To Outsource Or Not To Outsource?

That is the question for labor-strapped custom integrators
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Given the growth of home automation, and the concomitant dearth of skilled let alone certified tech labor, many companies find themselves in a quandary. Already booked months in advance, do they turn away business or do they put their reputations on the line and turn to local or national third-party providers like Herman Integration Services to supplement or assume big jobs?

To the heads of the industry’s four major CI and integration buying groups, the answer is a unanimous “no” to outsourcing … with exceptions. Their advice to their members: keep the complex installations in-house, where they have complete control over the myriad sub-systems that can go wrong, and, if necessitated by the labor crunch, relegate more basic services to trusted outside agencies.

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Other exceptions apply as well. Specialized areas such as HVAC, high-voltage electrical work and custom cabinetry are routinely sub-contracted to licensed or otherwise highly-trained tradespeople; some locations require union workers; and dealers will often refer clients with out-of-town properties, such as vacation homes, to a fellow group member in that market.

But the best way to avoid the outsourcing dilemma, at least for the short term, is to manage your calendar wisely by picking and choosing the most profitable jobs, even if that means walking away from opportunities, the group execs say.

Longer term the answer lies in training, whether in-house; through sponsorships to an outside resource like New Hampshire’s respected Maverick Technical Institute (MTI); or by mounting an industrywide effort to draw a new generation to technical careers in custom integration.

Short of that, the group leaders say, outsourcing is largely shunned.

Herman Integration Services, a national third-party provider of skilled tech labor, argues that it's more cost effective to outsource than to bring in new hires.

Herman Integration Services, a national third-party provider of skilled tech labor, argues that it's more cost effective to outsource than to bring in new hires.

“A few of our dealers have used Herman, typically for the simplest tech like pulling wire, or if a job requires more bodies,” said Dave Workman, president/CEO of the $5 billion ProSource group. But by and large, ProSource’s 550 specialty retailers and custom integrators “haven’t shown an appetite for outsourcing more advanced work, for fear of messing up the job. The complexities of design don’t lend themselves to handing it off.”

As a consequence of that reticence, and the tight tech pool, “Dealers have come to be more selective; they’ll bid on projects to maximize their available labor,” he said.

Jon Robbins, executive director of Home Technology Specialists of America (HTSA), the self-described national trade consortium of hybrid retailers and custom integrators, concurred. “The vast majority of our members would rather turn down a job if they couldn’t have complete control over a project,” he said. “It’s a challenge, leaving business on the table. But the way to address it is to provide expansive education to project managers and technicians.”

To that end, HTSA has partnered with MTI to create a group-exclusive Masterclass training program for installation technicians. Over the past two years more than 200 HTSA trainees have enrolled in the special week-long curriculum, Robbins said, which produces better mechanics with higher retention rates.

Ironically, MTI itself was born of the labor shortage four years ago, when custom integrator Dennis Jaques couldn’t find enough qualified technicians to staff his booming Maverick Integration business in Nashua, N.H.

Hank Alexander, director of Home Technology Specialists Nationwide (HTSN), the custom integration wing of Nationwide Marketing Group and a partner of HTSA, recounts a similar situation within his own group. That’s when South Carolina appliance, electronics and furniture dealer Jeff Lynch Appliance & TV Center, which had been outsourcing installation labor, went out and acquired the service provider.

“Labor is a tough issue in custom-install land,” Alexander said. “I don’t see the younger generation entering the business. But any time you can bring your labor in-house it’s better.”

One exception, and a major new opportunity, is outsourcing the installation of “over-the-counter”-type products, he said, like Nest and Google thermostats, doorbells and security cameras. “It’s a great place to outsource, to go to a local company,” he observed, “and it gives you time to get to a Control4 project. But I wouldn’t do it for real automation jobs, where you’re integrating lighting, HVAC and other complex systems, and have so many moving parts.”

Richard Glikes, founder and president of the seven-year-old Azione Unlimited integrator group, also advocates outsourcing lower-tech work, like pre-wire, to professional resources like Herman when necessary. He further laments the tight labor market that keeps tech salaries high and retention levels low.

“The problem with this industry is we pass people around. They’re bribed to leave, and we wind up overpaying,” he said. “I’m hoping CEDIA comes up with an education solution.”

Relief may be on the horizon, Glikes added, albeit from the economy. “We’ve had eight or nine years of uptick and we’re overdue for a slowdown. We’re due to take a breath.”

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