The traditional in-house team is increasingly being replaced with outsourced, specialized staffing options. Whether it’s through BPOs, agencies or overseas recruiters, tech companies are turning to external sources to fill essential skill gaps.
We saw much of this shift take place during the pandemic, when companies shifted to lean teams to ensure continued operations while cutting costs.
In 2023, the tech industry grappled with unprecedented challenges in the aftermath of mass layoffs, where 839 tech companies laid off over 216,000 employees combined. As a result, scaling startups and teams were left in a precarious position, having to face the dual pressure of reducing cash burn while building their businesses with fewer resources.
Founders are realizing they can't wear every hat and be in every place at once. Simultaneously, hiring the right person takes time, but “time is money” rings true for almost every team.
So, for teams needing to mitigate risk for immediate return, Fractional is the future.
What is Fractional? And Who Can Benefit?
Fractional hiring gives you a super-flexible and experienced workforce at your fingertips. It’s a clever way for companies to get top-notch professionals on board without committing to a full-time employment contract.
A fractional hire is a long-term or part-time hire that just happens to be doing the same for other organizations at the same time. Fractional hires come in all shapes and sizes, from C-Suite to key functional roles like HR, Talent, Accounting, and Software development.
Startups are using this model to accelerate product development while cutting fixed costs. For example, Gun.io have touted the benefits of the fractional hiring model they use, which has allowed them to continue to scale headcount even after the pandemic struck in March 2020.
The Problem of Traditional Hiring
The traditional hiring process proves to be a double-edged sword in the fast-paced tech world. Sourcing, interviewing, and onboarding candidates is a time-consuming process.
But startups can’t afford to wait for extended periods to find the perfect fit for crucial roles. That delay can result in missed opportunities, a lag in product development, and a compromised competitive edge. The challenge lies in speeding up the hiring process without compromising the quality of talent acquisition.
Therefore, it’s vital to find a solution that can accelerate product development and provide quick access to skilled professionals who can seize immediate opportunities and contribute to the venture’s success. That’s where fractional hiring comes in.
Fractional Hiring as a Solution
Fractional hiring offers a unique approach to talent acquisition that sets it apart from traditional hiring or working with freelancers.
Unlike traditional hiring, which often involves full-time or long-term commitments, fractional hiring allows businesses to engage professionals on a part-time or project-based basis. This flexibility enables organizations to tap into specialized expertise for specific tasks or projects without the need for a full-time hire.
Fractional hiring provides access to experienced professionals who can bring immediate value, contributing their skills and knowledge to achieve specific objectives efficiently. In contrast to freelancers who are typically self-employed and work independently, fractional hires become an integrated part of the organization, aligning with its goals and collaborating closely with the team.
This level of integration fosters better communication, collaboration, and a deeper understanding of the business, enabling fractional hires to deliver high-quality work that aligns with the company's vision and objectives.
So with fractional hiring, businesses can access the right talent at the right time, optimizing resource allocation while benefiting from expertise tailored to their specific needs.
3 Benefits of Fractional Hiring
There are three key benefits of implementing fractional hires when scaling your startup:
Benefit #1: Agility and Flexibility
One of the primary advantages of fractional employees is the agility and flexibility they bring to your operations.
- Fractional experts are well-versed in working with different teams and businesses, allowing them to adapt to the unique needs of each project quickly.
- They offer an unbiased perspective, bringing fresh ideas and innovative approaches to propel your business forward.
- The adaptability of fractional workers ensures that your business can pivot rapidly in response to market changes and emerging opportunities—vital in today’s dynamic tech landscape.
It's like having a special ops team that swoops in to provide critical support for a specific period, giving your core team the breathing room to focus on regular ops. This approach keeps your momentum going and sets you up for long-term success without the worries of overextending your team or burning through resources.
Fractional sourcing allows you to bring in seasoned professionals, only when you need them. There’s no need to go through lengthy hiring processes over and over again, or commit to permanent hires when the extra support is only needed temporarily or in limited quantities.
Benefit #2: Access to Top Talent
Historically, it made sense for business owners to build a robust in-house team that works together to tackle problems from within the company. But sticking solely to internal thinking and expertise has its limitations.
Fractional hiring allows you to:
- Access top-tier talent that might otherwise be out of reach due to the inability to afford a full-time employee salary or market competition.
- Tap into a pool of highly skilled professionals who have proven expertise and a track record of success in their respective fields.
- Have a collaborative partner that helps you cut through the fluff and get straight to the core of the problem. Plus, their expertise can introduce new thought processes that can evolve the way you work.
For instance, a tech startup can engage a fractional executive, benefitting from their vast knowledge without committing to a full-time executive salary. Similarly, a marketing team can leverage the expertise of a fractional chief marketing officer (CMO) to devise effective strategies without bearing the full cost of a permanent executive.
This access to elite talent ensures that startups can make critical decisions based on seasoned insights, maximizing their chances of success (even with limited resources).
Benefit #3: Reduced Risk
If the market has shown us one thing, it’s that volatility is ever-present.
Fractional hires help mitigate these risks, as they offer protection to your company in an economic downturn. Because they provide specialized support without locking you into long-term commitments, you can anticipate and plan for shifting needs in the business, rather than carrying the liability of large salaries.
Plus, fractional experts bring their extensive industry experience and knowledge, reducing the likelihood of costly mistakes (although that’s not always guaranteed). Their ability to adapt swiftly minimizes the risks associated with experimenting and pivoting to new strategies.
As a result, your business can explore new opportunities that might not have been possible for (or even recognized by) your in-house team.
Fractional teams can be vital to the success of a team.
Think of them as fuel that drives your business. This may be in the way of talent support, to solve for a hiring push before new headcount dwindles, or maybe you just need a functional expert in a specific field.
Whatever role you’re hiring for, though, it’s important for founders to be clear on the gap you’re trying to fill. Leverage your network, VC’s and advisors to understand what the role entails and what an SME can bring to the table to attract the best talent. Then, set expectations, and develop a launch plan with a very regular check-in cadence to track performance.
That’s how you maximize the value and impact of your fractional hires.
At Bamboo Crowd, we’re here to lend a hand. Our embedded talent model is tailor-made for the fractional world, designed to address critical gaps across small teams. Through our partner ecosystem, we’ve built a network of trusted support and resources to assist scaling teams in their journey.
Check out HelloGeneralist, one of our partners connecting top fractional operators with high-growth startups.