Master thesis : "How startups at HTC Eindhoven decide between hiring personnel and using independent contractors."

Abstract

The High-Tech Campus (HTC) in Eindhoven in The Netherlands is a breeding ground for tech startups. It offers a complete infrastructure for startups to grow and scale. When successful, these startups face a need to expand. The job market for technical personnel in The Netherlands is very turbulent, and demand is vastly exceeding supply. Technical talent is getting scarce and deciding which talent should be hired or which talent should be outsourced is a challenge. Recently I started my own consultancy company Qualifice BV which supports startup companies at the High-Tech campus with their test engineering needs. And if all goes well, Qualifice BV will be facing the same expansion challenge. Where large and mature organizations typically build their teams by hiring personnel, startups are facing different dynamics. They face many uncertainties like cash availability and non-proven technology in aggressive competitive environments, and they need to make the best expansion decisions possible to cope with these uncertainties. By researching the problem statement “How do hardware startups at HTC Eindhoven decide between hiring personnel and using independent contractors?” understanding of this decision-making process is built which is valuable information, not only for Qualifice BV but for other startups as well. This problem is researched by answering the questions “What are the variables influencing the hire or outsource decision?”, “How do these variables contribute to the hire or outsource decision?” and “How did HTC startups decide on hiring or outsourcing in practice?”. With desk research (literature review) a number of variables and their contribution to the decision to hire or outsource were discovered. These variables are cost, revenue stream, company valuation target, intellectual property, legal consequences, availability of competence, the business model, focus on value disciplines, ability to trust, intuition and the entrepreneur’s experience. Qualitative field research by interviewing relevant HTC startup leaders has confirmed that some of these discovered variables were indeed important in the practical decision-making process, and additionally, some new variables were discovered: the startup phase and legal entity restrictions. For tech startups at HTC, it can be concluded that the decision between either hiring personnel or outsourcing is directly driven by their business models which are developed to increase company value, and these models distinguish between core and non-core activities. Personnel is hired for core activities, and non-core activities are outsourced. Exceptions are only made when restrictions exist on cost, availability of competence and/or legal entity restrictions.