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Remote *and* Contract: Two Great Ideas that are Greater Together

Wired Magazine recently ran a piece on telecommuting. There are now very compelling reasons for U.S. companies to embrace telecommuting. Recent social survey research supports the idea that people who telecommute are more productive, happy and stable employees. The current energy and environmental crisis seems to cry out for alternatives to costly, gas-guzzling commutes and urban congestion. It costs the average company $15,000 per year to outfit an employee with a cubicle. Internet Web 2.0 collaborative technology has matured to bridge the work productivity gap between the office and home. For many IT workers in particular working at home is just as convenient if not more so than working at the office.1

In this article I would like to explore how telecommuting, or remote work, can leverage a company’s use of IT contract workers. IT contractors are individuals who provide services similar to employees in an IT department, but are not direct employees of the client company and are retained on a transient and contingent basis, bound to the client and usually a third party broker firm by contract. Contractors either are employees of their own corporation (referred to as 1099 contractors) or are employees of third party services firm (referred to as W-2 contractors). They are paid either hourly or by annual salary. Obviously some contract workers, such as project managers, require daily face time with employees and may not be able to regularly telecommute. My central focus in this article is on IT workers whose important tasks can all be accomplished via networked workstation/laptop. Developers, QA staff, system administrators, and database administrators are all probably strong candidates for telework. Many workers outside of the IT department may be equally, strongly leveraged by remote work and flexible time billing.2 I believe that telecommuting can help improve the quality of contractor’s work, and lower the cost of IT contract workers.

Table of Contents

U.S Contractors and Offshore Developers: Helping Corporate America to Adapt

Contract workers fill many specialized roles and often provide a better solution than hiring employees:

  • Talent exactly when you need it – an advantage similar to using just-in-time (JIT) inventory ; release the talent when no longer needed.
  • Contractors can generally be found without weeks or months of interview and recruitment effort.
  • The company gets highly trained, senior-level niche specialists with talents that may be rare in the mainstream workplace. They will not need to be trained. Contractors are often ready to begin work within the first day of the contract. There should not be substantial ramp up time. A contractor directs her skills to the completion of specific tasks without reciprocal career path/promotion/benefits expectations.
  • Contractors are usually excellent communicators; they need to be, due to the constant need to market themselves to new clients.
  • Because the contractor’s billable time is generally tied to a transient project, she does not suffer the lost productivity  that an employee can experience during a reorganization or between projects.
  • Contractors are often made more productive by being exempted from routine meetings, paperwork, and other potential time-wasters.
  • Using contractors can have tax and accounting advantages.

Offshore Teams, Nothing New


The recent explosion in IT offshore development seems an evolutionary rather than revolutionary step in the advancement of flexibility and modularity in the IT workplace. Just as IT contractors are plug-in workers, the outsourced team is a modular, non-local team that serves as a decentralized adjunct to the central and local IT team. Outsourcing companies, in theory at least, can be swapped in and out of projects as easily as contractors can be. Outsourcing offers cost and technical advantages over full-time employees. Both individual IT contractors and outsourced IT teams help companies to decentralize and quickly adapt through the boons of flexibility, JIT satisfaction of project requirements, lower cost, and ability to select specialized teams through a global pool of talent.

IT Remote Contracting: An even Greater Opportunity

U.S. companies’ increased use of offshore teams has had the positive effect of increasing tolerance for remote work; every developer in Bangalore is a telecommuter. This has implications for the U.S. contractor. Using a remote contractor (telecommuting most of the time, but still located in the United States) has benefits over and above using an on-site contractor.

To see why, examine how many companies treat contractors. Many U.S. corporations have not yet broken with the full-time employment paradigm born in the factories of the late nineteenth century and modified later by successive ideas about labor (but not abandoned). Companies bring in contractors but then they become de facto “quasi-employees.” The contractor is often brought in on a contract for several months (but stints of two or even five years are not uncommon). The contractor is expected to be full-time (40 hour workweek) and exclusive with her client. The company requires the contractor to be on-site, which sharply limits the pool of available talent to those people who are local, or flexible enough for 100% travel/relocate.The company allows the contractor time off for vacation, sick days, etc. much as it does for an employee, but would frown on the contractor taking six or eight weeks off, then coming back, even if there were a lull in the project.

To use contractors to their full potential, we might consider breaking completely with the Employee model that governs hiring practices. In this section I will talk about two innovations that can, together or separately, enhance the value of the contract worker by empowering us to issue that challenge. Those transformative tools are

Opportunities using Remote Contract Workers with fixed 40-hour Weeks

What is the difference between an onsite contractor and one working remote? Chances are, the one working remote is a stronger match for the project, more experienced, and happier working for you. The on-site travel consultant is probably under a great deal of pressure due to his hotel room lifestyle, and may just be the guy desperate enough to take the gig, not the best man in the field. Don’t underestimate the difficulty that contractors face when they accept a travel contract requiring on-site time. On-site contractors face family and personal stress that can make any long-term assignment difficult to consider. But if you want an experienced specialist with an unusual skillset, there is a good chance you will not find the best person in your locality. And senior contractors are more likely to have partners, children and a stable home. Somewhere else.

Contractors who can work remote no longer face unattractive and difficult decisions, such as being alienated from their partner and children. They can evaluate a contract based purely on the merits of the work. You have a better chance in this case of attracting senior,  elite contractors. And of course that is what you want, not junior-level people. Once remote work becomes a possibility, the world is flattened. The distance contract is just as convenient as the local one, and the contractor can accept any rate that would be competitive within her local market. Companies which allow remote work can now compete realistically for a much larger pool of high-value talent. The field is thereby leveled for both contractors and client companies.

If we are willing now to work with offshore teams on the other side of the world, why not also allow your contractors to telecommute?

Opportunities using Remote Contract Workers with Flextime

Using remote contract workers gives the corporation greater range in hiring, and faster satisfaction of project requirements. Telecommuting can have further positive ramifications. Telecommuting services the post-industrial values of adaptability and modularity.

If the clients wish, a remote contract worker, working from her home, is potentially free to assume several clients and to assemble her forty hours of work each week from a variety of sources, charging each less than forty hours thereby reducing the company’s cost. One client may only require 5 hours a week of work, another may require 30 hours. The telecommuting remote contractor can, especially when working with other flexible remote workers in a team, provide very solid coverage at much lower cost to the client. The telecommuting contractor can potentially develop a portfolio of clients, reducing costs to each client while gaining greater security for the contractor (no longer dependent on only a single business relationship).  Because the contractor is no longer dependent on a single client, she can also take on very brief contract service opportunities (e.g. lasting only one or two weeks). The current traditional 40-hour work week contract model would prevent this, since to “start” a new contract she would have to “end” the old one. Telecommuting has the potential to replace synchronous and inflexible scheduling with asynchronous, adaptable work schedules. Another advantage is that the remote contractor, working at home, can better balance family and work; this flexibility can make it easier to work weekends and evenings – to move from 9-5 to 24×7 (increasingly important due to coordination with offshore teams in different timezones).

Telecommuting can allow a much finer, more granular control over the billable hours that a project generates; a sharp, targeted, individualized focus that seems common to many 21st century business paradigms (e.g. crowdsourcing , the Long Tail business model). Contract workers, depending on how they are used, represent increasing degrees of time granularity:

  1. Full-time employees. Least granular. Full-time employees are hired, implicitly, with no termination date.  Paid an annual salary with implicit commitment to a 40 hour workweek, unpaid overtime. Are often assigned to a single department or project.
  2. Traditional hourly contractors, on-site or remote. More granular yet. In a business relationship from one month up to possibly more than 5 years. Still often assigned to a single department. 40 hour workweek regardless of actual tasks. Not paid for hours not worked.
  3. Remote hourly contractor with flextime. Very fine granularity. Can be brought on and off project discontinuously. Take weeks or months off, then resume. Paid 1 to 40+ hours a week. Can be most effectively used as resource pools for the entire company, not confined to a department. Not paid for hours not worked.

The U.S. Contractor Complements the Offshore Team

Remote contract workers in the U.S. have many advantages over offshore outsourcing, but ones which complement and strengthen offshore relationships. The growth of offshore development teams has paved the way for more acceptance of telecommuting by U.S. companies; U.S. telecommuting staff can in turn help U.S. companies move toward mature outsourcing strategies. To illustrate how, we might look at the strengths and weakness of both U.S. contractors and Indian outsourced teams.3

  • Training: U.S. universities continue to be the best in the world. A U.S. contractor is more likely to have a U.S. education and consistent, standardized training.
  • Seniority and Experience: I deal heavily with offshore. I have, sadly, found that offshore development teams seem to be staffed heavily with junior and trainee-level personnel. When the going gets tough, you want a senior-level technician. When you bring on a U.S. contractor, you are interviewing her directly, and hiring that person – not a large, faceless team. U.S. contractors know that they must fly based on their CV alone; the IT people I have met as contractors have had as a minimum five years of experience. Most consultants are closer to 7-15 years of experience.
  • Communication skills and Corporate Culture: U.S. contractors are likely to have a stronger command of spoken and written English, and understanding of the American work ethic and corporate culture.
  • Infrastructure: The U.S.-based remote contractor will have excellent Internet broadband access. The U.S. contractor also has access to the best hardware at reasonable prices. Anecdotal evidence suggests that Indian network reliability can be an issue even in major IT cities such as Bangalore, and computer hardware is consistently more expensive and more difficult to obtain than in the U.S. The U.S. contractor is more likely to have the tools she needs to do her job.
  • Ease of travel to client: The U.S.-based remote contractor can still travel at relatively low cost to the client site if absolutely needed, without visa. Getting an offshore resource from India can be much more complicated.
  • Personalization: When companies enter into an offshore relationship, they generally form a partnership with a company and inherit teams that the offshore company already have active. Many of the members of these teams are people you might rarely, if ever, meet. Have you had an opportunity to interview all the offshore team members? On the other hand, when hiring a U.S. contractor, you are hiring an individual whom you have interviewed and with whom you have a daily, direct relationship.
  • Geek Factor: U.S. contractors are often strongly interested in technology and their work at a personal level. They become contractors because they  love technical problems and want to be immersed in interesting and challenging environments. This can translate into brilliance at solving problems and innovating solutions. Do you see the same drive and inspired motivation from offshore teams?
  • Cost: Indian and Chinese offshore resources are clearly less expensive per person than the U.S.-based contractor. However, the client company’s money is only well spent if you are acquiring the services you need. Are you truly getting the talented, innovative and driven personnel you need from the offshore team?

The contractor may be used in tandem with offshore teams for good creative synergy. The U.S. senior consultant can provide oversight, imagination, communication and leadership in projects, and be the lead in resolving critical issues that might require on-site travel on very short notice. The offshore team can be used for more routine, junior-level (but time consuming) tasks. Offloading as many of the easier tasks to offshore reduces hours billable by the senior consultant. The U.S. contractor also backs the project team up when there are problems with the offshore team.

Challenges

Using remote flextime contractors effectively requires the same changes to corporate culture required by adoption of telecommuting by employees, and use of offshore teams.

  • There needs to be effective and constant communication between client company management and the contractor. Contractors should be given tangible goals and expectations based upon completion of tasks. Contractors need to be proactive in communicating their needs to client management. Remote contractors cannot be passive or timid. Client management cannot be aloof. You need to be talking for this to work, and both sides need to be able to initiate the conversation.
  • Effective use of Web 2.0 collaborative technology within the organization.
  • Better, more reliable cloud computing business tools need to come online.
  • Videoconferencing needs to be used much more than at present. This can do much to build trust of remote workers.
  • Flextime contractors should be organized into teams so that fluctuating workloads can be distributed more evenly among contractors. This metaphorically mirrors the multi-processor computing environment, where processing load is distributed among multiple CPU’s for better performance. Teams can be managed either by consulting company or by the client.
  • Better Internet security. If you lose the network you lose the cloud; lose the cloud and you lose your telework and offshore staff. Government can play a role in funding Internet secure infrastructure, mandating standards and investigating threats to global networks.

Acknowledgements

I would like to thank Neil Green of Predictive Technologies for chats that we have had, that in turn led to some of the ideas in this essay.

Footnotes

  1. As an example, all contractors and employees at my current client (a Chicago ecommerce company) work via laptops on a WiFi network. Work from home (WFH) is secured by Cisco VPN and SecurID. Blackberry mobiles proliferate. One of my coworkers lives in California and works permanently remote, with rare flights into Chicago for face time. A key developer on my project lives in Israel and only flies to Chicago occasionally. Most of our developers are offshore partners who live and work in Bangalore. Local staff send out WFH emails for a variety of reasons; feeling sick, traffic congestion, family responsibilities or having had to work late the night before. When we are at the office, we often undock our laptop from our cubicle and move to a lightly trafficked lunch or conference room to escape from distractions. WiFi has freed us from the cubicle even in the workplace. Developers sit on the floor outside conference rooms with laptop, working while waiting for a previous meeting to end and the room to clear. Laptops have freed us from some of the constraints of locality. []
  2. a compelling case for this is made by Timothy Ferriss in The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich []
  3. I specifically mention Indian outsourcing because my own experience has solely been with Bangalore-based teams. []

2 Trackbacks/Pingbacks

  1. […] between the evolving world of contract work and that of open source. Like open source software, the flextime remote contractor […]

  2. […] Cagle on a few of the above points, I strongly agree with his central arguments. IT contractors, as I have argued elsewhere, supply better information technology solutions to companies with far lower costs than going the […]

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