By now, it’s clear that technology is a major driver for the growing gig economy, both as a tool and as a potential disruptor. At its most basic, technology has helped independent workers connect with prospective employers via online platforms. Increasingly, however, companies are tapping independent workers to provide the expertise they need to stay competitive as technology evolves.
A parallel evolution
In a report released earlier this year, IT research and consultancy Gartner looked at what technologies will drive the future of work. Gartner identified four trends that they expect to work in parallel:
In order to remain competitive in a world where technology changes quickly, businesses must be agile in their adoption of new tools, techniques, and systems.
From algorithms to online platforms, technology is making it easier than ever for HR to effectively pair talent supply and organizational demand, both internally and externally.
Static roles and clear-cut career paths are dissolving in favor of collected expertise and skills specialization, allowing for greater flexibility in building project-specific teams.
The rise of the “robo-boss”
AI has the potential to automate certain management functions to create greater efficiency and consistency while freeing up resources for more strategic tasks.
Each of these factors supports an overall shift toward a more fluid workforce. Yet businesses are still struggling to adapt. When talent-management group SAP Fieldglass partnered with business analyst Oxford Economics to survey 800 senior executives, it found that only 10%—dubbed “Pacesetters”—were effectively managing external resources to gain a competitive advantage in the digital age.
Forging blindly ahead
A CB Insights study of disruption in consulting reported that spending on external resources is somewhere in the neighborhood of $800 million annually. According to SAP Fieldglass, external resources accounts for roughly of 44% of total workforce spend.
But although 46% of the survey respondents said their businesses couldn’t operate without the support of external resources, only 25% of C-suite executives actually claim a thorough understanding of what those resources are doing and how well they’re performing. Worse, the breakdown appears to begin before the hiring process is even complete: of those surveyed, only a handful could claim seamless collaboration between HR and procurement (4% for contingent workers, 10% for service providers).
The problem here is that while businesses recognize the need for external support, they’re not managing the resources they bring in to their best advantage. Not only is potential wasted; so are the time and money invested in it—and then some. A third of the executives surveyed said they’d seen overcharges and payment redundancies related to external resources, and 25% have seen rates that deviate from previous agreements. They also reported unauthorized spend (28%) and compliance issues (29%). Yikes!
We agree with SAP Fieldglass that this is a perfect opportunity to automate parts of the process. The Gartner report hints at that, too, predicting that AI “robo-bosses” are the next wave in workforce management. Not only can AI help eliminate crossed wires between HR and procurement, it can also track performance and report any issues. Perhaps the Pacesetters are already employing it—78% of their group reported seamless collaboration between HR and procurement.
The leaders of the flexible workforce
More than half of the survey respondents indicated that they’re already experiencing skills shortages in critical areas, and those growing the fastest said they find it particularly challenging to fill specialized and emerging technology-focused roles. This is where the “employment marketplaces” that Gartner references come into play.
The majority of Pacesetters (56%) use on-demand online marketplaces to source external resources, and the fact that so few (13%) use non-payroll employees and service providers for staff augmentation leads us to believe they’re primarily sourcing highly skilled talent. Rather than filling gaps, they’re preparing for what’s next.
This is also reflected in the responses from Pacesetters regarding the reason why they use an external workforce. Rather than citing cost savings as the primary motivation, 79% of Pacesetters said that these on-demand resources are the key drivers of business performance (compared with 52% of non-Pacesetters), and 60% said it “allows them to stay competitive in the digital age.”
Managing for the future
Though the Pacesetters are on the right track, there’s still plenty of work for everyone to do in order to scale, pivot, and remain competitive in an era when technology changes by the minute. The ad-hoc approaches many companies use now will not hold up under the pressure of increasingly complex business needs.
Fortunately, as the Gartner report indicates, technology is also here to help. Through the use of online talent marketplaces and AI, businesses can manage their resources more effectively, allowing them to adopt new technology more readily and pair talent demand with talent skills more modularly. The result is an agile workforce that integrates internal and external resources to drive business success.
About the AuthorMore Content by Emily Slayton