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MSP staffing strategies change during a pandemic

The overall economic and employment impact of coronavirus is affecting service provider staffing -- some more than others, if at all. See why and gain tips to help with hiring.

The current coronavirus pandemic has dramatically changed the IT job market, as unemployment rates have soared, and the business landscape. Few have been left untouched -- MSP staffing and services included.

Employment in the U.S. IT sector grew by an estimated 8,500 workers in March, according to nonprofit trade association CompTIA. At the same time, 54% of solution providers have seen customers cancel or postpone spending, while 48% have had shortages of finished products, CompTIA said. Furthermore, 30% of solution providers have had customers requesting a restructuring of contracts and payment terms, and 20% saw disruptions with key partners.

It is not all bad news, however.

About 75% of tech firms have seen an increase in business, with the biggest gains in shifting operations from on-premises infrastructure or applications to the cloud (cited by 38% of respondents); communications, collaboration or A/V-related technology (37%); and cybersecurity (37%), CompTIA said.

For IT services and consulting firms like Los Angeles-based SADA Systems, it has been pretty much business as usual. The MSP isn't experiencing any staffing challenges due to the COVID-19 pandemic, and is -- in fact, hiring -- albeit at a slower rate.

Orkideh ShahidiOrkideh Shahidi

MSP staffing needs

"I have three recruiters continuously building a pipeline, so [the pandemic] is working to our advantage since we're looking to hire folks,'' said Orkideh Shahidi, vice president of people operations at SADA.

SADA even added a few cloud and data engineers over the past few weeks. Its staffing strategy is to build a conduit for new hires and have a hiring plan in place that, Shahidi said, "ensures that as we grow, we'll have staff trained and ready to go."

She credited SADA being a family-operated business and its partnership with Google as enabling her company to "expand and be in a comfortable position where we don't have to do layoffs.''

Charles WeaverCharles Weaver

Charles Weaver, CEO of the MSPAlliance, said in early April that he had spoken with a half-dozen MSP business owners and heads of firms with 50 to 80 employees. "None of them reported any layoffs or furloughs for managed services … or losing any appreciable amount of business," he said.

A smaller MSP based in Colorado, for example, experienced a 6% drop off in projects but not managed services, Weaver added. This MSP believed the project work dip was "just pauses" and customers would resume business in a month or so.

Vertical-specific MSPs -- like those that work in the hard-hit retail and hospitality markets -- are having a more difficult time adjusting, Weaver said. Decisions about layoffs and staffing all depend on how diversified an MSP's client base and services are, he said.

Furthermore, "if you're more dominant on the managed services side, you're likely to be stable,'' Weaver explained. If an MSP is more hardware-focused and doing reselling, "you're probably taking a huge hit."

Larry WalshLarry Walsh

Larry Walsh, CEO of The 2112 Group, an IT research and strategy firm, noted that smaller MSPs are struggling. "Anecdotally, we're hearing about some belt-tightening,'' he said. "There are a lot of MSPs, particularly smaller ones, that aren't cash-rich that went into this crisis feeling confident because they had secured contracts -- only to learn people are slow paying, decreasing services and walking away from their obligations."

Walsh said he believes there isn't as much of an MSP staffing issue as there is a need to even out cash flow. "Right now, weaker customers are cancelling contracts,'' he said. A recently released The 2112 Group survey found one-third of MSPs have only two months or less of cash on hand; 10%, less than a month's worth; 9%, one month; and 14%, two months.

Strategies for hiring talent

SADA has created SADA Academy and hired someone to spearhead curriculum. The plan is to bring on new college graduates or people who aren't in technology but are changing careers and train them.

Shahidi doesn't know how many people SADA will hire and put through the academy. But given the current shortage of IT talent, she said it will be worthwhile to train people "to sit on that bench at much lower compensation than if I brought in someone else from the field."

There are a lot of MSPs, particularly smaller ones, that aren't cash-rich that went into this crisis feeling confident because they had secured contracts.
Larry WalshCEO, The 2112 Group

Prior to the start of the pandemic, SADA planned to focus on diversifying staff and hiring more women. "We're very excited to be able to do that more,'' Shahidi said. "I'm not sure if there will be a change due to COVID-19, other than a bigger talent pool."

Weaver said MSPAlliance is advising members to tap into the Paycheck Protection Program to help "make sure you're solvent and keeping people on the payroll."

The economic downturns in 2001 and 2009 showed how recovery happens quickly in the IT services sector, Weaver said. "So, MSPs have to be in a position of strength to handle that.''

Tips for improving workplace culture

With 100% of its workforce and staff working remotely, managers of all teams at SADA are holding daily updates to discuss what people are working on and where they need help, Shahidi said. SADA also holds companywide events, such as video coffee breaks where people discuss tips for working at home and what to do with kids, as well as morning meditations and game nights through Google Meet.

"I have a standup [meeting] every Tuesday with my own team for happy hour after work, and we play games,'' like Jackbox Pictionary, Shahidi said. "We have a town hall with the CEO every Friday to make sure everyone understands what's going on,'' and the company produces a weekly newsletter with themes like how to make sure your workspace is ergonomic and what type of equipment you need.

Having the proper tools in place is essential, and so is constant communication, she said. It's even OK to "overcommunicate, ensuring people feel safe and are aware of everything going on."

Shahidi also advised that MSPs "allow for things above and beyond tactical tasks and allow people to be creative. Mental health is so important, so games and coffee breaks help people stay positive and productive."

Walsh said maintaining culture and connectivity has not been an issue for most MSPs. What has become an MSP staffing problem is employees maintaining a comfortable work-life balance now that everyone's working from home at all hours of day, he said.

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