Staffing Industry Spotlight: Terri Gallagher, CEO of Gallagher and Consultants

‍Mickey Pelletier Terri, thank you so much for taking the time to sit down with me and do this interview. We'll start off getting to know you – who are you and what do you do?

Terri Gallagher I am Terri Gallagher, and I am the founder of Gallagher and Consultants. I founded this company eight years ago and built it specifically to provide emerging technology-focused strategies to optimize and manage the gig workforce. We are a women-owned business that is very deliberate on the emerging next-Gen approach, and we do that for customers. We also help staffing companies to add other solutions, tech, and services, that want to level up to get more wallet or market share in the space.

Mickey Great. I think it's always good to go back in time with people and learn about how they got into the contingent workforce and staffing space. So where did you get your start?

Terri I worked for Disney, and I built the first contingent workforce solution, in house, for them. I worked in IT. We used an access database as the VMS. A little factoid – I was actually dating one of the technology developers and I got him to do it for free because I had no budget. So, he built that for me, and we had our first contingent workforce program. I won an award for it, but I wasn't making a lot of money. I think I was making 50K a year at the time and was solicited by a couple of staffing companies and Taleo and went over to work for them and doubled my salary to do the same thing, which is to build and deploy solutions for contingent workforce.

Mickey So you continued in the industry after Disney. What were some of the other roles and activities you were doing with Taleo and beyond in the contingent workforce and staffing space?

Terri Well, I did that for eight years and built out that program. I won the Partners and Excellence Award for it at Disney and then when I moved into Taleo, then the MSP space where I worked for Adecco and TAPFIN. I was really just building, deploying, and then operationalizing MSP programs. That was the core of what I did for almost eight years. That really was the foundation of my education to build Gallagher and Consultants.

Mickey You spent a long time in the contingent and staffing space. You worked for Disney. You worked for some of the large MSP players. What led to you starting Gallagher and Consultants eight years ago?

Terri I worked for some big MSPs. I went to each of them and I kind of started doing my own thing. I would get into these MSPs and then build my own tools, my own approach, my own methodology, and that's not necessarily the way to endear yourself to leadership and teammates. But it's because I just saw the model changing for contingent workforce delivery. For example, I built out our first shared services center for one of the MSPs – because the other side of this is that I would get all the really tiny programs that nobody else wanted that were not profitable. And I made them profitable, and I did that by changing the model.

I used a shared services center model. I spread programs across multiple program managers, so I had already started my little entrepreneurial journey. But you can't do that in an environment that is very much all about following the playbook and being a good soldier. It was an awkward environment for me, and I just saw that the model is going to change. I saw the future. I saw that it was going to be technology-enabled and we were going to have multiple forms of talent supply, even before it became popular.

I was working with my last company – doing what I normally do, which is building my own stuff and doing my own thing, and it was wildly successful. We were making more money, but I wasn't the best team player, and the CEO pulled me aside and she said, “I'm firing you. I don't think we're ready for you yet, and you need to go paint on your own canvas.”

At the time, “ego” right? “What do you mean you're firing me? I’ve literally saved your life, look at all the money we're making. The clients love what we're doing.”

But she was right. I wasn't being a good team player and I really did need to be out on my own and I ended up sending her an email two years later thanking her, and she said, “You're welcome. We need to do drinks soon.”

So yeah, that's how I started. Most people don't tell the truth about that, but yeah, I was fired. But the reality is that I was already doing my own thing and it was effective, I was just doing that in an environment that's not necessarily conducive to that type of approach.

Mickey I think it's an interesting way to be told that you're let go – We're not ready for you yet. I mean, that sounds like the way of getting out of a relationship with somebody.

Terri It's not me. It’s you.

Mickey Exactly! I say it’s interesting because avoiding that type of forward thinking mentality you had, I think, is what can plague the current MSP space and that's something I want to ask you – what are your views on the current state of the MSP and the VMS providers?

Terri Well, this is not going to be a shocker. Gallagher's been very vocal and now we're getting some attention on our point of view. I don't see the MSP model that's current state surviving. In fact, the stats already point to that voice of the customer and diminishing market share, because it's really based on a procurement supplier management strategy that's not aligned to an omni-channel approach and technology enabled talent supply strategy and being the aggregator of that.

The other piece of this is that a lot of those solutions reduce the revenue model. So the MSPs really only have one playbook, which is manage the supplier community, push requests through the VMS, pop out some reports. I see them trying to pivot. But I feel like the pivot is too little, too late.

We’re starting to see some partnerships MSP are building with on demand workforce platforms and they’re finally adopting direct sourcing. But then doing what they do: which is adding a lot of process and steps and layers. And it's just too little too late. I'm pretty bullish on that. They only currently have 10% of the global 5 trillion spend. And of that, half of it is going to in house programs because these customers tend to be pretty progressive and have expedited roadmaps, want to bring in other sources of talent supply strategy, and not wait and do different things.

So, I don't see the MSP being a viable model at all. I realize they've got some market share; I see that maintaining at a certain point, I mean there's going to be a minimum of that market share that will remain. But I see that being eclipsed by multi-talent supply strategy, technology, other types of services wrappers.

I am more bullish on VMS. I think the VMS is innovating and changing at a much faster rate. They're replacing a lot of the steps that MSPs used to take. I think they're always going to have a place in the solution, but with a caveat there too, is that there are emerging VMS providers that are coming out that, in my opinion, are far more agile. They have shorter implementation cycles, they have more of a DIY configuration approach versus everything going through a ticketing system.

You and I know that because we worked on some of these programs with some of these providers and I think that those providers are going to take much more market share than people realize. I think that they're always going to have a place.

I think some of the biggest VMS providers that have been around a long time, because the infrastructure is older, I don't know if they're really going to be able to make the pivots that are needed to accommodate different talent tech ecosystems, and truly integrate those with talent clouds, on demand workforce platforms, and SOW technology.

Mickey

You talk about the MSP, and I’m using my own words, being antiquated there. Personally, I don't think they're going to go away, but to use your word, I think they will potentially be diminished unless they can pivot to be more strategic and consultative and not just pushing requests.  They can do that, and that’s great and that's awesome. But to be a strategic partner is a completely different item.

Then on the VMS side, that antiquated old tech stacks being able to revitalize with the future of where technology and the industry is going, I think it's going to be a key point. So, I think those are those are great items that you bring up.

Shifting topics a little, you've been around the industry for quite some time, how have you seen it evolve and change since you first joined?

Terri I think technology explosion; just all of the different forms of tech and AI that are now the sourcing agent, are now the enabler, are now the recruitment arm for talent supply. That's probably the biggest thing, the sourcing and delivery system for talent. Because of this explosive growth around the tech, I see more disintermediation. With the talent tech marketplace, on demand workforce platforms, direct sourcing, there's now so many forms of talent tech products that can source, enable, and deliver this talent – that flies in the face of a 200 year old employment construct which is perm employment is the primary, golden standard for employment.

Going through these outdated recruitment models where you go through four and five interviews like today. If you ask anyone who's halfway good at what they do to go to more than two interviews, they're out of there. They're like, “Bye.” Literally, they're not going to bother. I think that speed to hire is where we are. I think technology-enabled is where we are. I just think that this employment construct that's been around for a long time, that regulatory bodies and legal bodies have not really caught up to where the future work is. Which is primarily: alternative workforce, fluid workforce, with workers deciding how, where, and why they want to work, with technology being at the center of it to deploy that workforce.

Whoever can figure out the strategy around leveraging technology and really doubling down on the candidate’s experience and then finding succinct ways to deliver this to customers, they're the ones that are going to dominate in the industry.

To summarize, traditional employment construct, it's done, it’s dead, right? You know the Mad Max guy at the top with the cigar and the Scotch and the big mahogany desk, and everybody's just happy to have a job?

Now the people are deciding how and where and why they want to work. They may want to work part time. They may want to be a freelancer; they may want to work full time and be a freelancer as well. So, we need to really accommodate that shift in the workforce with tech and very altered recruitment and sourcing models.

Mickey Yeah, I agree. I think the way work has changed, just even recently, we've shifted. You're seeing so many more people start to go freelance and independent, which is a good question I wanted to ask you about: that comparison of corporate life to starting your own firm eight years ago. How has that compared to being in the corporate role of another company?

Terri Oh my God. So many different ways that it can compare! I think the biggest thing is striking out on your own, you really don't know what you're in for. If I'd really known what I was going to have to overcome when I started, I don't know if I would have the guts to do it. To be frank, I'm a pretty tough person, but if I knew everything, and it's a blessing that I didn't, but the process of building a company and then everything that comes with that, there are some dark nights of the soul and challenges, asking, “Am I good enough?” and the consistent hustling for cash flow and the huge wins and then the losses, it’s a lot.

I've had literally everything happen, I've had people come after my trademark. I've had people steal my client the last minute. Solution providers that I brought into co-create (because I believe in that) thinking everyone's going to love everybody and hold hands and go “Kumbaya” then they took my customer.

But at the end of the day, there’s literally just nothing like it. You change into a different person. There's nothing more gratifying than being able to create something that you believe passionately in and put a specific product out in a specific point of view, and then get people to adopt that. And then those magical customers that say yes, there's just nothing like that feeling.

I'll never ever go back, but I was not a very good employee anyway. I mean, a lot of the reasons that I wasn't a good employee were because I used to have all this friction and conflict with people because I just thought differently. I operated differently and I was just being myself and I could not figure out why there was friction. Plus, I was a people pleaser. So, I was like, “why is everybody so angry with me?”

Then I would just work harder, right? Because I felt I'm not doing good enough. Then it just got worse because now I'm really circling around who I was reporting to. So that's the other piece, I'm really not employee material.

The last thing is that I’ve always had challenges with anxiety, so it's just been a lifelong thing that I've learned to deal with. With running your own company and building your own company, if you didn't have issues before with anxiety, it's almost like it forces you to really deal with it and grapple with it because you're going to have problems and things that will spike your anxiety that you never had before. And you have to find a way to navigate that. So, in a lot of ways, it's actually helped my anxiety because I had to find really strong coping mechanisms because there's so many things to get anxious about on a daily basis.

Mickey Yeah. I think that's something you don't always think about, all the things that go into running your company and the things that keep you up at night mixed with trying to get the next lead, trying to get the next win, that next payment. It can be a lot! I think those are really good points you bring up and something I'm always curious to talk about with people that have gone out or started their own things. So, I appreciate you sharing that. Ok shifting topics again, based on some of your posts and articles on LinkedIn and you're quite bullish about EOR. You've used phrases that EOR is a sleeping giant, and that it’s going to eat the world. Give us your thoughts on EOR and while you are so bullish on it.

Terri Well, it's something that I always suspected. And then we worked on a project where we had to pull data and the data proved that there's all this white space of roughly $5 trillion in the gig economy, with $4 trillion of that in independent contractors, freelancers, on demand workforce platforms. Some of that is also Uber and Doordash people, but still 1099, then direct sourcing, then SOW – all in order of spend.

As you know, EOR's have a hand, at least partially, in almost all of these spend categories. They're the regulatory and employment vehicle for much of this to employ the workers. So, if you're already sitting at the table and you're starting to solve for this massive white space that doesn't really have any kind of strategy or synchronization or data strategy, why wouldn't you just grab it?

Add a few things to these customers that already trust you and say, “Hey, by the way, all those ICs coming in from this on demand workforce platform that you don't know about or all these freelancers running around that are making you nervous that you have to find on your own. Why don't we just be the eye in the sky to keep an eye on all of that and come in through whatever tech product you have?”

A good example is direct sourcing. Direct sourcing alone is this $780 billion opportunity according to SIA and it's untouched because the other, $2 billion or so, the MSPs are managing, but the rest, 90% of it is still untouched. So why not go after that? Some EORs are adding a direct sourcing product. They already have the EOR. They've already got processes; they've got the client’s trust. So, in my mind, it's only going to be a very small pivot to revolutionize and centralize that area of spend and add in data strategy and a tech strategy. Then just have strategic conversations with their customers to provide a more holistic talent supply strategy.

Now aspirationally, this sounds wonderful. We've been talking to many EOR after I posted a couple of articles. A lot of them are not ready. The challenge is they need to get out of their own way. A lot of them are not ready to make the mild pivots they would need to make to add a services layer or to add tech. A lot of them just want to make their EOR/AOR placements and collect their bonus. But that is riskier, financially, in the long run.

But I think the biggest thing that I'm seeing in the multiple conversations I've had, especially this week after the last article I posted, I have 11 meetings with EORs. They think this is going to be much more complicated than it is. I'll leave you with this: they're much closer to grabbing a massive share in this 4 trillion than they realize with just some small changes. This is not a big lift and shift. And the fact we have all these EOR companies reaching out to help them with the strategy to get this additional whitespace means they are ready. And frankly the ones that don’t make these pivots will slowly lose market share to the EOR’s who are working with us and adding other services and tech layers to centralize this $4 Trillion.

Mickey That’s one of the questions I had that I wanted to ask you; what do you think the industry, and maybe even those outside of the industry are getting wrong about EOR? What is it that they need to know? I think you're starting to answer that there. But what I want to dig in a little more.

Terri If I were an MSP or a staffing company, I would be very, very afraid of what EOR are going to do, if they're smart. I would just really watch the stats. I would watch what they're doing. I would watch within their customers. I think one of the things they get wrong is that they don't understand the complexity of the solution that EORs provide. Everyone thinks it's just an employment vehicle, they do this vetting process, they onboard people, and they're really more just like an operational arm.

But I don't think that they understand the layer of vetting and regulatory knowledge and protections that they provide on a continuous basis, that change constantly and globally. Consider the labor laws that they have to stay on top of, the regulations by country. They stay on top of some of these because if you get it wrong, it’s millions of dollars in penalties, some require jail time. It's no joke. But not only do they stay on top of that, but they incorporate this knowledge and this protection and this indemnification into all the processes. I don't think people realize what goes into it.

Mickey Oh absolutely, there’s far more than meets the eye. Now, if you think of staffing holistically, technically EOR has been around, in some capacity, for a while. Why do you think it's just now starting to get much more attention?

Terri Because of you and me, and I think they should pay us (laughs). But. I'm serious. I think that they're getting a lot more attention because of the explosive growth in ICs.  People are using them more. Remember 5 or 10 years ago ICs were something to be removed and afraid of and managed. And “we don't want to use them, they're the boogeyman.”

Now it's like, wait a minute, some of your best talent is in this community. There's explosive growth, and you and I, our whole model of delivery is this. Both our companies leverage freelancers and independent consultants very heavily. We drink our own Kool-Aid because you know that’s the way the best talent wants to work. I think that's why EORs are getting more attention because of that explosive growth around that community that they are already providing support. Coupled with indemnification and compliance that is already in their backyard, so to speak, to manage that population.

So, providing that regulatory knowledge, vetting, and the kind of legal safety net has become that much more important. Whereas, 10 years ago, it was just something you did so that you don't have to worry about ICs, you just put them through an EOR and then they disappear. Well, now ICs could be one-fifth of your workforce.

Mickey

I agree. I think with the growth of the freelance market, though freelancers are essentially ICs, there needs to be somebody to make sure they're compliant as they're coming on board and that they're checking all the boxes and that they're paid accurately and all of the nuances that goes into it. I think additionally, with the growth of remote work as well, and companies wanting to be able to have talent in countries where they don't have an entity, this whole EOR opportunity has just made such a such a big difference. I think you bring up some really good points.

Terri Well, I think the last thing I would say too, is fear, because there's still a lot of fear, though some of it's outdated, around leveraging this community. Now there's even more of this community that companies have to grapple with. So now there's more fear and EOR's mitigate that fear.

Mickey

Fear is a great motivator and certainly brings up makes people think a little bit differently. Continuing the topic of EOR, one item becoming more associated with EOR is direct sourcing. You’ve mentioned direct sourcing a little bit already, but what are your thoughts on direct sourcing as a talent strategy?

Terri We're very bullish on direct sourcing. We have implemented multiple direct sourcing programs. We have built out the direct sourcing strategy for two of the biggest providers in the space. Gallagher was behind that. We're very bullish on direct sourcing. If you look at the data, as I mentioned earlier, the opportunity is $780 billion. You've got all these customers saying that they want it. They’re excited about it. I don't remember the stats from SIA but an overwhelming majority, something like 60-70%, either say they have direct sourcing, or they will deploy it soon.

Now the other piece of that, and this is where I may be a bit controversial. There's a lot of people that are saying, yeah, but nobody's implementing it, why is it not taking off? And that's not true. Customers are implementing it. They're just implementing it outside of the MSP. They're implementing it outside of traditional staffing.

I think that probably the biggest challenge is you need solution providers, and the people talking to the customer that are really explaining the business case and how it works and executed within their ecosystem and that it's not a big lift and shift. It's not a huge implementation. It can be integrated fairly easily. They need to able to articulate not only the business case, which everybody can do, but exactly how that will work right, the agility, how talent clouds work, why we need your ATS. How we're going to do a better job with your database of people that apply than you will. So, I think there's a disconnect of articulating the value prop to the customer and the real know-how to implement direct sourcing.

And I also will say this again, MSPs are not pro direct sourcing. But this isn't just my opinion, I've had people that have worked for MSPs, and I've sat in on some webinars and it's clear that they're being forced to embrace it and they're not really expediting direct sourcing. They're creating PMOs, they're talking about it and they're doing everything they can to just keep that progression slow, because why would they? Why would they want direct sourcing? That's going to decimate the revenue model or, they will bring it in and then add an additional fee on top. So not only their MSP fee but add the extra 2 to 3%. What customer is going to want to pay that extra?

Mickey I’ve felt adoption hasn't been as rampant, but maybe it is, I’ve always just questioned how many companies say they're doing direct sourcing, but are they really doing it and are they doing it well?

Terri Yeah, good point.

Mickey I wonder if that attributes to the numbers, but it is another progressive strategy that you and I both agree needs to be considered and factored in as that part of the Omni channel talent approach. So, to end the conversation with you, you're a very progressive, futuristic thinker when it comes to talent and contingent workforce. I'm just curious if there's any other progressive thoughts you'd like to leave us all with.

Terri I don't know how progressive, but I'll give my opinion. I think we've had a shift. We talked about the 200-year-old employment construct right where everybody is simply happy to have a job and I think the workforce is in charge now. I think the workforce is dictating how and where and why they want to work. It's constantly changing, side hustles, part time work, remote work, solopreneurs, and freelancing. People are saying this is how I want to work, and if you want to employ me, then you need to employ me in this type of construct. I think that the people have spoken and are shaping the future work and the way that we work.

We need to change with them to expedite the hiring and sourcing process. This antiquated, going through four and five interviews process, I think that that's an old construct – like the employer has the upper hand, and they're going to make you jump through all these rings and people are not jumping through rings anymore. They want to be hired quickly. They want to be paid what they're worth and I think technology is going to be at the center of that.

I think direct sourcing is going to be at the center of that, as are on-demand and freelance workforce platforms. If you look at all the stats that are out there, companies overwhelmingly plan on using more of those because they see the bottom-line results. They prefer to rent people than hire people permanently and the people they rent want to be rented. So, I think the worker has more power than they ever have at any other time and the balance of power has shifted.

Mickey I think that's an incredibly powerful and a very interesting way of thinking about things. I appreciate you taking the time to speak with us and leaving us with some very amazing things to think about. Thank you!

Terri You're more than welcome. Thank you for having me.

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