Thursday, August 7, 2008

Can we have a People Exchange platform to trade resources?

Think about this! We always struggle to get resources with right skills and experiences for an IT engagement. Though, we get the resource sometimes, we are unable to gauge the salary expectation and price them for a client requirement for a profit. How do we manage the resource economics?

I look at the above situation akin to a stock market where instruments (shares, bonds, options..) are brought and sold for profit. The analogy I can draw between the instruments and resources are as below:

1. Instruments have a certain buy price similar to the payroll cost for resources
2. Instruments can be sold in the market for a price, whereas resource are in turn deployed in engagements with client for a price.
3. The differential in buy and sell price of instruments can lead to profit/loss similarly for resources
4. One can speculate on the prices (buy/sell) of instruments in the market, similar to the one we do for resources. All that without agreeing on the intrinsic value of the instrument/resource...

Now lets look at what Stock exchanges do:
1. Provide a platform for buying and selling instruments based on demand and supply
2. Aid in speculate/price discovery of instrument based on whatever rationality/irrationality

Can we then create an exchange for resources as well similar to stock exchanges then. The resource exchange can then provide this platform for buying and selling these resources based on the need and also aid one in price discovery. Now let us devise this model to face the resourcing challenges for IT Services engagement:

1. The Job portals (like Monsters of the world) become the brokers similar to the agents who fulfill the resource transaction obligation
2. The IT Service Provider can behave like companies that house these resources based on intrinsic value the resource with specific qualities come with a specified price to sell in the market...there can be a standard valuation that is agreed by all IT Service provider in the industry for a specific grouping of resources based on skills and experiences...
3. The clients who want resources to solve their issues then bid to buy the resources through the exchanges
4. Have a new stakeholder regulating agency that comes up with a standard/proprietary valuation model that all Service provider agree on....


The benefits this will bring to the IT industry are:
1. Clients can benefit by discovering the price through the resurce excchange platform
2. Resources get what they are worth by having a standard pricing based on valuation model, rather than having a bazaar type negotaitions on salaries
3. Service providers can value the resources based on a proprietary model
4. Job portals can get their commissions based on the value they add to the clients and service providers


Can we develop similar model? Let me know if your thoughts if this model is viable!

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