Hot Stuff

Hot Business: Staffing

We've said it once-well, actually, six times-but we're going to say it again: Specialized staffing is hot. According to the American Staffing Association (ASA), revenues in this sector of the $58 billion temporary-help industry have jumped from $335 million in 1991 to about $3 billion today.

Firms supplying professional and tech workers also continue as strong players in market, a fact John Jay knows well. With hot tech start-ups growing all over the country, demand is up for the employees to staff them. Couple that with a scarcity of qualified tech workers, and plenty of companies find themselves in need of staffing services. For the past 10 years, Jay, 41, owner of Tech Central in Edina, Minnesota, has been in the thick of the specialized staffing growth wave. "I emptied out my retirement account, got loans from relatives and took out a second mortgage on my home to start my company," says Jay, recounting how he came up with the $200,000 he used to launch his business in a small rented office space in 1990.

The gamble paid off. Today, Tech Central employs 120 programmers, engineers, database managers and other IT workers, and estimates 1999 sales at about $7 million. "Although the industry continues to grow rapidly, so does the competition," warns Jay. "A lot of large corporations are getting into the market, like General Motors, which started its own staffing division."

For a start-up to succeed, Jay says there are three critical areas to watch. "It's important to understand the staffing industry [itself], but you've also got to understand the technical and professional aspects," he advises. In addition, you need to take care of your customers by offering exemplary services. And finally, you've got to treat your employees very well.

"You've got to offer top benefits," says Jay. "I give paid days off for birthdays and to do volunteer work. I give tuition reimbursement and internal training. People are fighting over technical employees, so that puts them in a position to make great wages."

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This article was originally published in the December 1999 print edition of Entrepreneur with the headline: Hot Stuff.

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