Axium / Chimes Files Bankruptcy

Axium / Ensemble / Chimes (The largest VMS player) files bankruptcy.

January 8th, Axium International, Inc. who is the parent company of Chimes Ensemble Group filed chapter 7 bankruptcy which has shaken the contract & contingent staffing industry.

Chimes clients included major players such as UnitedHealth Group, GM, Toyota Motor Company, Ford, Perot Systems, Morgan Stanley, Kaiser Permanente, AT&T, Bell South and many more are now scrambling to either find a replacement MSP/VMS or to bring their contract workforce management back inside the company – which is a daunting task. 

Many of the staffing vendors have been told that they won’t get paid for most of November and December 2007’s billable time – which leaves firms (and their consultants) in a really bad situation, not to mention the companies who have outsourced their entire contingent workforce management to Chimes.

This was a huge surprise to us in the staffing industry – and even to many of the Chimes employees who we work with everyday at major client accounts. Axium purchased Chimes from Computer Horizons in February of 2007 – so it hasn’t even been a year since the acquisition, which adds to the confusion, especially the inflated price of $80 million which had most of us in the industry scratching our heads. 

There is some speculation that the writers strike has a role to play in the downfall since Axium was a major player in payrolling the TV/movie industry which has all but been shut down since the beginning of the strike, however, the majority of people close to the business said it was mainly because of poor management and a complete failure of the integration of the Chimes business into the acquiring company, and a very paranoid set of lenders who jumped to swipe the bank accounts shutting the company down.

Most importantly, these companies will have to figure out how they’ll regain the confidence of their staffing suppliers, who are most likely not going to be happy losing 1-2 months of billable revenues (especially after they’ve been margin squeezed already), which could result in a large volume of contractors leaving their accounts with the pending loss of pay and future instability.

Some companies have reportedly converted the Chimes on-site program teams to their own full time employees – and are re-establishing direct vendor relationships with their vendors to return to their pre-outsourced state of internal and manual management.

Some staffing firms are excited about the collapse, with the prospect of working directly with their client managers again – and not having to deal with what they called bottleneck of the MSP/VMS program to fill contract positions, however, their excitement is tempered with trying to isolate the damage they may have suffered with any consultants currently engaged in the accounts.

For companies that are seeking VMS/MSP types of solutions – this will surely add another dimension to what strategy they select, and how they build their CWM strategy going forward. 

CONVERSATION:

• Does your company current work with any MSP/VMS partners?

• How does this affect your relationship with them?
• Where you considering an MSP/VMS in 2008?  (how would this effect your thinking?)

News Links:

LA Times

Staffing Industry Analysts