The main definition of a spin-off is “a product that develops from another more important product“. Many people probably associate spin-offs with the film and television industry. In this business, you just need to pick the secondary character who is very popular with the audiences. Then, create a separate movie or TV series with them as the main hero. There’s a new plot with links to the original one but also introducing some new stuff along the way.
One of the examples of TV spin-offs is the “Joey“ series. It is based on much-loved “Friends“ and starring the funny character played by Matt LeBlanc. But, surprisingly, spin-offs may also take place in corporations, occurring as spin-outs or starbursts. As such, they often involve hiring new people, also within the IT recruitment process.
Spin-outs: staff issues and IT recruitment
What are spin-outs, in detail? Although this phenomenon is quite common, not everyone knows this name. In short, it’s a situation when a given company decides to take a certain department away from its structure. The bottom line is to create a separate company starting from this department. The new units have varying degrees of independence. They can use the parent company’s assets, workforce, technology, intellectual property, or products. However, sometimes what the “mother” has to offer is not enough. That’s why a spin-out may require hiring people and engagement in new IT recruitment.
Anyway, spun-off companies already have some of the staff (and thus, experience), and prestige. They acquire those assets automatically thanks to their relationship with the parent organization. Some help from a professional recruitment agency may be in need anyway, to make the process go smoothly. It may take the form of Recruitment Process Outsourcing, Talent Market Mapping, or Interim Recruitment, to name a few.
However, the fact that a given company spun-off from a larger, well-known corporation is sometimes not that obvious. Or such information doesn’t reach many people. Therefore, parent companies help their “children“ have a successful start on the market and appear in the clients‘ minds. They often decide to take on several supporting activities, such as investing in equity or being the first customer. Other forms include providing the right space and infrastructure that enables work or offering legal support and financial assistance. Thanks to that the spun-off companies can grow fast and build their own independent brands and strong market position.
IT recruitment: reasons why developers engage in spin-offs
There are many interesting reasons why companies decide to take on spin-offs. One of them is the willingness to implement innovations or at least acquire the image of an innovatory firm. There’s no doubt that companies with established positions and many years of experience are seen as strong and trustworthy. However, the market can change very dynamically and consumers constantly expect the launches of new products. A spin-off is a great solution in this case because it perfectly combines both these worlds. And people who can do that are, among others, programmers or developers. For this reason, IT recruitment, e.g. in the form of Executive Search on the IT/Telco market may be necessary.
The former is often associated with and accompanied by a transition in the structure. If a company wants to be innovative, it simply needs to change the way it operates. The decision-making process should be faster, the communication process must be easier, and project management methodologies more agile. Introducing these changes to the entire organization can be extremely time-consuming. However, if we separate one department and give it a new structure and management methods, we’ll reduce this time.
Another reason is a narrower specialization or developing a product that doesn’t fit in with the rest of portfolio. A company may have an extensive product range, and some of them may not match the others at all. Creating a spin-off will allow you to focus on these products while still taking care of the rest. At the same time, you’ll be able to manage your budget in a better way.
Making spin-offs: other motivations
Other motives for creating spin-offs include the decision to further some promising ideas that have been postponed so far. Another cause may be a lack of good offers. Certain companies simply decide to sell those departments that are unprofitable or don’t match the brand. Sometimes, when they don’t get good offers, they decide to create a spin-off instead of closing those departments completely. And let’s not forget about the financial issues. Most frequently, independent spun-off companies earn more money than if the department was still within the parent company.
And there’s one more reason, quite rare. This is dealing with a difficult history. Unfortunately, there are companies that suffer from some misfortunes or major scandals. Such situations have a strong negative impact on public opinion and can easily lead to the loss of customers. To soften the blow, some organizations create spin-offs that it’s harder to link with the parent company.
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