In 1997, Monica and Jerry Sforza co-founded Encode Inc., an IT staffing and consulting company headquartered in New Jersey. The company germinated during the years preceding the Y2K bubble and has since grown into an infrastructure-centric IT services organization with more than $12 million in gross revenue last year.
Today, the company works with infrastructure managers across the US and Canada, providing subject-matter experts with skills ranging from cybersecurity, analytics, middleware, cloud, content management and automation monitoring to electronic medical records technology — most often outside the constraints of vendor management systems.
Managing Editor Sharon Thomas spoke with CEO Jerry Sforza about the challenges faced and what lies ahead for Encode.
Jerry and Monica Sforza
Q: The bursting of the Y2K bubble came fairly soon after Encode was launched — barely two years. Describe your reinvention?
A: When Y2K remediation was over — and that was by mid-’99 — we were thinking, “How do we want to reinvent ourselves? What’s going to be our focus now?”
Y2K brought us into the infrastructure departments of IT. We built relationships with infrastructure managers, directors, and of course, resources that were infrastructure-centric, as well. So we stayed within infrastructure, and became aligned with IBM, quite frankly, because it was the major infrastructure software vendor at that time.
As IBM expanded its offerings, our practice expanded as well. And so our track as an organization was successful early on because we were a niche player. We weren’t everything to everybody. We were very infrastructure-focused and we sought out additional infrastructure opportunities or engagements utilizing the technology that we knew well.
Our client satisfaction was extremely high early on because we had a roster of talented technical resources whom we knew intimately, and it was very easy to sell their services because demand was high and our confidence was high in our ability to deliver. It still remains one of our key differentiators — highly skilled, senior resources who are well known to Encode.
That was pretty much the early years of Encode, and we have stayed infrastructure- centric really up to this day. The software vendor technology that we support has grown significantly — and in all of those areas we have very active practices.
Q: Your website solicits consultants with reference to seeing the ‘long game.’ Explain why this is different from staffing?
A: It really speaks to the heart of how we see ourselves and the type of service that we provide to our clients. There’s a very close working relationship with actual project managers as well as the resources we deploy. We tend to avoid clients that don’t allow us or try to dissuade vendors from working closely with project managers because we can’t be successful without that. While yes, we are technically staffing, but in our delivery model, we are partners with our clients in helping solve technical challenges.
That’s how we’ve always operated from day one with a very close, intimate working relationship with our clients. We understand what the client’s initiatives are for the year, what they’re looking to accomplish in the next 30, 60, 90 days, the next three quarters, what type of resources they need. This way, we meet our clients’ requirements with well-proven resources that we know are coming available.
And so, our redeployment rate for our consultants is high. In some calendar quarters, it’s more than 20%. And building those relationships with clients and our resources is the reason we see the long game. If somebody is a subject-matter expert with a technology that we’ve been supporting and expect to continue supporting, we want that resource to be comfortable working with Encode. We want to be their “go-tomarket” partner.
We want them to be comfortable, to know that even with notice of an imminent end date on their current assignment, they don’t have to work so hard lining up their next engagement. Based on our knowledge of their skills and our clients’ upcoming initiatives, there is a strong likelihood that Encode will have their next assignment lined up. And that’s what we attempt to do. It doesn’t always work out due to timing of their availability and a clients’ start date, but that’s what we attempt to do. And so, yes, we look very much at the long game both with our customers and with our resources because really both are our clients.
Q: So you don’t do any VMS related work?
A: That’s correct. There might be a vendor manager in the equation that functions as a “paymaster” in that we submit invoices to them and they process those invoices for payment. But not otherwise.
We like to know about the requirements from the hiring or project managers. We then work with those managers directly to fill their open positions. We secure a commitment from the manager for the resource to start, and then we’ll work with the designated vendor manager to onboard the resource, bill for the resource and get paid for the time the resource is working. It is impossible to deliver the high level of service we are known for without a close working relationship with both our clients and our deployable resources.
Q: What is your recruitment strategy? With job openings outpacing workers, how do you attract your consultants?
A: Primarily the standard mechanisms, including postings, social networking, generic searching, networking and referrals. It’s basically not too much different than it’s been for a number of years. Yes, there are tools available today that allow us to be highly productive, targeted and faster with our recruiting, but it is still a relationship business for us. Using LinkedIn Recruiter is becoming more and more active for us, depending on the duration of the engagement. There’s really no secret sauce, just the hard work of developing and maintaining a network of skilled, reliable, redeployable resources.
The strategy of hiring somebody right out of college isn’t feasible for the type of resources we need — the client could do that themselves; they don’t really need us for that. Most of our clients want senior talent, which kind of dictates that we maintain strong, balanced, win-win relationships with highly talented resources.
Our strategy is we treat our resources well. We stay in touch with them whether it’s a new relationship or existing. Our strategy of maintaining a stable of people whose expertise we can provide to clients is to be fair and honest with the ones you do business with. We treat our consultants the same way we treat our clients, with a “white glove”.
Q: In addition to the talent shortage, what else do you consider as a barrier to growth?
A: Talented salespeople — that’s probably the ratcheting factor for companies in our business. Regardless of size, it’s tough finding passionate, honest, hardworking and knowledgeable IT services sales people. That seems to be the limiting factor for us.
Q: Where do you see Encode in the next five years?
A: Last year, we closed the year with $12 million to $12.5 million in gross revenue. We have a two-pronged growth plan to get us to $30 million. One is to grow organically, and we currently are looking for a VP of sales to help us with that organic growth here in New York Metro. But we are also actively looking for smaller acquisitions, firms where the owner is looking for an exit strategy.
Q: Are you looking to acquire within your New Jersey area or outside of that area?
A: I would say as long as the business model of the company is similar to ours they could really be based anywhere in the country. We offer a “win-win” exit strategy for someone looking to retire. We also have a very compelling incentive program for principals seeking to stay involved in a growing business.
