The latest jobs report from the Department of Labor had some surprising news for the field service sector: while overall job growth was weak for the month, the demand for field service technicians surged. With 221,000 workers added last month compared to a year ago, the rate of field service unemployment sits at 4.8 percent — well below the national average of 7.6 percent. So what’s behind the demand? We asked Peter Cannone, president and CEO of OnForce, a company that pairs independent service technicians with companies in need.
WHY IS FIELD SERVICE HIRING SO STRONG?
Over the past few years the number of service professionals has decreased dramatically due to the recession so it’s no surprise to see an increase in the labor department’s numbers just because those numbers were already so low. We’re seeing some pent-up demand for workers right now. However, I don’t think [the employment rate] is going to return to what it was years ago because companies are looking for alternative workforce solutions.
WHAT DO YOU MEAN BY ‘ALTERNATIVE WORKFORCE SOLUTIONS?’
We’re seeing a talent mismatch in the services sector. Whether it’s a full-time, W-2 labor force or a 1099 independent contractor labor force, companies are trying to figure out how to match revenue with expenses. There’s a movement towards a more flexible workforce. There’s less of a want or a need among large OEM companies to hire, rehire or retrain full-time technicians. So a lot of companies are not hiring full-time technicians. There is some hiring of the higher-skilled W-2 workers that can do field service work, but we’re seeing more of a hiring of independent contractors than the W-2 long-term employee.
COULD THAT TREND REVERSE ITSELF LATER ON?
I don’t think so. MBO Partners recently said that by 2020, over 50 percent of all U.S. workers will be independent contractors. Right now, Wall Street is doing well but Main Street is still struggling. This type of independent contractor workforce allows companies to ebb and flow with the economy. If it’s decelerating or accelerating, companies with a flexible workforce can easily ramp up or tone down the number of workers. It gives a company 100 percent utilization at all times.
SO ARE THE JOBS NUMBERS SOMEWHAT MISLEADING?
Not necessarily. Companies’ balance sheets are actually pretty healthy from a cash standpoint, but they’re finding ways to optimize their existing workforce.
ARE THERE OTHER FACTORS BEHIND INCREASED DEMAND?
There’s an aging workforce and it’s especially prevalent in the service sector. The next generation of technicians are very different from their predecessors. They’re using mobile devices and technology to be more efficient. Technology changes the game, not only the servicing of it but also how they’re using it on the road or to solve problems. We’re also seeing an evolution in the service technician. With all the new technologies emerging, technicians need to be able to do a number of different things. Those service technicians that are keeping up with the trends and becoming renaissance folks are the ones that will be very successful over the next few years.
I used to be a service technician and am now a Service Manager and what Peter says is a mistake many companies make. You just should not “swap out” technicians, especially when their work is on very technical products. Training technicians or service reps to be very good ones takes time and money and both are much better spent on your own “in house” technicians. A “rent-a-tech” approach means, when you first start with those “contractors”, time is often lost, professionalism is often lost and if you get them up to speed on your products or services, your invested capital in their knowledge could disappear overnight and even worse, to your competition and this is a much greater risk, than if you have your own good, well paid and dedicated technician workforce. Sure, this could happen within your own technicians, but if you are dedicated to them and their accomplishments for the company, they are much more likely to be loyal to you, than the “rent-a-tech” guy or gal.
The real issue is, very vew companies see the return on investment in their technician workforce and only see them as “costs”. A bad, very, very bad way of viewing the one team of people who see and deal with your customers directly……the most! Yes, the service team has, on average, more than 60% more customer contact than your sales or marketing teams, who, by the way, too often get too much money shoved up their ying yangs to get their jobs done! Yes, there is a cost to Service. But the cost comes in a great return. It is the “Wow!” effect people get, should your product just happen to have broke or need maintenance for the first time and they are quickly and professinally served. They are the cherry on your high quality product pie.
scamo
scamo
The undeniable fact of the matter is that both sides have a valid argument and there are rather clear benefits to both models (just a few of which I have included below). However, the deciding factor of which model is better suited to a given company needs to remain within the culture and core competencies of the organization itself. Neither the rent (which I like to call distributed) nor the buy (which I like to call internal) model works well for EVERYONE, but some companies fall into one or the other category, and the points made by Mr. Peter Cannone resonate strongly with those who prefer to rent this labor and the points made by Mr. Scott Molinari resonate strongly with those who prefer to take on the work in-house. Furthermore, as strongly as I disagree with this thought process, the current paradigm for IT in business is that it is a non-revenue generating department, which affects decision-making for service and anything IT-related.
With businesses looking only at bottom line costs, which is a common mistake on a number of levels, more and more companies choose the rent methodology, primarily because it is a considerably more attractive option for utilizing personnel and is less costly than the capital expenditure required with regards to wages and payroll taxes, VACA, sick days, network access, tools, vehicle fleet, healthcare costs, retirement costs, and all of the management layers that go into such internal workforces. Simply put, you only hire when you need the work completed, so this is very efficient with regards to utilization and cost control. This model also scales well to fluctuating needs. You can rent and train the same technicians for your environment using this model and doing so can yield very similar results as indicated by Mr. Molinari in the buy model.
Internal workforce models can allow for more physical control, dedication, and a specific, pinpointed skillset to the needs of the company. With strong leadership internally, the resources can be strategically placed, ensuring enough coverage in all areas at all times without under or over utilization, and then manage the work orders, track SLAs and completion times, etcetera. There can be elements of SLAs and tracking with the rent model as well, but this is an absolute necessity in the internal workforce model.
Whichever model you elect, you must be able to show that the chosen model is worth the investment to your specific organization, since in the end, the success of a company is determined by profitability and how a company chooses to handle this aspect of their environment plays a vital role in determining this metric.
We’ve seen the serge since 2004, not everyone can just unplug their computer, net work or server to have it taken care of…