It’s counterintuitive. As an IT firm, aren’t you taking away from your own professional services utilization when you subcontract or refer services? A solid partnering strategy will actually improve utilization. Here are five ways IT providers improve their own professional services utilization using subcontractors and referral partners.
More Sales With a Broader Portfolio
Clients often want complete solutions and choose go-to IT partners that solve their entire problem.
But growing tech complexity means an increasing number of projects that include some new niche technology. You can’t staff for every new product out there, so you may be missing out on opportunities where you have gaps in your services.
Gaps in service offerings definitely impact services sales for your core competencies, and a lower services utilization follows. We can expect more gaps to emerge with the pace of change in technology. Specialized IT contractor partners help you fill those gaps.
Indirect Services Demand
A bigger, more complex solution naturally requires more services to implement and support. Subcontractor services don’t count toward employee utilization, but they can create additional services for their teams.
Project management services are a good example of this. Subcontracted services add to the project scope. Project managers now have to coordinate additional roles and activities. In fact, it’s an exponential increase in communications as the project team gets bigger. So the incremental project management services can be significant as the project complexity grows.
Your technical teams may also get additional work within their domains. Existing systems and software may need to be updated to work with new solutions.
The network and security disciplines are often impacted by changes to the rest of the IT stack. Whether it’s a software or hardware project, there tends to be a need to connect and secure the additional pieces. The network and security teams need to integrate the changes into the complete architecture.
Eliminate Bench Time
High billable professional services utilization depends on more than a large volume of work. You need a large volume of work for each
skillset. The problem is every new competency comes with non-billable overhead – initial training, lab time, certification, and continuing education to stay current. Not to mention the management overhead, expenses for training and labs, and non-billable work to over deliver for your first clients.
In building practices, I found that the first jobs for a new service are often loss leaders. The team has not yet figured out how to deliver
efficiently. They need to create best practices and deliverables from scratch. The technology is often immature. You usually can’t bill for the OJT and need to look at it as a practice investment.
The utilization penalty is even worse if you have to hire a new FTE for a niche technology. They need ramp up time, and it takes a while to build sales and backlog for their specialized skills.
Trusted IT contractor partners allow you to offer new services – profitably – without the utilization hit while you ramp up non-core skillsets. Remember that contractor relationships don’t have to be permanent. You can bring those services in-house as your sales pipeline grows.
Add Peak Capacity
Any practice has ebb and flow cycles. These can really kill professional services utilization. The smaller the practice, the more acute these cycles are. If you turn away work during the feast period, you are hurting future utilization. The current opportunity and any future work for that client may never come back.
IT contractors allow you to staff for the low seasons while having capacity to deliver during the peak seasons. And unlike employees, you only pay your partners when they are generating revenue for you.
Don’t forget the mutual services opportunities from the right partnerships. Even a simple referral relationship can build future business. Anyone in sales knows the value of a personal referral network. This can also extend to B2B relationships. Build a network of partners before you need them, so you can access them when you have an opportunity and receive referrals from them.
There is new responsibility that comes with partnerships. If you want to grow with IT partners, then you also need to be prepared to take on a broader scope. As scope increases, the complexity and risk is greater, and so is the need for really good practice management and project management. But so is the value to the client and the potential profitability.