After an unsuccessful attempt in the fall of 1998 to outsource the management of its contract labor hiring, Xerox last year turned to an Internet-based service that standardizes the way the company requisitions, pays and evaluates its contingent workforce.
The Stamford, Conn.-based business supplies and services vendor decided to implement online procurement software built by Lake Success, N.Y.-based White Amber Inc. as an application service provider (ASP) service, says Aqua Porter, Xerox's manager in charge of labor procurement.
With the service, the company was able to improve its hiring processes and standardize job descriptions and the rates it paid for equivalent jobs in 3,000 local job markets. In addition, Porter says, the system gives hiring managers new analysis tools that enable them to calculate their spending and evaluate the performance of vendors and individual hires. Now, she says, "Xerox thinks we're paying the right price for the right people."
According to Larry Helft, White Amber's president and chief operating officer, the company's Internet-based ASP approach is a big benefit to IT organizations. White Amber places a minimal burden on IT because all the people involved in contingent staffing at both the companies that supply labor and at customer sites only need a browser to access the system.
Helft says IT gets most involved in setting up a workflow that allows the requisitions, hiring data and payment data to flow smoothly through the customer approval process and out to White Amber.
Christopher Boone, an analyst at Framingham, Mass.-based market researcher International Data Corp., says White Amber brings several benefits to the table. For one, he says, it goes beyond being a pure application to provide a better methodology for managing contingent workers than most companies' current manual processes do. Second, White Amber is vendor-neutral it doesn't supply contract labor itself so a customer's existing suppliers aren't shut out of the system.
Porter says Xerox is indeed experiencing smoother processes for requisitioning and hiring contingent staff. Xerox's accounting department also benefits, she says, because White Amber consolidates a month's invoices for all labor suppliers into one bill that's delivered to the company via an existing electronic data interchange setup. (White Amber says it has no plans to integrate its hosted system with customers' back-end accounting systems.)Although Xerox's procurement department initiated the search for an Internet-based staffing system, IT played an important role in choosing the winning vendor, says Porter. The department evaluated the impact on Xerox's network infrastructure, and IT expertise also was needed in investigating White Amber's security and disaster recovery plans, says Porter.
Xerox communications manager Carla Lorek says her IT department's evaluation strategy relied heavily on demonstrations of dummy transactions moving through the White Amber system, with four machines set up to simulate the different roles people at Xerox would assume when hiring and managing contingent staff.
The IT department also sped up a planned upgrade to Internet Explorer 5.0 for White Amber users so encryption and security requirements would be met.
Helft says the next step for White Amber is to globalize its ASP offering to accommodate the needs of its Global 1,000 target customers.
Porter, however, says she would also like to see improvements to the system's reporting features. Previously, Xerox's front-line managers never had in-depth analytics about labor suppliers and the contractors they used; any additional information of this type could be extremely valuable, she says.
Johnson is a Computerworld contributing writer in Seattle.
White Amber's success depends on the continuing willingness of labor suppliers to work with them as the middleman. It may also face bigger competitors going forward.
So far, White Amber has cooperation from labor suppliers, says Christopher Boone, a senior analyst at IDC. But big companies like Manpower Inc. in Milwaukee and Kelly Services Inc. in Troy, Mich., may get stubborn about having a middleman between them and their customers, he says. If staffing companies see an advantage to owning the hiring and employee evaluation process, they could set up their own procurement services. White Amber may also face increasing competition from existing human resources software vendors.
Boone says the market for online labor procurement services in the U.S. is small but growing rapidly. Last year, revenues for services organizations (excluding software vendors) were approximately $80 million. Boone says he expects revenues to grow to US$420 million by 2005.
The following are two of White Amber's competitors in the market:
On May 31, PeopleSoft bought SkillsVillage Inc. and renamed it PeopleSoft Services Procurement. Boone says the acquisition proves that large human resources software vendors are beginning to understand that their customers need to manage their contingent workforces. PeopleSoft's offering has many features similar to those of White Amber, including the ability to work with existing labor suppliers, modules that handle payments to contingent staff, and reporting and analysis tools for understanding costs and performance.
EWork's ProSource service parallels White Amber's, providing an online service for finding, qualifying, hiring and paying contingent staff. Many features are the same, such as consolidating all contractors' payments into a single customer invoice. Like White Amber, eWork partners with labor vendors. But the company also runs an online exchange through which independent contractors can offer services to eWork customers.