16/12/2010 - 00:00

Diversification next on Trilogy’s books

16/12/2010 - 00:00

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HOW would you respond if faced with the prospect of losing access to half your business’s potential market?

HOW would you respond if faced with the prospect of losing access to half your business’s potential market?

For Trilogy Resources’ principal Sam De Longis that question was more than a rhetorical one when, five years ago, the state government decided to limit its IT recruitment contract distribution to a panel of just five companies.

Although not over-committed in the government sector, Mr De Longis decided he didn’t want the opportunity taken away.

“This town is probably roughly 50-50 mining and government ... it is two major camps. If you said to someone, ‘I am going to wipe out 50 per cent of your market’, even if you are not in there you are going to feel nervous,” Mr De Longis said.

“You could see the smaller operators saying, ‘we need to get on this panel and if we don’t we’re dead’.”

Competition was intense, with Mr De Longis estimating about 100 IT recruitment companies vying for a spot on the panel of five.

Faced with the prospect of not dealing with the government for five years, he and his team went about developing a plan for getting on the panel – offering the lowest fixed margin.

Mr De Longis figured that if there were only going to be five companies on a panel, one of those would naturally dominate the contracts; and he decided that Trilogy Resources was going to be that company.

In order to do that, he needed to shave his margins.

“We did get in, we were the lowest on the panel, which is where we wanted to be,” he said.

But reducing margins by the degree necessary to make the cut put the business’s profitability at stake.

That’s where dominating the contracts comes in, Mr De Longis said; having the lowest margin meant getting the most contracts, which in turn would show whether they were going to be lucrative.

If they weren’t going to offer a sufficient return, Mr De Longis determined to leave the panel and secure better work, and bigger contracts.

As it turned out, the profits came quickly, and Trilogy had to expand quickly to build the capacity to cope with the work.

The recruitment side of the business had been growing since Mr De Longis started the company in 1988 as a software development business, recognising a gap in the market for a recruiter that understood the technical needs of clients looking for contractors and individuals looking for work.

Before the government panel position came along, Trilogy had about 20 contractors on its books, which grew rapidly to between 200 and 300 at any given time since the government work started coming in, in 2004.

Mr De Longis estimates revenue of the business has grown 10-fold in this time.

Growing that rapidly has meant challenges, however, with 90 per cent of the recruitment side of the business being in government contracts.

“When we started we had nothing to lose, other than the potential to not be doing anything over the next five years. All of a sudden being the biggest guy on the panel, we had a lot to lose; we had 80 or 90 per cent of the business sitting here so you get a bit nervous,” Mr De Longis said.

Positions on the panel were up for renewal last year, and Trilogy was the only original company to have its position renewed.

With the growth has come recognition; Trilogy was awarded the best candidate management award at the Thompson/Reuters recruitment awards earlier this year, a category open to all recruiters, not just IT.

Mr De Longis is now focused on diversifying the business’s books and winning contracts in the non-government sector, as well as developing the original core of the business – software development.

“We will be looking at ramping up the non-government side of the business next year. We want to be able to make sure we are dominating in that space as we are in the government space,” he said.

“With any business, you want to have a foot in both camps.”

 

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