The director's chair on a big-budget movie set is a unique position to occupy. While a massive roster of gaffers, set dressers, hair, make-up and costume professionals, camera operators, audio engineers, craft service personnel and, of course, performers are carrying out their individual tasks, the director somehow is controlling every detail, even if he never comes into direct contact with a particular aspect of the production. Somehow his standards are known across the set, and everyone behaves accordingly as they strive to attain his vision on the screen.
When considered from this standpoint, the hustle and bustle of a film set can be compared to a new business model within the electronic systems industry. The waning economy in the past five years has spurred the growth of a new type of labor outsourcing-one where a small systems integration firm becomes the "director" of a project, providing much of the engineering and project management, but leaving a portion of the hands-on installation work to companies specializing in that end of the business. This model is an extension of the traditional outsourcing model that had national and regional firms employing local integration companies when a project occurred outside their usual territory. Now, national installation-centric companies can provide their staffing services when and where they are needed by the prime systems contractor on a project.
Even as budgets for mega installations are growing closer to the proportions of blockbuster films, their number is actually declining, leaving many systems integration companies adrift with oversized staffs and no work to cover the overhead. As a result, many companies have cut back to key personnel-leadership, engineers and sales and project managers-roles which more often than not are handled by business-owners wearing more than one hat. This setup serves most companies well until a large project comes their way. Then they are forced to either staff up and train new people who will most likely be let go when the project is complete, or seek help elsewhere.
In response to this all-too-common conundrum, Mark Folks founded Technical Installation Personnel (TIP) in 2000. After its launch in Birmingham, AL, the company soon developed a national client base and thus moved nearer to the major hub of Atlanta, GA, settling in Alpharetta four years ago. From this base, Folks says TIP is able to service international as well as national clients. "Basically, one of our major clients can call me, and if they need help any place in the country the next day, I'll have a team of technicians on a plane first thing the next morning, if not that night," said Folks, TIP president.
Of course, only half the trouble of staffing up for projects lies in finding the actual workforce. The real problem is what makes outsourcing necessary in the first place: budgets. Labor estimation is probably the most common source of turmoil on a project of any scale, and so the new model of installation personnel outsourcing has had to address this concern with much diligence. "The biggest unknown on a project is labor, because you never know what you're going to run into," Folks observed. "We're often able to provide a turnkey labor quote to our clients so that when they go in to bid on a project, they know their labor number. We have a system of formulas that enables us to provide a number that our clients can be competitive with, and we can still be profitable."
Even with the black-and-white issues of personnel numbers and labor costs seemingly tackled by companies like TIP, there remains a trying issue which prevents many systems integrators from utilizing this business model, that of quality control. Perhaps the biggest hurdle faced by those companies considering labor outsourcing is achieving a comfort level with this type of delegation.
"There's a kind of a misconception in the subcontractor approach where many look at it as having less control because they don't have internal staff," noted Rick Landry, general manager of SPL Integrated Solutions. "I don't think that is the case. You can't control people anyway, and what we look to control is the quality, schedule and budget. Manage those things, and you'll be in control of the project."
Surely there is a mutual benefit for both contractor and subcontractor for a job well done. "Quality and control is every newcomer's issue, and we have that covered, because dependable, quality workmanship is what TIP is building our reputation and future on," Folks said. "Our motto is 'Our clients' success is our future,' and it is. We wouldn't have one return client if TIP didn't make their projects successful, and we let our clients take the credit for a project well done."
SPL is a longtime TIP client, and the companies have worked together on many large and small projects with many different types of systems. "TIP helps us to be flexible and ready to mobilize quickly on large projects, as well as small projects," Landry said. "Outsourcing labor enables us to maintain a larger volume of work, while still making it possible for us to focus on the higher-level expertise of engineering and project management. It allows us to be competitive and still maintain the quality and consistency that our clients require."
Having worked with TIP and other companies of a similar type, SPL has demonstrated success with a business model that many say is the future of the electronic systems industry. "It's beneficial to keep a focus on the higher level expertise within, and then look outside an organization for high-quality installation teams," Landry surmised. "That way, they focus on the training and the development of the hands-on installation people, and that's a good complement to our operations."
Consultant firms have also noted the benefits of these new installation-centric subcontractors. "The extremely large projects are the ones where there is an obvious need for outsourced labor," noted Scott Walker, president of Waveguide Consulting. "That way, an integration firm can keep its core intellectual property together-its engineers, project managers, lead installers, lead shop people, lead service techs-but for building 50 racks exactly the same, it's a point of strategy to look at who can build those racks more economically than trying to bring full-time employees on staff to do accomplish that task."
In order for this model to work in a bid-build environment, Walker adds, contractors need to be upfront about their outsourcing plans. "We ask in our pre-qualifications documents that any subcontractor be listed prior to bidding so we have a chance to review their qualifications as part of the award," Walker said. "The key issue for the systems integrator is partnering with an install-only company that has the same core philosophy, that can surge and bring more resources to bear quickly, and which has rigor and internal standards that meet or exceed that of the systems integrator's own internal team. Furthermore, in a consultant spec scenario, the prime systems integrator and their subcontracted, install-only firm both need to be very fluent in what the consultant is asking for and understand the testing requirements of each particular contract."
On many projects, a consultant may limit just how much of the installation work is completed by an outsourced company. This is as much for the benefit of the end-user as it is for the prime contractor and the consultant. "Clients want one single point of contact after an installation is complete," Walker said. "One of the downsides against outsourcing is who really owns the job at the end of the day. You want to avoid finger pointing if the prime contractor only did a small portion of the physical work."
This division of responsibility should be easy to attain, as reliable installation-only companies are not there to take long-term service agreements away from their clients. But there is one responsibility the outsourced company may be able to take off the hands of the prime contractor, and that's licensing and certification. "Outsourcing labor provides a systems integration company a benefit in the long run, because the company they outsource to certainly has the proper knowledge of local building permits and licensing issues," said Chuck Wilson, NSCA executive director. "Nobody knows the local environment better."
The future of the industry seems to hang in the balance as many systems integration companies are transitioning to a model where they achieve more volume with a smaller staff. That means these installation-only companies will likely flourish in the years ahead.
"We want financially healthy systems integrators to be around to bid on big jobs," Walker said. "It can be very difficult to manage cash-flow and credit-hold issues and payroll and all that when you're having to constantly grow and shrink the size of your staff. As a result, I think there will be a greater and greater role for outsourcing companies going forward."
For its part, TIP is ready for action. "We want to build the relationships with contractors and consultants around the country, and we want all of them to look at a business plan using a technical services company, whether it's TIP or somebody else, because it's the smart thing to do going forward and it's going to help companies' margins annually," Folks said. "It's no longer important to be the biggest company with the most vans outside and 70 people in your shop, because the client doesn't care. The client cares about cost and the quality of the system and installation. We've proven over and over that we can provide that."
SPL Integration Solutions...www.splis.com
TIP...www.tipinstall.com
