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Buyer Interest in Woman- and Minority-Owned Staffing Firms Appears to Be Rising

March 8, 2010
Related Topics: Contingent Staffing, Diversity, Workforce Planning, Featured Article, Recruitment
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Interest in acquiring woman- and minority-owned staffing firms is strong and expected to grow in the future, a contingent buyer survey by Staffing Industry Analysts shows.

Fifty-three percent of buyers are currently increasing their use of Women and Minority Business Enterprise staffing suppliers, and an additional 24 percent are considering doing so in the next two years, the survey found. Only 15 percent of buyers said definitely that they are not doing so and have no plans to do so.

The buyers who are most interested in increasing their use of WMBE suppliers are those in the pharmaceutical/biotech and energy/chemical industries; large companies of 10,000 employees or more; and buyers of information technology skills.

Buyers least interested in increasing their use of WMBE suppliers are those in the manufacturing, health care and logistics/transportation industries; buyers in smaller and midsize companies of fewer than 10,000 employees; and buyers of industrial/logistics, health care and finance/accounting skills.

Collabera, one of the largest minority-owned IT services companies in the U.S., is a tier-one vendor to such clients as IBM, JPMorgan Chase, CapitalOne, Wachovia, American International Group and Hewlett-Packard, according to Ashwin Rao, senior vice president and chief sales officer.

“Clients like IBM are partners and form key accounts to Collabera where we serve them as global vendors,” Rao explains. “It’s a win-win situation. Collabera gets the revenue boost through its various services such as staff augmentation, consulting and solution services, while IBM gets flexible resourcing strategy, external partnership in diversity spend and outsourcing deals.

“A partnership that has lasted nine years or more, we make sure that they are able to meet their customer demand at a faster pace.”

Joining with other minority-owned firms
Sometimes minority-owned staffing firms partner with other minority-owned firms, and that can be beneficial as well.

Hispanic-owned Zempleo partners with another Hispanic staffing firm, Populous Group, as well as Hicks Consulting, a service-disabled veteran-owned small business, says Mike Larkins, vice president of sales.

“Whenever we can engage subcontractors, first and foremost we try to engage minority-owned firms. Why make the big guys bigger? A lot of the smaller, minority firms, we can’t afford to fail.”

In some cases, minority-owned staffing firms partner with minority-owned suppliers. Akraya, an Indian-owned information technology staffing and solutions company based in Sunnyvale, California, partners with 24 minority-owned suppliers and spends $1.4 million on them, according to president Sonu Ratra. She says the goal is to increase minority spend even more.

When Akraya partners with other minority-owned suppliers, it provides them with advice on accounting, recruiting and technology, Ratra says. Some of the minority-owned suppliers Akraya works with include Betasoft Systems and InfoYogi.

Akraya also partners with minority-owned suppliers. The company ordered its Akraya apparel from Way to Be, a certified minority-owned company. Akraya also bought its holiday gifts from LogoLab Promotions, a woman-owned business.

Tips for success:

• Both companies need to do their homework. They should know as much as possible about the other.

• Both companies need to make sure they fully understand the other company’s perspective and what the other company wants to achieve in the partnership.

• Both companies need to have a clearly defined business mission and objective.

• Both companies need to decide what kind of relationship they want to have with each other.

• Both companies should designate an internal champion.

• There should be a written contract between both companies, and it should be reviewed carefully.

• Both companies should establish a sales referral fee before doing any sales work.

• Both companies need to put together a tactical road map that spells out who is going to do what and when.

• Both companies need to have open and honest communication.

• Both companies need to be willing to learn from each other.

• Both companies should know the other’s strengths and weaknesses.

• There should be no competition between the companies.

• Both companies need to trust each other from the beginning.

• Both companies should share a similar culture and similar values.

• Both companies should have like-minded services or areas of focus.

• Both companies need to be involved and have responsibility.

• Both companies need to provide quality service, timing and delivery.

• Both companies should want to be in a long-term relationship.

• The best opportunity for a non-minority-owned staffing company to partner with a minority-owned firm is when the non-minority-owned firm is functioning as a managed service provider for a large user of contract labor and has diversity requirements to meet.

Diversa set to take off
The owner of a small minority- and woman-owned staffing firm and the second-largest staffing firm in the world have joined forces to help meet companies’ growing demands for a more diverse workforce.

Last fall, Rosa Santana, CEO of El Paso, Texas-based commercial staffing firm Integrated Human Capital, partnered with Randstad to launch El Paso-based Diversa, which helps companies meet diversity needs at the local, national and global level. The idea behind the venture is that companies need to tap into everyone and be reflective of the communities in which they operate.

Santana says she had clients with diversity initiatives, and they wanted to implement those initiatives on a global level, but she didn’t have the resources. So Santana—who was already partnering with Randstad as an affiliate vendor—turned to the staffing giant for help. After three years of work, Diversa is up and running.

“We provide a competitive advantage to our clients by coupling recruitment and workplace diversity as a diverse supplier,” Santana says. “We aim to increase diversity in the workforce and at the same time we’re a diverse supplier. Many of our customers are looking for that.”

She says there are a lot of large, international companies interested in doing business with Diversa.

Diversa, which made its debut at the National Minority Supplier Development Council in October, provides managed services, HR consulting services and staffing solutions via a network of staffing providers, according to Greg Netland, executive board member for Randstad US. Mostly, it’s a managed service provider.

“We certainly are positive about the VMS space,” says Netland, who has been involved in vendor management services for a number of years and has seen the many changes it has gone through. “We believe it’s a growth area. We believe Diversa is well-positioned in that marketplace.”

Diversa combines Randstad’s global resources with the local market understanding and delivery of IHC, making it win-win for both parties. “We feel Diversa is a face of change. We combine the global reach of Randstad and the know-how and the local market and delivery of IHC.”

Santana says the benefit is that now she can offer services on a global basis.

“We think it’s pretty innovative and creative,” she says. “I am very excited to be with this company that is a great partner.”

Diversa is particularly important given how minority populations make up a significant percentage of the U.S. population. In 2008, the latest year for which numbers are available, there were about 47 million Hispanics in the U.S., constituting 15 percent of the country’s population.

The number of Hispanics is expected to grow to 133 million by 2050, according to the U.S. Census Bureau. Similarly, there were about 41 million African Americans in 2008, representing 13.5 percent of the population. The number of African Americans is projected to grow to 47.7 million by 2020 and 65.7 million by 2050, according to BlackDemographics.com.

Netland says a commitment to diversity is nothing new for Randstad. The company contributes time and money to the YMCA’s Multicultural Achievers program, which motivates young people from inner cities to achieve higher educational goals.

“[Diversity has] always been important—certainly today,” Netland says. “We do it two ways, both as an employer and a staffing supplier. As an employer, Randstad promotes diversity. We’re a supporter of a diverse workforce and the benefits that come along with that. As a supplier, we recognize our customers’ need to satisfy their diversity initiatives.

“Especially here in the United States it’s an important thing. We have a diverse population. Randstad feels strongly that you should promote that actively.”

Diversa will give back to the communities in which it operates. For example, at the National Minority Developer Supplier Development Council Conference, the company donated to the Make It Right Foundation, a philanthropic endeavor spearheaded by actor Brad Pitt to benefit the victims of Hurricane Katrina, which ravaged New Orleans in 2005.

Santana has worked in the staffing industry for 28 years, having spent time at Kelly Services and Westaff before launching Integrated Human Capital and Diversa.

Santana first began working with Randstad about five years ago through its affiliate vendor program. One of her clients wanted to do business locally and had an agreement with Randstad, she explains.

“Randstad was very open to working with me to serve their client,” she says. “They treated me like a true partner. They paid me on time. They were very easy to work with. It was relatively easy for me to do business with Randstad. Then Randstad brought in some other contracts.”

Santana continues to serve as CEO of Integrated Human Capital in addition to being CEO of Diversa. Frank Armendariz oversees the day-to-day operations of IHC, and Santana’s daughters, Lisa Navarro and Nicole Navarro, also work for the company. Lisa is director of finance and accounting; Nicole is a market manager.

For now, Diversa is still in its infancy, but the expectation is that it will take off and be a success.

“Randstad believes in Rosa,” Netland says. “We’ve known her for a number of years. We felt it was something worthy of supporting. We believe we have a very unique situation with Diversa and the fact that it is a joint venture. With the expertise of Rosa and her team, we’re positive she’s going to make it a success.”

Workforce Management Online, March 2010 -- Register Now!

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