency of a staffing firm is recruiting & relationship management; internal employees consist of recruiters & account managers (technical staff is temporary for each assignment)

The core competency of a solutions/fixed price business is technical & business subject-matter-expertise and project management processes; internal employees consist of PM's and technical staff (the better fixed price co's have their own full-time technical employees that have continuity & stability)

The grass may look greener, but staffing firms that venture into "true" SOW business and responsibility need to exercise extreme caution... be careful what you wish for!


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