Despite economic uncertainty, the business outlook appears especially bright for managed service providers (MSPs), who are expanding to meet growing demand for their outsourced IT services.

"There's a strong value proposition for the MSP business model whether times are good or bad," says Justin Crotty, vice president of services, Ingram Micro North America. "It's a great way to leverage a technology infrastructure to deliver services that customers truly value. Even customers pinched by the economy will not abandon managed services, because they're consuming services more costeffectively than they have in the past."

MSPs around the country share this assessment. "In a down year, organizations often look at cost-saving measures," says Chris Andreozzi, president of KnowledgeCentrix, a fast-growing MSP and professional services provider in southern California. "Managed services can help them get a higher-value product without having to add staff, or they may be able to replace staff with a service that gives them more value for the dollar spent."

"This year our pipeline is bigger than it has been in a long time," says Adam Eiseman, president and CEO at Lloyd Group, a New York-based MSP." Companies that outsource IT management find they get more value for their investments. And more clients moving to a hosted IT environment makes our offering more attractive."

Strong business prospects often lead to growing pains -- such as the need to bring in additional staff. Indeed, Lloyd Group and KnowledgeCentrix are both aggressively hiring to meet anticipated levels of growth. In this they face unique strengths and intriguing human resources challenges directly related to the MSP business model. This article explores these issues through the eyes of five experienced MSPs. The advice they share for recruiting, evaluating and hiring the right employees should help novice and seasoned MSPs alike develop a thriving and well-staffed practice.

A Scalable Business Model
MSPs are in the business of leveraging technology infrastructure for remote IT monitoring and management -- a process that has a significant impact on staffing decisions.At 50-employee Lloyd Group, for instance, Eiseman doesn't need to hire as many people as he did previously to handle the same amount of growth." As you scale out and move to a hosted environment," he says," you don't necessarily need to hire additional staff to support more customers."

Lloyd Group is hiring nevertheless, but not in the technical arena.With most engineering positions set and entry-level jobs filled by an ongoing internship program, Eiseman is recruiting people with several years of business experience who can lead and manage."It's easier to hire entry-level people whom we train on the technology," he says. "The challenge is to find people who can make existing employees more effective. Otherwise they can't grow."

Running Lean
The inherent scalability of managed services affects other MSPs differently. At Computer Solutions Group (CSG), a 15-person MSP and solution provider in the Los Angeles area, outsourcing managed services via Ingram Micro's Seismic helps the company run lean -- a theme that permeates president Scott Spiro’s overall management philosophy.

"By using services like the Seismic Managed Help Desk,we can improve our customer service without requiring additional staff," says Spiro. "If we bring in another 10 or 20 customers, before Seismic we might have had to hire three people to handle that. Now we might need only one, or maybe we could handle it with the people we have."

This efficiency does have a potential drawback, however -- generating enough work to keep in-house staff busy and content. The situation can be exacerbated by the uneven workload in the managed services life cycle: lots of work in the beginning setting up the account and creating management templates, less work later when most processes are automated. Spiro handles this by working with partners and hiring contract employees whose hours often fluctuate over time. But even contract employees will look elsewhere if they don't get the hours they require.

CSG's solution is to supplement managed services with work from IT-project and application-development divisions. Engaging customers for managed services often brings in projects such as network development or creating a disasterrecovery protocol, and project work can generate managed services contracts. According to Mark Fitzpatrick, executive director of managed services at CSG, the result is "a beautiful engine that feeds itself," while equalizing the workload for engineering and services staff.

Managed services and project work generate a similar synergy at Knowledge-Centrix, where they present an upward career path for the technicians. The managed services division is mostly staffed by engineers with room for professional growth -- typically they've been supporting a Microsoft environment for three to four years, and are often in the process of completing certifications such as Microsoft Certified Systems Engineer (MCSE). Over time, if they perform well, they have the opportunity to move into more senior positions in consulting and professional services.

Beyond Speeds and Feeds
Technical competency, whether backed by vendor certifications or general knowledge, is a baseline qualification for managed services engineering positions, but other aspects of attitude and character carry equal or greater weight. For one thing, technical staff must be highly detail-oriented -- and some staff members may have difficulty adapting.

Fitzpatrick cites the example of a former engineer who was more comfortable with the break-fix business model -- "he wanted to go out and solve problems and then go home," he says. "With managed services, there's a tremendous amount of detail work in logging devices and asset management, in documenting issues of RAM and installed software, in ensuring that all the managed services are installed and functioning.You have to be very precise, and not everybody is into doing that."

Process-orientation is another characteristic MSPs seek out, in contrast to the "hero" culture many solution providers have developed. "It's naturally less sexy to replace heroes with processes, so a mindset shift has to take place," says Aaron Shaffer, vice president of human resources, Ingram Micro North America. This shift has occurred at Intellicom, a Nebraska based solution provider with 26 employees that provides managed services through its help desk.

Engineers on the desk troubleshoot problems remotely or by engaging clients on the phone. Needed skills include time management, organization, and comfort in performing predictable and repetitive tasks such as software upgrades, patches and system reboots. "As we've peeled back the layers in the qualifications of our help desk staff," says Bryan Kuntz, vice president of operations, "it's surprised me that the technical side is probably less important than the process side of things."

In addition, Intellicom evaluates candidates on their propensity for teamwork. If an engineer is out sick, for instance, others should be able to substitute and complete the job. And candidates are scored on a matrix of personality traits that includes responsiveness, likeability, customer service, eye contact, punctuality and appearance. These qualities are considered as important as technical skills.

"Demeanor" traits also count heavily in KnowledgeCentrix's evaluation criteria. "My rule of thumb when I interview, and which I try to instill in my managers, is, Could you ride in a car with this person for an hour and have a good time?" says Andreozzi. "If you can, and if the person has the technical knowledge and/or the willingness to learn, we may have a good fit. Nobody wants to sit at the help desk all their life, so let's hire people who can get out in front of our customers, and whom we like."

Matching the Company Culture
Attention to detail, process orientation, teamwork, good communications, likable demeanor -- and of course, mastery of the technical universe -- if these are "must-haves" in a managed services employee, no wonder some solution providers have endured personnel upheavals during the transition. Case in point: PMV Technologies, a Michigan-based solution provider whose managed-services business is growing more than 100 percent annually.An MSP since 2004, PMV experienced turnover of 180 percent in its first two years. Today the firm has gained a handle on personnel evaluation by stressing two key criteria: teamwork and the cultural fit.

Emphasis on a team mentality arises from the nature of the MSP business. "Previously, you sold a person's skill set to a client for a rate, and all the client really got was that person," says Scott Goemmel, partner at PMV. "With managed services, you've got to solve the customer's problem regardless of who performs the work, and the fewer hours it takes, the better. The key is working effectively as a team." Many candidates with strong technical credentials are used to going it alone, so that complicates the search.

The other key challenge is finding people who fit the company's culture -- as Goemmel says, "knowing your core values and what makes a good employee, and then hiring against those core values." Goemmel easily rattles off the six values that constitute "the PMV way": consistency and reliability, integrity, ability to deliver results, serving the client, continuous improvement and "bust your a--." All candidates are measured against these values during the hiring process.

Goemmel explains: "Sometimes we'll see candidates who have high integrity, but they are really more effort-driven than results-driven. They want you to value how many hours they work, but not what the client gets for the hours. Or they want to work 8 to 5, but with managed services you don't reboot a server when it's convenient for you; you do it at 2 a.m. on Saturday because that best serves the client. "When candidates closely align with PMV's culture, Goemmel says, "we'll do whatever it takes to hire them."

To assist in this, PMV employs a part-time staff recruiter who uses a series of questions to screen candidates against the company's values.

Testing the Personality
Other MSPs use more formal methods for evaluating a candidate's suitability. Personality testing has its champions, among them Andreozzi of KnowledgeCentrix. He swears by a test from Professional DynaMetric Programs (www.pdpnet.com) given to candidates as they rise to the top.

The test, which costs several hundred dollars each time it is given, analyzes a person's natural tendencies and any adjustments he or she is currently making across key traits, such as dominance, extroversion, conformity and patience. Once you have some experience with the test, you can develop profiles of people most likely to succeed at different jobs.

How accurate are the profiles? Andreozzi took the test himself, and "it sounded like my wife had written it," he quips. Profiles of other successful employees also proved accurate. What really impressed him, however, was that the sought-after profiles predicted employee success around 70 percent of the time. "Once you see the test work, you really start to believe in it," he says. "It's valuable input to add to your own impressions."

Even using clear evaluation criteria, you still need to recruit the right candidates.Many MSPs have difficulty keeping the pipeline filled with promising candidates, in part because of a shrinking labor pool. While no executive interviewed for this story has the perfect solution, most MSPs recruit continuously, use multiple venues, and involve the entire company in the process.

"Even if you don't have an immediate need, it's best to always be looking for exceptional candidates," says Karen Hammond, HR manager at KnowledgeCentrix. The company relies on a three-part recruiting methodology: Ask current employees; ask friends and partners; and make use of staffing companies and job postings on web sites such as www.dice.com.

Intellicom recruits using local newspaper ads, by advertising on its web site, and by working with the local employment agency, although a fair number of resumes come in unsolicited. Kuntz credits this to the company's reputation as a desirable place to work. "We try to hire people who truly enjoy working with information technology," Kuntz says. "When they're out working with customers, and they're happy and whistling while they work, the message comes through loud and clear."

This positive impression is reinforced by the time and respect job candidates receive, including significant face time with senior management. The process starts with a precise job description. "If you don't know exactly what someone will be doing, it's hard to recruit the right person," Kuntz says. He then personally spends about an hour interviewing every candidate as the first screening step. If someone isn't a good fit, Kuntz often offers career advice or recommends other employers to contact. Promising candidates are then interviewed by technical managers and the owner of the company.

Heavy involvement in the hiring process by company principals is a theme at Lloyd Group as well, especially for management- level positions. "Because the principals best understand our culture and where the company is headed, we're best able to evaluate a person's suitability," he says. Eiseman also advises principals to be active in all aspects of HR management as an aid to employee retention.

"We have a capable HR person and a companywide cultural initiative, but you need to invest a lot of time in it yourself," he says. "If you don't touch the people you work with a lot, you'll lose them."