Hot Stuff

Human resources management is a minefield. One tiny misstep in setting up a benefits program can get a small business in deep trouble with the IRS. Big businesses have substantial staffs handling these intricacies, but at smaller companies, it's usually an overworked secretary or the owner who does this job in his or her spare time. This makes the probability of serious mistakes escalate.

Enter "virtual human resources" consulting firms, which have turned the problems small companies face into their own business opportunity. A case in point: Rochester, New York-based Paychex Inc. "Our typical client, a small business with between 15 and 200 employees, doesn't have the internal expertise to perform human resources functions effectively," says Paychex's founder and CEO Tom Golisano, 57.

Core small-business human resources needs involve everything from employee handbooks and personnel forms to setting up and administering retirement programs. For the companies that tackle these duties on an outsourced basis, these tasks are a potential gold mine. "Outsourced human resources is a $50 million business for us," says Golisano. "It's very profitable. And it's been growing 25 to 30 percent per year."

What's more, this niche is relatively uncrowded. The biggest hurdles? Having the meager customer base that goes with being an industry newcomer means economies of scale are a struggle to achieve. What's worse, the very complexities in human resources that prompt small-business owners to outsource those functions can prove maddening as laws continually change. But meet the requirements, and the payoff just may be rich: Predicts Golisano, "The outsourced human resources industry is going to be a very big business."

Y2K Consultant

For the 2,000th time . . . With less than a year to go before the January 1, 2000, deadline, businesses of all sizes are scrambling to com-plete their Y2K compliance projects-and failing. A recent survey by La Jolla, California-based ZD Market Intelligence of 2,400 businesses on their Y2K readiness indicates that while 80 percent of the businesses are committed to addressing the issue, only 17 percent have actually completed a Y2K project. The problem? There are simply not enough qualified people available to audit and fix all the computer hardware and software products that may be vulnerable to the bug.

What's worse, many non-Y2K-compliant systems were designed using older programming languages like COBOL, and many programmers skilled in the older languages have long since retired, leaving behind a potentially catastrophic knowledge gap.

If your IT experience doesn't include dealing with the Y2K bug, take heart. It's never too late to learn, and the recent avalanche of Y2K-related software packages, books, pub-lications, Web sites and conventions inspired by the impending crisis can help.

While no one can accurately predict the full effect the Y2K bug will have on the computer systems of the world, those who have the right skills can expect to see their value in the marketplace spiral ever upward in the coming months.

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