Hot Stuff

Quick-change artist. That's what your company must be to provide job training services to businesses. Indeed, keeping pace with technological changes is one of the primary challenges facing training companies, according to a 1998 survey by the American Society for Training and Development (ASTD).

Computer and teamwork are expected to be among the top skills employees will need in the coming years, according to ASTD. A recent Price-waterhouseCoopers LLP survey of CEOs of the fastest-growing U.S. firms bears this out. These companies are offering upgraded training in basic skills such as math and reading; advanced computer education in areas such as customer serv-ice, mar-keting, sales and internal communications; as well as in-struction in accounting, fi-nance and cash management. Other hot training areas include customer serv-ice and creative problem-solving.

The good news for entrepreneurs, at least in the area of technical training, is that at the typical company, less than 40 percent of computer courses are taught by in-house employees. And the picture continues to look bright: Expenditures on out-sourced training are expected to more than triple, reaching a whop-ping $318 billion by 2001.

We said it last year, and we'll say it again: Entrepreneurs who are poised to move at the speed of change will likely enjoy lon-gevity and prosperity in this booming industry.

Employee Leasing

Fifteen years ago, there were approximately 10,000 leased employees in the United States. By 2000, the best guesses say there will be 10 million. That surge points to a flood of opportunities in the employee leasing field that hasn't stopped since we first named it a hot business in 1995-and it shows no signs of slowing.

"We believe our industry has achieved only a 2 to 3 percent penetration of the potential market," says Carlos Saladrigas, 50, co-founder and CEO of The Vincam Group Inc. in Coral Gables, Florida, which places employees with some 2,000 businesses nationwide. According to recently released figures in Investor's Business Daily, the industry has grown from $5 billion in 1991 to $18 billion in 1996. "This industry will enjoy exponential growth for the next 20 years," predicts Saladrigas.

Why so much new optimism for a business we've touted for at least four years? "The explosion of small business," says Perry Solomon, founder and chairman of HR Logic, a Newton, Massachusetts, employee leasing firm, or professional employer organization (PEO), as these companies are known.

By the reckoning of the SBA, 65 million Americans (about half the labor force) work for companies with fewer than 500 employees. That's ideal for PEOs because being a boss has become complicated. "There are [countless] federal regulations you have to comply with," says Saladrigas. "You have to watch what you do and what you don't do. It's gotten complex."

Enter PEOs, which lift the hassles off the shoulders of business owners by providing clients with qualified staff and handling all the details-payroll, benefits, and compliance with laws and regulations. "By outsourcing noncore functions such as human resources, the business owner has more time to focus on profit-making functions," says Solomon.

Sound good? Fledgling entrepreneurs should know that as fast as the PEO industry is growing, there are still steep barriers to entry. The PEOs that are thriving have invested heavily in computer systems, lawyers, accountants and human resources professionals.

There's no doubt, however, that industrious entrepreneurs with a clear vision of how to create even greater efficiencies in employment will prosper as more companies wise up to the benefits of contracting with PEOs.

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