Highlights
Northgate Regional Distribution Ltd. needed to reduce overhead and focus on core operations. Their internal IT and logistics support department—11 employees—was essential to daily operations but costly to maintain in-house. Rather than lay off the team or outsource to an offshore vendor, Northgate chose a department takeover model: InfraDev would become the employer of record for all 11 employees, host them at our office space, and deliver the same services under a fixed monthly fee. The result: 24% cost savings for Northgate, 100% employee retention through the transition, zero budget overruns, and a dedicated workspace at InfraDev where the team could collaborate while continuing to support Northgate. This case study demonstrates how InfraDev facilitates department transitions, office hosting, and budget-conscious workforce management for companies seeking to streamline operations without losing talent or capability.
The Challenge: Reducing Overhead Without Losing the Team
Northgate Regional Distribution Ltd., with operations across Ontario and Quebec, had built an internal department of 11 people to handle IT support, logistics coordination, and administrative operations. The team was embedded in Northgate’s workflows: they managed inventory systems, supported warehouse technology, coordinated with carriers, and handled internal help desk requests. They knew the business intimately and had built relationships with vendors and internal stakeholders over years. Several team members had been with the company for 5+ years; their institutional knowledge was valuable and difficult to replace.
The problem was cost. Northgate’s leadership had run a cost analysis and concluded that maintaining the department in-house—with salaries, benefits, office space, equipment, and management overhead—was consuming 18% of their operating budget. They needed to reduce that figure to align with a broader cost-reduction initiative. The options on the table were stark: lay off the team and outsource to a third-party vendor (risking knowledge loss and service disruption), keep the team and try to cut costs internally (difficult without reducing headcount or compensation), or find a partner who could take over the department while preserving the team and the service level.
Northgate had two non-negotiable constraints. First, budget: they had a fixed annual budget for the department and could not exceed it. Any solution had to fit within that number—or reduce it. Second, continuity: they could not afford a prolonged transition or a drop in service quality. The distribution business runs on tight timelines; system outages or coordination failures would directly impact customer delivery. The team had to keep working with minimal disruption.
They also wanted to treat the employees fairly. Layoffs would damage morale across the company and create reputational risk. Northgate had a strong culture of loyalty and did not want to be seen as abandoning long-serving staff. If there was a way to transition the employees to a new employer while maintaining their work and benefits, Northgate preferred it. InfraDev’s department takeover and office hosting model offered exactly that path—a solution that reduced cost, preserved the team, and aligned with Northgate’s values.
Why Department Takeover Over Alternatives
Northgate evaluated several options before choosing InfraDev. Layoffs and outsourcing would have reduced cost but at the expense of institutional knowledge, service continuity, and employee morale. Keeping the team in-house with cuts would have required reducing headcount or compensation, both of which risked attrition and quality decline. Contracting the work to a generic outsourcing vendor would have introduced a new party unfamiliar with Northgate’s systems and workflows—and likely required a lengthy knowledge transfer.
Department takeover offered a middle path: the same people, the same work, but a new employer and a new cost structure. InfraDev could achieve savings through economies of scale (our benefits and payroll administration are more efficient than a small in-house operation), office hosting (we had spare capacity and could absorb the team without Northgate’s facility costs), and streamlined management (Northgate no longer needed a dedicated internal manager for the department). The employees would keep their jobs, their work, and comparable benefits. Northgate would get cost reduction without capability loss. It was the option that aligned best with Northgate’s constraints and values.
Our Approach: Department Takeover and Office Hosting
We designed a department takeover structure: InfraDev would become the legal employer for all 11 employees, assume payroll, benefits, and HR administration, and host the team at our office. Northgate would pay InfraDev a fixed monthly fee for the services the team provided. The employees would continue doing the same work for Northgate—same systems, same workflows, same stakeholders—but they would be InfraDev employees, working from InfraDev’s office.
Employer of Record: Assuming Employment and Payroll
Through our Employer of Record (EOR) service, we offered employment to all 11 department members. Each employee received an offer from InfraDev with comparable or improved compensation and benefits. We handled employment contracts, payroll, tax remittances (CPP, EI, income tax), benefits administration, and compliance with federal and provincial employment standards. Northgate no longer had any employment liability for these individuals—InfraDev did.
We structured the arrangement so that the employees were assigned to work exclusively on Northgate’s projects. Their job descriptions, responsibilities, and deliverables remained aligned with Northgate’s needs. Northgate retained day-to-day work direction: they set priorities, approved workflows, and received the same outputs as before. InfraDev handled everything related to employment: hiring (in this case, transition), payroll, benefits, performance administration, and HR support. Northgate had a single point of contact and a single invoice.
Office Hosting: A Dedicated Space at InfraDev
A key differentiator was office hosting. Rather than have the team work remotely from home or from Northgate’s former office (which Northgate was consolidating), we hosted them at InfraDev’s office. We allocated a dedicated area—desks, meeting space, and common areas—for Northgate’s team. This gave the team a professional workspace, face-to-face collaboration, and a clear sense of identity as an InfraDev-managed unit serving Northgate.
Office hosting also simplified logistics. Northgate no longer needed to provide workspace, utilities, or facilities for these 11 people. InfraDev’s office already had high-speed internet, meeting rooms, and security. The team could focus on their work without the distraction of a physical transition to a new employer location—they came to InfraDev, and InfraDev became their workplace. For Northgate, it meant one less facility to manage and one less lease to worry about. Northgate was consolidating their own office footprint as part of the cost-reduction initiative; moving these 11 employees to InfraDev freed up space that could be subleased or relinquished, adding to the overall savings.
Working Within Budget: Fixed Fee and Cost Transparency
Northgate had a strict budget. We built a fixed monthly fee that covered: (1) employment costs (salaries, benefits, payroll taxes, InfraDev’s EOR fee), (2) office hosting (allocated cost for space, utilities, and facilities), and (3) a small margin for InfraDev. The fee was set at a level that delivered 24% savings versus Northgate’s previous in-house cost—and we committed to no overruns. If employment costs increased (e.g., statutory raises, benefit changes), we absorbed them within the agreed parameters or renegotiated transparently with advance notice.
We provided monthly reporting so Northgate could see exactly what they were paying for: headcount, role mix, and cost breakdown. There were no hidden fees. Northgate could plan their budget with confidence, and we delivered within it for the full first year—and have continued to do so.
Before and After: The Numbers
Before InfraDev (In-House Department)
| Metric | Before |
|---|---|
| Department headcount | 11 employees |
| Annual department cost (fully loaded) | $847,000 |
| Cost per employee (avg. fully loaded) | $77,000 |
| Office space cost (allocated) | $132,000/year |
| Payroll/HR admin (allocated) | $28,000/year |
| Management overhead (allocated) | $45,000/year |
| Total cost to client | $847,000/year |
| Employee retention (prior 12 months) | 82% (2 departures) |
After InfraDev (Department Takeover + Office Hosting)
| Metric | After |
|---|---|
| Department headcount | 11 employees (same team) |
| Annual cost to client (fixed fee) | $644,000 |
| Cost per employee (effective) | $58,545 |
| Office space cost | Included in InfraDev fee |
| Payroll/HR admin | Included in InfraDev fee |
| Management overhead | Included in InfraDev fee |
| Total cost to client | $644,000/year |
| Employee retention (first 12 months) | 100% |
Key Results
- 24% cost reduction: $847,000 → $644,000 per year
- $203,000 annual savings for Northgate
- 100% employee retention through transition (no voluntary or involuntary departures)
- Zero budget overruns in year one
- Dedicated office space at InfraDev for the full team
- Same service level—no drop in quality or responsiveness
How We Facilitated the Transition Within Budget
Transparent Cost Modeling
Before the transition, we built a detailed cost model with Northgate. We compared their current fully loaded cost (salaries, benefits, employer taxes, office space, HR admin, management overhead) against our proposed fixed fee. We showed exactly how we could deliver 24% savings: through economies of scale in benefits and payroll administration, efficient use of our existing office space, and elimination of redundant management layers. Northgate’s finance team validated the numbers and approved the budget.
Employee-Centric Transition
We knew the transition would succeed only if employees felt secure and valued. We worked with Northgate to communicate the change clearly: employees would become InfraDev staff, with comparable or better compensation and benefits, and they would work from InfraDev’s office. We offered one-on-one conversations to answer questions about payroll, benefits, and career path. We also ensured that the transition did not disrupt their work—they continued supporting Northgate from day one, with the same tools and access. The result was 100% acceptance of offers and zero attrition during the transition period.
Flexible Fee Structure
Northgate’s budget was fixed, but we built in flexibility. We agreed on a base fee with clear parameters for adjustments (e.g., if headcount changed by mutual agreement, or if statutory costs increased beyond a threshold). We committed to 90 days’ notice for any fee changes, giving Northgate time to plan. In year one, no adjustments were needed—we delivered within the agreed fee.
Office Integration
Hosting 11 new people at our office required planning. We allocated a dedicated zone, ensured adequate desk space, meeting rooms, and storage. We coordinated with Northgate on IT access—the team needed to retain access to Northgate’s systems (inventory, logistics, help desk) while using InfraDev’s network and facilities. We established clear norms for security, confidentiality, and use of shared spaces. The integration was complete within two weeks of the transition date.
We also considered the team’s experience. Moving from Northgate’s office to InfraDev’s could have felt disorienting. We provided orientation sessions, introduced them to InfraDev staff where relevant, and made clear that they were a valued part of InfraDev while continuing to serve Northgate. We assigned a dedicated InfraDev contact for HR and administrative questions. The goal was to make the transition feel like a positive change—new employer, new workspace, same important work—rather than a disruptive upheaval.
Before and After: Summary Statistics
| Metric | Before (In-House) | After (InfraDev Takeover) |
|---|---|---|
| Annual department cost | $847,000 | $644,000 |
| Savings | — | $203,000 (24%) |
| Office space | Client-provided | InfraDev-hosted |
| Payroll/HR admin | Client-managed | InfraDev-managed |
| Employee retention (Y1) | 82% | 100% |
| Budget overruns | N/A | 0 |
| Time to transition | — | 6 weeks (planning to go-live) |
Key Takeaways
This case study illustrates how department takeover and office hosting can reduce costs while preserving talent and service quality. Northgate achieved 24% savings by transitioning their internal department to InfraDev—without layoffs, without service disruption, and without budget overruns. The employees gained a stable employer (InfraDev) with competitive benefits and a professional workspace. InfraDev gained a long-term client and a team that continues to deliver value.
When department takeover makes sense: Companies considering a department transition often face the same dilemma: they need to reduce cost but cannot afford to lose the team or the capability. Department takeover is ideal when (1) the department is well-defined and can be clearly scoped, (2) the client wants to preserve the team and avoid layoffs, (3) budget constraints are strict, and (4) the client is willing to transition employment and workspace to a partner. InfraDev’s model—EOR + office hosting + fixed fee—addresses all of these.
Budget discipline: We committed to working within Northgate’s budget and delivered. Fixed fees, transparent reporting, and no surprise costs built trust. For companies with strict cost targets, this predictability is essential.
Frequently Asked Questions: Department Takeover and Office Hosting
What is a department takeover?
A department takeover occurs when InfraDev becomes the employer of record for an existing team that previously worked for the client. The employees transition to InfraDev employment but continue doing the same work for the client under a service arrangement. The client pays a fixed fee; InfraDev handles payroll, benefits, and HR.
Do employees have to work at InfraDev’s office?
Not always. In this case, we hosted the team at our office to provide a dedicated workspace and simplify the client’s facility consolidation. We can also support remote or hybrid arrangements depending on the client’s needs.
How does InfraDev stay within budget?
We build a fixed fee based on transparent cost modeling. We commit to no overruns within agreed parameters and provide advance notice if adjustments are needed. Monthly reporting keeps the client informed.
What happens to employee benefits?
Employees receive InfraDev’s benefits package, which includes health, dental, and retirement savings. We aim to match or improve upon their previous benefits to support retention.
How long does a department takeover take?
In this engagement, we went from signed agreement to full transition in 6 weeks. The timeline included employment offers, acceptance, payroll setup, and office integration. Simpler transitions can be faster; more complex ones (e.g., larger teams, multiple locations) may take longer.
Can the client still direct the team’s work?
Yes. The client retains day-to-day work direction. They set priorities, approve workflows, and receive the same outputs as before. InfraDev handles employment, payroll, and HR; the client handles the work itself.
Considering a department transition or office hosting arrangement? Contact InfraDev to discuss how we can take over your team, host them at our office, and deliver cost savings within your budget.