IT Staffing's Cloudy Future

Channel 2.0, an industry collaborative project initiated by VARBusiness and chaired by Lawrence M. Walsh, is studying the market trends, business models and technologies that will shape the channel during the next five years. This blog will explore the issues being studied by the Channel 2.0 project and give you an opportunity to comment. To read more about the Channel 2.0 project, go to www.varbusiness.com/channel20. While working for a small solution provider in high school and college, Seth Kaplan saw tremendous potential for growing the business -- especially in the integration of small business and home electronics. His employer at the time didn't have the same vision, so he struck out on his own. Kaplan used his network of contacts to launch his business, Kaplan Computer Solutions. To help his fledging enterprise, he turned to OnForce -- an online network of solution providers who bid for work in an eBay-like auction -- to find incremental work. After a year-and-a-half in the OnForce network, Kaplan reaps about one-third of his revenue from OnForce work orders and referrals. "It started off slowly, but once I got more established and more ratings, and the vendors and the buyers saw I could perform the jobs, the work just kept coming in more and more," says Kaplan, the sole proprietor of Randolph, Mass.-based Kaplan Computer Solutions. "I get as many as 10 work orders a day, which is more than I can handle. I obviously wouldn't be where I am today without OnForce." Kaplan story isn't unique. He's one of 10,000 solution providers who is selling his skills and services through OnForce. This growing community of IT talent is giving solution providers purchasing services added firepower and market reach through temporary job engagements. Likewise, it's allowing solution providers with excess capacity to turn a new dime with little to no marketing effort. The idea behind OnForce is brilliant in its simplicity. Solution providers often have staff members with time on their hands (unused capacity), and can sell that available time and resource on OnForce's open market. Likewise, solution providers can buy capacity through OnForce to fulfill jobs, service far-flung customers or expand into new geographies. The jobs are posted in an auction-format, and people bid based on price; OnForce collects a commission for each job. "This marketplace can make a real impact in helping VARs as well as helping the IT services companies," says Peter Cannone, OnForce's incoming CEO. Cannone, who was PC Connection's senior vice president of sales operations, succeeds Kevin Gilroy, who left the company in December to become president of distributor Arrow Electronic's Computer Solutions business. Ah, but the two extremes of OnForce's business model may lay two possible futures for the channel. IT talent is scare for everyone and is one of the factors contributing to consolidation within the channel. However, OnForce may drain staffing resources away from the channel and change the dynamic between solution providers and their employees. "What does this mean for the people I've been training for years? Are they going to put up shingles of their own on OnForce? Are they all going to be independent in five years? Am I going to be working for them?" asks Chris Pyles, president and CEO of Champion Solutions Group (No. 227 on the VARBusiness 500). Because OnForce uses classic supply-side economics, in which the market dictates the amount solution providers make for everything from server installations to repairing digital signage, solution providers could flood the free market and drive down labor costs. However, acting as individuals instead of surplus capacity, they could make more than if they were on a payroll. Likewise, groups of skilled IT workers could ban together to form alliances -- similar to unions -- set market prices and, thus, dictate terms to employers (solution providers), as Pyle fears. Solution providers are finding it hard to find good people, but so, too, are end users on all levels. The channel and the companies they serve are competing for the same network administrators, database administrators and security managers. In this regard, OnForce may have the power to equalize or tip the labor wars in favor of the channel. IT talent employed by enterprises and midmarket companies will have the same enticements to join the free market as much as solution providers' talent. Under the best of circumstances, the channel could benefit from this dynamic, since end users drained of talent will become more reliant on the channel for support. Cannone believes OnForce could be a stabilizing force through which it can help standardize labor costs for specific tech jobs and skill sets -- something he argues doesn't exist today. As for the questions about robbing labor from solution providers and shifting the balance of power in the channel labor market, Cannone wants a little time in his new post to see how feasible these scenarios are. "It's a fair statement. However, if we can aggregate the opportunities and get off the exchange, there's enough work out there for the long haul," Cannone says. "It's a free economy, free business environment. We have no intention to hurt the channel, but bring bigger opportunities." What do you think will happen to the IT labor market over the next five years? What are your employment experiences? Send your thoughts to lwalsh@cmp.com. All submissions will be kept confidential unless otherwise specified.