Everybody’s talking about the gig economy – the use of freelancers or subcontractors to fill a wide range of tasks and positions. Should security integrators hire more staff…or rely on this emerging type of labor pool?
The gig economy is everywhere – highlighted by companies such as Uber, Lyft, Instacart, Rover, Wags and others. Consumer-facing models like Task Rabbit connect local workers to handymen for residential work. Technology further fosters these models, with platform apps like Wonolo filling on-demand roles in retail, warehouse operations, delivery, event staffing and administrative work.
The list of potential gig economy jobs keeps growing; in fact, Uber Technologies recently announced initial testing of an on-demand labor service in the Chicago area called Uber Works, which would provide temporary workers such as servers or event staff. In physical security and integrated systems contracting, the gig economy may be developing into a necessity – companies are scrambling to address the lack of skilled workers as the industry shifts to high-tech, IT-based infrastructures.
Who is the Gig Economy?
According to a Gallup study entitled What Workplace Leaders Can Learn from the Real Gig Economy, more than one-third (36 percent) or approximately 57 million U.S. workers are in the gig economy. Gallup defines the gig economy loosely, as “multiple types of alternative work arrangements such as independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers.”
Studies estimate that by 2020 some 43 percent of the American workforce will consist of independent contractors. According to the Intuit 2020 report – research by which looks at significant trends and forces affecting consumers and small businesses over the next decade – the long-term trend of hiring contingent workers will continue to accelerate, with more than 80 percent of large corporations planning to substantially increase their use of a flexible workforce (read more at www.intuit.com/2020).
The term gig economy is also commonly referred to as “contingent workers” or “independent contractors.” Although there are slight differences between the two, in general, their focus is on short-term employment or work tied to a specific project or contract. These workers are drawn to the flexibility of the arrangement, working in a different environment or location and typically time off on weekends or holidays.
While this freedom is attractive to many, these workers do not enjoy the benefits, insurance and security of being an employee of the company – and conversely, the systems integration firm does not have the overhead associated with a full-time hire.
While the costs of subcontracted labor are lower because there is no overhead for the installation company, contingent workers are considered highly skilled experts in their fields, and as such will often command a higher pay scale than in-house personnel – depending on their certifications, credentials and proficiencies.
In addition to traditional independent subcontractors, there are agencies specific to the security and IT industries – such as Outsource, which specialize in placement of low voltage and electrical talent; or Anistar Technologies, whose slogan is ‘networking the wired world.’ In the example of Anistar, it recruits and hires employees for outsourcing labor, offering benefits that include health insurance, paid holidays and vacations and retirement savings plans.
So what does the gig economy look like in the systems integration space? There’s no single consistent method in finding workers, but instead, different approaches to turning the gig economy into an opportunity to build the business.
“It is the new reality,” says Steven Paley, president and CEO of Florida-based integrator Rapid Security Solutions. “When we first started in business, I didn’t want to use subcontractors because I wanted to control the client experience. I thought the only way to do that was with our own team members. Ten years later, we realized we were not able to grow the business in the way we wanted because we couldn’t find enough technicians. To meet our expansion plans, we started using subcontractors – primarily for installation and service.”
Vetting and Other Safeguards
Paley says he controls the client experience by providing appropriate uniforms and signage for the work van. Many of the subcontractors have worked for the company in the past or for other companies, and they have been vetted by known industry colleagues and through networking with other organizations.
“We certainly don’t just go out and hire someone simply because they are breathing – that can be disastrous,” Paley says. “They have to be vetted like a new employee, because our brand is at stake. Our lead technicians talk to potential subcontractors to determine if they are well-versed in the equipment and technology. They need to have an alarm contractor’s license and insurance, and we ask to be an additional insured on their policy.”
While the pay rate for these workers may be higher than their in-house fully loaded labor, the trade-off for Rapid Security Solutions foregoing the administration and overhead associated with having another team member. “We give them a dollar amount to complete the work and they agree to it or not – but there is always room for negotiation,” Paley says. “For service tickets, we usually just accept the subcontractor’s rate. There is less profit margin, but they are helping us by expanding our staff without having a full-time employee.”
Paley adds that when you pay a subcontractor, it is ultimately for the work they do, so it makes the process more efficient. With in-house technicians, their work is actually about 70 percent billable and the rest is overhead. “You can improve your overall efficiency by using subcontractors and your billable percentage as well,” he adds. “As you grow and your market area expands, using subcontractors is a natural progression.”
Atlanta-based GC&E Systems Group manages growth in three ways – internal hires, outside subcontractors and temp labor, explains Rob Hile, the general manager of the company’s Tampa, Fla., office. “We address growth and manage our business with our direct labor force, which focuses on networking and security; we use subcontractors and specialty workers for low voltage, cabling and data and also hire temps,” Hile says.
GC&E works with private outsourcing companies that specialize in security, life safety, fire and IT – including Outsource and Anistar – with good results. “With the outsourcing model, I pay a subcontractor by the hour to do a turnkey project to augment our staff,” Hile explains. “The outsourcing model is a cool way to grow the business, and potentially find someone who is the right fit for future employment. We can hire these temp people after they have worked for us if we know they will fit our culture.”
With the staffing agencies he works with, Hile can request certain qualifications or competencies, such as BICSI technicians or NICET certifications. “We let them know what we need for a job,” he adds.
For subcontractors, liability and customer perception is one of Hile’s top concerns. “When you hire a subcontractor, they are representing you and your organization in front of the customer – so they have to be reliable, you have to be able to trust them and they must be screened and drug tested,” he says. “When we bring them in we are opening our tool chest – they must (sign) non-solicitation and non-compete agreements so the subcontractor can’t take over our customers, and they can’t work for us and then go across the street and work for a competitor.”
Kirk MacDowell, president of MacGuard Security Advisors Inc., a business consulting firm for the electronic security industry, says the gig economy fills a need while there are not enough qualified people in the industry. “It’s a completely different time in our world right now,” he says
Look Inside Initially
MacDowell takes a different tact and says that subcontracted labor should not be the first place systems integrators look for talent. Instead, he advises on what he calls portable, in-house labor – moving technicians from one task to another depending on the system and their strengths.
“Many systems integrators are not using their people to 100 percent of their capability,” MacDowell says. “The way systems are today, many are wireless – if you are using subcontracted labor for a wireless system, that’s silly. Take inventory on what you have within the confines of your walls at your organization, and determine how to get more bang for your buck. You know your existing employees’ skillsets – if you have a good sales force or other office staff, you can train them in installations, especially wireless.”
MacDowell advises to start with an internal SWOT analysis (strengths, weaknesses, opportunities, threats). “Look for the skillsets inside the company that can be put to use,” he says. “If there is a skillset you don’t have, that is where you should subcontract.
“When you have a good subcontractor, it is fantastic, and you can develop a great relationship; but, it is competitive, and they are becoming harder to find,” MacDowell adds. “Take a look internally first – at the end of the day, it will be less expensive if you look at utilizing some of your own employees. Cross-training in house is so important. I love it when people step in and do something they weren’t hired to do – it is a win for them and a win for the systems integration company.”
Houston-based Preferred Technologies (Pref-Tech), an IT-centric systems integration and networking company, takes a similar approach to the gig economy – first focusing on in-house staff before looking outside for subcontractors for specific competencies a project might require.
“Our primary focus is quality, and in light of that, we believe our own employees build a higher level of craftsmanship,” explains Pref-Tech President Shaun Castillo. “We have a greater capacity when it comes to IT, and we try to attract the best and keep them around in our own culture; but, when you need help, sometimes it is better to hire a specialist short-term without the overhead of carrying another employee. For example, we may need an electrical contractor, or a door hardware contractor or someone who specializes in fire systems when something is beyond our expertise, or to provide service outside our normal geographic area.”
Pref-Tech, which maintains a large staff of IT technicians, will have one of their own employees present on the job as a check and balance when they do employ subcontractors. “We don’t have a formalized process for finding subcontractors, but we draw from our network of industry relationships,” Castillo says. “We are part of PSA Security Network’s National Deployment Program. It is all relationship-based, so we look at the business, core value, what they do and what they don’t do.”
The gig economy can also go the other way – causing integration companies to actually lose workers because of the combination of the amount of work available and the attractiveness of being an independent contractor. “We have lost a couple employees to the gig economy,” Castillo admits.
Indeed, the rise of the independent workforce is here to stay. There are many different ways to get the job done in the world of security integration – meaning companies can decide to “go gig” or go with in-house employees. In either case, the gig economy certainly offers abundant opportunities for both the security workforce and the companies themselves.
Deborah L. O’Mara is the managing director of DLO Communications and has been writing about the physical security and systems integration industry for more than two decades. Reach her at [email protected].
