Recruiting and managing software and IT staff through vendor partners is meant to bring relief from tedious pre-screening and hiring processes, but it can be a double-edged sword, if not done right. Companies tend to struggle with choosing the optimum number of staffing vendors they should have on the preferred vendor list. The standard dilemma: one vendor or ten? When it comes to IT staff augmentation, the answer, as we all know, is a frustratingly simple “it depends.”
If you’ve ever created a decent size RFP, RFI, or RFQ, you’ve likely added a dozen staffing agencies to your vendor list. Initially, this seems like a quick solution to your IT staffing needs. Should you give yourself a pat on the back? But soon, you might find yourself puzzled as some, or most, of these vendors stop responding, becoming just a dead weight on your list.
You might wonder why. It’s easy to think, “It’s not me, it’s them.” And sometimes, that is true. However, more often than not, the issue is on your end!
Let’s imagine you’re aiming to hire ten data engineers this year. You have 10 staffing vendors on your list, and you’ve asked all of them to work on all of your open roles. Assuming all vendors are equally good, committed and do a decent job for you, each gets a mere one placement a year from their efforts or 10% slice of the pie for 100% effort. This approach might appear fair, but it leads to a significant problem: the potential reward for each vendor is too low.
Put another way, to place one person on your team, each of your IT staffing vendors will need to respond to all 10 requirements, which usually means they need to submit at least 3 pre-vetted candidates per position. That, in turn, will require screening anywhere between 7 to 9 candidates for quality submissions, or a total of 70-90 pre-screens—just to fill one role with your team. This excessive workload with minimal payoff can easily lead to drop-off: vendors prioritize clients who offer more value. Surprised?
You don’t need a lot of industry insights to understand that a long vendor list might not be the best value proposition for your staffing partners. You can also think about it this way—if you don’t give your 10 vendors enough business, you become a low-potential client and represent just a tiny bit of their overall book of business, so, in essence, you become a non-core client.
Yet, there is another issue associated with having too many staffing vendors – they will all ask for your time and attention in return for their efforts. Think of all the resumes that will need to be reviewed, multiple interviews scheduled, technical assignments assessed, and feedback required. This isn’t just a minor inconvenience. It’s a black hole sucking in your technical team’s time. Time that could be spent on what really matters: your business’s core. It’s easy to underestimate the cost of managing too many vendors, but it’s there, hidden in plain sight, eating away at your team’s productivity.
Instead of spreading yourself thin, consider focusing your energy on a select few vendors.
Tweak that pie chart above just a bit to achieve very different results. Instead of 10 slices for ten vendors, picture just two. Two big, dedicated, and motivated vendors ready to support your hiring needs on a short notice. It changes the game for the staffing agencies dramatically. Each now has a bigger stake, a real reason to roll up their sleeves and dive deep into learning your business and figuring out how to succeed long-term.
But how many vendors would be ideal?
Depending on your company’s size and needs, you are in the best position to determine how many vendors you actually need. Our advice is that it’s better to start with fewer vendors on the list and add more if necessary. Casting a wide net and doing a lot of work upfront only to see them drop off over time if not enough opportunity is available to them are likely to dent your reputation with vendors and candidates.
Exclusivity: Should you ever only have one IT staffing vendor?
The answer is a resounding “yes”… under certain circumstances. Firstly, you should give exclusivity if your goal is to build the entire team and have the partner vendor manage it. Nearshore staff augmentation works best with one vendor/partner. Having engineers from more than one vendor on that team will not work, as it is not just finding suitable talent and managing them. It also involves vetting and testing them, seeing if they can fit into the North American work culture, as well as work together as a unit, etc. Essentially, it is ensuring team cohesion, which cannot be achieved by relying on more than one vendor.
Secondly, you should also have one vendor if you have a trusted partner with a proven track record and your volume of search requirements represents a significant part of their overall book of business. Say, upwards of 5% will ensure that you get special treatment from the vendor. Personal relationships, trust, understanding of what worked in the past, what kind of tech professionals fit into your team environment, and what your team needs to succeed going forward—these are all precious qualities that you can count on if you choose to work with the right partner.
The DevEngine Advantage: Your Bridge to LATAM Nearshoring Success
At DevEngine, we understand the complexities of LATAM nearshoring. We’re not just another vendor; we’re your trusted partner, having a presence in both Latin and North America, committed to building your team. With a deep understanding of the region’s talent landscape and a proven track record of success, we offer:
Choosing the right number of IT staffing vendors is a strategic decision, not a one-size-fits-all formula. Consider your specific needs, company size, and desired level of exclusivity. Start small, build meaningful partnerships, pivot if necessary, and remember: sometimes, less is truly more.
Ready to unlock the potential of LATAM nearshoring? Contact DevEngine to start a conversation.