Before COVID-19, every industry was already seeing the impact of digitization. Mergers and acquisitions (M&A) and consolidation were increasing, innovative disruptors were raising more venture capital than ever before, and each internal function in large enterprises was strategizing on how to embrace and incorporate technology.
As the global pandemic hit, digital transformation hit the gas. The most defining effect of COVID-19 on digital transformation has been the growth of e-commerce penetration: e-commerce adoption grew more in the last six months than it has in the prior 12 years. Industries are fundamentally redefining themselves. New consumer behaviors and habits are forming, and the value chains of the market are permanently shifting.
While digital transformation promises a great challenge, it also promises significant opportunities. In our conversations with leading executives across the Finance, Procurement, HR and IT departments – one recurring theme has been made abundantly clear: to capture this new emerging value, an agile and robust talent strategy will be necessary.
Resetting Contingent Workforce Strategies
It’s time to hit the reset button on contingent workforce strategies! Age-old strategies were already under pressure pre-COVID-19. In a post-pandemic, hyper digitized world, organizations cannot revert to outdated techniques. New strategies and boundaryless thinking are required to reconstruct a more sophisticated, agile and robust workforce.
Romeen Sheth, President & Scott Fraleigh, Chief Product Officer
The gig economy has been talked about so extensively that the term has become nearly meaningless. Yet contingent workforce and services procurement practitioners know there is something going on beyond the buzzwords, something that is beginning to matter to the work they do. It is difficult, however, for many practitioners to distinguish what is essential and of importance in the context of their procurement goals. To aid in that effort, this Spend Matters’ brief explores how practitioners can make the gig economy work for them.
Based on a cursory look at Google Trends data, it is clear that the interest in the gig economy has risen consistently since the summer of 2015. No such increase occurred for terms like “contingent workforce” or “temporary labor” since 2004. But let’s take a closer look at how the gig economy is being described.
Definitions of what constitutes gig economy work range from:
Andrew Karpie, Research Director for Services and Labor Procurement, Spend Matters
In part one of this brief, we deconstructed the meaning behind the buzz word “gig economy” and explored what these new digital supply chains look like. In part two, we’re addressing the potential value opportunities, risks and challenges associated with digital supply chains for work and services and how practitioners can make the gig economy work for them.
Do you have the talent you need to stay competitive? Connect with your customers in a 24/7 world? Harness new technologies to drive more business value?
To achieve these goals, organizations need to source fresh talent and new capabilities. That’s easier said than done. To put things into perspective, in 2009 there were 6.6 job seekers for every vacancy in the US. By July 2018 that figure had fallen to 0.9, meaning there are now more job openings than unemployed people. The result? It’s increasingly hard for organizations to find the skills they need.
Our new research found that many organizations are already experiencing significant skills shortfalls. Just 31% of executives say their organization has enough skills in newer technologies (such as AI, automation and robotics). Only 29% have enough skills in cybersecurity.
To source sought-after skills, many organizations are turning to the external workforce, which includes:
contingent labor (also known as non-payroll workers), such as independent contractors, freelancers and temporary staff
services providers (companies that supply services delivered by people), such as consulting firms and marketing agencies
Our research found that the external workforce helps organizations to achieve a broad range of business goals. Most executives say the external workforce is important or extremely important to operating at full capacity/meeting market demands (74%) and improving the customer experience/client satisfaction (67%).
Molly Spatara, Global VP, Brand Experience, SAP Ariba and SAP Fieldglass
Your workforce is larger than you think. Look beyond your employees and contingent workers and you’ll realize there’s another large, powerful force at play. One that probably isn’t on your radar.
Services providers, such as consulting firms, marketing agencies and IT outsourcers, play a crucial role in helping organizations get work done. They are a vital part of today’s workforce, comprising nearly one-fifth of workforce spend, and bringing much-needed skills to the table. They carry out mission-critical work, often operating at the heart of the enterprise.
In the oil and gas industry, services providers play a major role in shutdown/turnarounds, which cost millions each day and must therefore be completed as soon as possible. Many organizations rely on consulting firms to help them build and execute their strategies – particularly around digital transformation. Banks engage IT consultancies to improve their online and mobile banking platforms and call centers to support their customers.
In many organizations, services providers operate as an invisible workforce. How can management ensure that this often-unseen workforce consistently delivers maximum value? And how can organizations make sure that workers’ access to confidential data and systems is turned off at the end of the engagement?
Molly Spatara, Global VP, Brand Experience, SAP Ariba and SAP Fieldglass
As the demand for independent talent grows, many organizations are using their own resources to directly source top independent talent without engaging third-party staffing agencies or consulting firms to perform recruiting functions. Direct sourcing affords many economic benefits such as avoiding high-priced staffing markups, decreasing overhead costs by hiring fewer full-time employees and filling project-specific roles with the right-priced independent talent.
But direct sourcing is only a small part of the picture. In order to compliantly utilize independent talent end-to-end, organizations must build a Direct Access program that encompasses finding, sourcing, engaging, paying and managing independent workers. Here are five best practices organizations should keep in mind when creating a Direct Access program to source and engage independent professional talent.
1. Drive Support from the Top Down
A lasting and successful Direct Access program begins with the right leadership support and sponsorship. This support must be driven from the top down by a senior business leader who has influence over the managers who will be sourcing and utilizing independent talent.
While a top-down approach is not the only method, attempting to build a Direct Access program from the bottom up is almost always a long and arduous path. Internal adoption is much slower and disjointed as the process relies on word of mouth and proof-of-concept in small groups.
It was nearly 90 degrees and the breeze was barely offering any relief from the heat radiating off the white sand. I love the beach but there are times when even the relatively cool, 80-degree water can’t offer any way to provide relief. I looked at all those beach front homes with their cover decks, fans and A/C with envy. Then just when I was thinking of packing it up and heading for the air-conditioned car, clouds rolled in and covered the sun. Temperature moderate, winds began to pick up and I could see the telltale signs of a shower in the distance. Relief was coming thanks to the cloud.
Being on the beach can make you feel a bit exposed. Like a small business that is so vulnerable to the whims of the market, it can be tough to find relief that is offered to the larger competitors with resources and plenty of volume to offer to the latest solutions providers. With recent advances in technology, that is beginning to change thanks to the cloud. Take the workforce management systems for example. Finally contingent workforce management systems are in the cloud. That means a small or medium sized business (SMB) can get the control, visibility and risk mitigation that has previously been available to only larger enterprises. Like that experience on the beach, this cloud is bringing relief to SMBs who have grown to embrace the use of the external workforce.
Jay Lash, Principal Consultant, Compass Rose Advisory