Statements of Work (SoWs) have been around since Noah built the ark. Yet the ever-evolving nature of the market has led to a growing gap between the classic agent model and modern-day consulting.
As the government begins squeezing the private sector with IR35 legislation, the timing is ripe for recruitment companies to shift the way they operate and start sharing the risk of service delivery with their customers. SoWs are the answer.
Looking to future-proof your contract revenue, or develop a secure model for moving into this market? You need to know about SoWs.
Traditional vs consultancy
Too many agencies are still using a traditional time-and-materials basis (signed timesheets) to approve work and pay for contractor time. SoWs, on the other hand, are based on milestones and defined deliverables – much like a consultancy.
SoWs are a great resolution for the customer, who often gets ripped off by consultancies. Senior technical people may scope out their work but, more often than not, fresh grads straight out of the training camp are delivering it.
Recruitment agencies, on the other hand, can draw on best-in-class contractors as standard. This allows for the quality to be significantly better and the price considerably cheaper than if the customer were to go to a consultancy firm.
Everyone wins. The only challenge is moving the conversation away from the traditional approach clients have come to expect…
Starting the conversation
The tricky part is recognising the ideal opening to trigger a SoW conversation. It is, of course, only appropriate for contract work. If you’re happy being a permanent recruiter, this isn’t of interest to you. But if you’re currently (or looking to) generate revenue from freelance talent, a SoW is the thing to be talking about with your customers.
There are plenty of reasons why a business would go down this route, but they typically fall into the following categories:
- Trying to save money – through automating and reducing operational costs
- Trying to make money – through developing a new concept
- Compliance reasons
- Trying to fill a gap – although most contracts fall into the first three brackets.
Historically, the majority of SoW agreements are handled in the tech arena. However, SoWs are going to creep into industries elsewhere as consultancy-style services gain popularity. Again, this move coincides with the push to IR35 compliance. Clients are looking for a guarantee of a fixed piece of work, with no supervision, and to pay on an outcome.
Making SoWs work for you
When introducing SoWs, consider how to scope and price correctly, and how to sell, manage and deliver a solution to the customer to avoid scope creep or missed milestones. This can be mapped out with your client on projects they don’t have the resource or interest in completing in-house.
As a recruitment agency, therefore, you need to become an agile project manager through delegating and segmenting pieces of work. It’s slightly more expensive than solely having a contractor working on-site, but it negates the need for supervision and control – everything is about delivering against the project plan.
Embrace the change
You need to be on your front foot with this. Open your eyes and meet other people to see what’s happening in the world right now. Don’t be a victim of these changes – become someone who thrives through change. Learn, and broaden your network.
Contracting isn’t a dark art. It’s actually very simple once you understand it. SoWs can give you the security to make that move and build your contract revenue. Get ahead now – today’s opportunity is tomorrow’s necessity.
In the meantime, if you would like support in setting up SoW agreements, email email@example.com