A Case Study on the
Management of Outsourced Resources
And How to Build the Virtual Business Enterprise

By Barry Allen, CEO International FieldWorks, Inc.

A study by Accenture indicated that 95 percent of business leaders believe that entrepreneurship is important to a company's success. How can one who wishes to be an entrepreneur start a successful business enterprise without a huge bankroll or a bevy of bountiful capitalists at their beck and call?

Instead of leasing or buying a suite of offices and hiring receptionists, secretaries, managers, clerks and bookkeepers, why not retain the services that you need when you need them? Whether you are setting up that new entrepreneurial enterprise, managing outsourced resources or sending your employees home to work, the answer is much the same: the virtual business model.

There is some confusion about managing outsourced resources, telecommuting and the virtual business enterprise. There is a difference. It has to do with definition.

•  Telecommuting is a term used when the discussion involves employees rather than independent contractors and those employees generally do not work in the corporate brick and mortar.

•  Outsourcing is a term used when the business contracts for services that are not within its core competency.

•  The virtual business enterprise is one that is not held together by brick and mortar but relies on contracting all its services and whose expertise is in the management of those services.

The key is "the management of resources (employees or outside contractors) to achieve the best results".

This article will not include an in-depth look at the legalities in managing employees other than to state that when considering telecommuting as an alternative, the issue of management of off-premise employees must be considered. The legal ramification of managing employees is quite different than the management of contractors.

An example of a virtual business enterprise is International FieldWorks, Inc. which embarked on the virtual business model in 1998 when the business was created.

Pauline Field, the Chief Operating Officer, a management consultant with many years experience, said that she didn't want a traditional consulting firm model where there would be a number of employees on the payroll waiting for the next assignment. Then the next person up was sent to the client, even if they had no industry experience. That was an anathema to the business she wanted to build: one that would be based on true, verifiable value for the client.

The emphasis was on providing the best, knowledgeable talent for the client. How to do that was the first problem and how to keep the payroll at a minimum between assignments was the second.

The office was located in the hills above Los Angeles , proximate to Burbank Airport, downtown Los Angeles and within two miles of the California freeway system.

The first problem was actually two-fold. How to locate qualified talent and once located how to 'catalog' them. Networking was the answer. As both of the principals of the company had been networking for years with community cross-sectional groups and with industry specific verticals, they had amassed a critical number of contacts, one of which was the developer of recruiting software. The developer was able to quote on a custom redesign of the software to allow the company to use it to build a contact database with the necessary search fields, the digital attachment of resumes and case studies as well as being web enabled.

Networking also gave the company secretarial support, a web host and designer, sales support, researchers and when the time came to scan 400 resumes, several home based support staff to do the necessary work and enter the data into the website.

The infrastructure allows for a distributed workflow that uses the skills and disciplines of the most qualified people wherever they may be located. Access by phone and email is important. Even more important is that the contractor is responsive, checking email and voicemail frequently. Building depth in the resources is a must as a particular person may not be able to complete a project within the time frame and another resource must be used.

Connectivity, bandwidth, speed and ISPs (Internet service Providers) are important issues. ISPs that do not allow attachments, convert text into unreadable attachments or restrict delivery of mail are barriers to maintaining communications with contractors. Speed and band-with are essential and we recommend that our service providers have DSL or cable modems at a minimum. The future calls for the use of two-way satellite communications service so resources that are 'off-grid' can provide services to the company. Presently connectivity may dictate who are the available resources.

The following are off premise services used by International FieldWorks, Inc.:

contracts lawyer, graphics design, printing, secretarial, public relations, proofreading, webmaster, reception and telephone answering, accounting, tax preparation, bookkeeping, payroll, sales, sales support, marketing, marketing support, mailing, billing, report writing, proposal writing, research, reference checking, data mining, software development, recruiting, telesales, IT, and more.

The second problem, keeping payroll at a minimum during slack periods has been answered. Networking and referrals found many excellent independent contractor resources for International FieldWorks, Inc. The company manages those resources on a results oriented, contractual basis. There are only four employees, the CEO, the COO and two administrative assistants who work out of the office near Los Angeles .

The company prefers working with independent contractors who have their own corporation (this precludes the necessity of providing an IRS form 1099 for services over $600) and they are encouraged to add other customers to their list of clients and work-load (which alleviates some of the concern that the contractor is really an employee).

It is important that the infrastructure 'staff' have multiple phone trunks, a fax machine, an up-to-date computer, a printer and whatever additional tools for their particular discipline. The consultants who are assigned to projects should have a notebook computer and Internet availability while traveling. In some cases the company has provided equipment for the use of the resource. Keep in mind that whenever equipment is provided, a delivery receipt is obtained that protects the company in case of bankruptcy. Insurance for off-premise property is also purchased.

The contracts used are updated annually by the contracts attorney. Contracts include a section that spells out the scope of the activity in detail, the results wanted and the time frame for successful conclusion of the project. The contract covers confidentiality.

This allows International FieldWorks, Inc. to concentrate on the results rather than the time committed or, best efforts.

Sometimes it is necessary to build teams that need to collaborate on projects and the technology available today makes that possible, with improvements in access and security coming out continuously.

Expansion of the outsourced service model will include call centers and help desks. With the tools such as automated call distribution, calls can be transferred to the next available, knowledgeable person, anywhere. There will be no restriction on where the customer service representative lives or if they are handicapped. Progress can be monitored and results displayed to the entire team as events occur.

Whenever the subject of people working off-site is discussed the topic of security rises to the top. How will the company protect proprietary data? How can the company prevent unauthorized access to their confidential data? The answer is, "What are you doing now?" Are you using biometric devices, is there a security plan for information, are you password protected (at a minimum), do you shred documents, do you label confidential material (trade-secrets) as such and do you lock up data and log-off computers at night? (The foregoing is at a minimum and is not designed to be all-inclusive). What ever is done on-premises can be done off premise. It may mean buying shredders, file cabinets and adding biometric readers.

Socialization, gatherings and newsletters are an important ingredient in working with off site resources. Contractors are encouraged to network (to find more work) and to socialize. Periodically International FieldWorks, Inc. has a social gathering to which 'staff' and spouses are invited. This helps in team management.

A plan must be in place for the virtual business to be successful as well as a plan on managing those outsourced resources.

A moral benefit is that by using outsourced workers, you may be helping someone for whom travel and egress is a burden - as all facilities are not ADA compliant.

Change does not come without effort, so before you measure the results, you must train for change. Moving from the time-card mentality to one of results orientation is difficult for middle managers that value their stewardship by the number of heads they see when they peer out their office window.

In summary, the solution to controlling the expenses of business growth is the use of the virtual business model.

•  Reduce non-productive overhead

•  Keep good workers that can work from home

•  Avoid some ADA compliance issues

•  Control expenses

Decide on the results you want. How long it will take to get you there. Develop a plan to include the budget, resources and equipment you will need. Then, you can use that plan to manage by results, to get those results.

About the author

Barry Allen is the C.E.O. of International FieldWorks, Inc., a management consultancy. His specialties are in business management, law and technology. Allen's background includes the startup, turnaround and management of businesses in Michigan and California . For many years he was the Deputy Director of Civil Defense in Southfield , Michigan , while owning, operating and building a multi-million dollar Physical and Electronic Security corporation.

As the youngest Private Investigator in the state of Michigan , he built his company from a startup to an enterprise with over a thousand employees, and was the first to computerize and to sell to his competitors. He designed industry-wide training and education programs, set up legislation and designed both workers compensation and liability insurance programs. He was elected to the Michigan Private Investigators trade association and served on that Board and as an officer for over 10 years. He created the first national trade association for the physical security industry and became a lobbyist for the industry and was also a charter member of the Michigan State Police Security Advisory Board.

Barry managed a Los Angeles business talk radio station, designing marketing programs that built sales by 300% over a six-month period. During which time he was an on-air talent for business talk radio. He located niche markets and methods to approach them for other media and is a sought after resource for editors and writers of the major news media in Southern California .

In 1996 he formed a 501(c)3 educational corporation designed to teach businesses about the value in government contracting and still serves on that Board.

He has had many technical and business management articles published and has been included as a reference in books on networking, law, training and security. While living in Michigan he was a chairman of a Governors Task Force for Small Business. Since living in Southern California he was a member of the Advisory Board of Los Angeles County Office of Small Business. Allen attended Wayne State University in Detroit and the Detroit College of Law.

Contact Information:

Name Barry Allen
Phone: 818 243 4864
Email: ba@fieldworks.net