A User’s Guide to the Gig Economy for Procurement Practitioners - Part 1

How procurement can make the gig economy work for them.

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.

This two-part brief is available to readers as part of SIG and Spend Matters ongoing partnership

Read part two.

Deconstructing the Gig Economy

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:

  • Any contingent work — past, present, future (Staffing Industry Analysts definition)
  • Work performed by independent workers (sometimes loosely referred to as independent contractors)
  • Work performed in untraditionally short intervals (projects, tasks) and sometimes initiated “on-demand” (essentially, faster than we’ve been accustomed to)
  • Work arranged and coordinated using technology (especially configured as platforms) in new ways

At this point, definitions vary to the point that the gig economy has become a conceptually useless category. Yet whatever definition is used, most would agree that, over the past several years, a significant shift has begun. New ways of sourcing and arranging work and services are emerging and making their presence felt. With respect to the contingent workforce supply chain that has worked so well for so long, there is a new kid on the block who is presenting a new set of options for enterprises, contingent workforce managers and internal business users.

From our perspective, three features define this new set of options:

  • Engaging independent workers outside of traditional employment, staffing agency, and consulting and business services labor, and service contracts
  • Sourcing and arranging work and services that can be initiated and performed in short time frames (relative to traditional approaches/models), potentially in geographic locations independent of where the work or service is being sourced, contracted and managed
  • Leveraging a range of new technology-based solutions (complementary or disruptive) for sourcing, procuring and managing external workers and services on behalf of our enterprise business users and key stakeholders 

The more we stop talking about the gig economy and start focusing on this new set of options, the more effective we will be at identifying opportunities and extracting value out of the real developments unfolding behind the buzzwords. What we are talking about are new digital supply chains for work and services. This is how contingent workforce and services procurement practitioners should be thinking about the gig economy. 

Building New Digital Supply Chains for Work and Services

When thinking about exploiting this new set of options, there are at least three questions that contingent workforce managers should ask: What are digital supply chains? What is the potential for risk, challenges and value? How can it be done? 

We’ll answer the first question here and the last two questions we’ll address in part two of this brief.

What Are They?

Put simply, digital supply chains for work and services consist of end-to-end integrated digital components that directly and efficiently connect business users in an enterprise to resources they actually need, whether in the form of someone’s work or the output of a service provider. 

When the procurement of work and services becomes digitally intermediated and independent workers become the prime source of labor/talent, the long-standing, separate categories of contingent workforce and services not only begin to dissolve and bleed into one another but also give rise to new forms of work and services, including work sourced from a global talent population across an online freelancer marketplace or project outcomes sourced through one of various kinds crowdsourcing platforms.

This set of conditions presents contingent workforce and services procurement with a new set of potential value opportunities, risks and challenges that will be discussed in part two of this brief.

You can follow Andrew Karpie on Twitter @andrewkarpie and read more of Spend Matters’ contingent workforce and services procurement coverage

SIG has teamed up with Spend Matters to provide members access to Spend Matters’ SolutionMap Accelerator and associated knowledge base (Insider and PRO subscriptions) at a discounted rate.  

Andrew Karpie, Research Director for Services and Labor Procurement, Spend Matters

Andrew has over 30 years' experience working as an analyst, executive, and adviser at the business intersection of technology and services. His first brush with procurement came early in his career when he was a network planner for a Ford Aerospace telecom services subsidiary, responsible for leasing high-speed digital bandwidth facilities from emerging suppliers. In his long career, he followed the thread of information and communications technology (ICT) across a number of different service industry verticals and small to large companies in a variety of analytical planning and management roles (both buy- and sell-side). In more recent years, beginning as a research analyst at Staffing Industry Analysts, he has become focused as an analyst, writer, and adviser researching the rapidly changing services and labor supply chains (especially the impact of technology). Andrew holds an MS in Policy Analysis from Carnegie Mellon University, where he first learned to code in FORTRAN and developed a deep appreciation for the value of data and statistics. He lives in the San Francisco Bay Area, where he enjoys time with his family and volunteering as a Pet Assisted Therapy dog handler.