The power, value and expertise inherent in agile talent, as well as the productivity that results from flexible enterprise thinking, will be the difference between enterprise success and failure over the next couple of years.
That’s according to a study from Ardent Partners, The State of Contingent Workforce Management 2020, which found nearly 80 percent of enterprises experienced an increase in the utilization of contingent talent over the past 12 months.
In fact, 43 percent of the average enterprise’s overall workforce is now considered contract, contingent or non-employee and is built on freelancers, independent contractors, professional services and traditional temporary workers - up from just 20 percent a decade ago.
What does that mean? The contingent workforce has become a driving business force and revolution of talent, technology and work that is now a foundational element in the way that work is done. The future of work is now the present.
In this blog, HCMWorks has summarized some of the most important findings from the study, including the current state of the contingent workforce and where it’s heading beyond 2020.
Major market shifts that represent the future of work
In 2020 and beyond, talent, technology and work are evolving to transform the way businesses find, engage and source workers - and this is significantly changing the foundation of how work is done.
In fact, there are four key elements pinpointed in the study that show how the contingent workforce of 2020 is demonstrating change:
- The laser-like focus on skills, expertise, and how the business will react to unpredictable market shifts.
- The impact of next-generation technology on how talent aligns with work.
- Business agility, and the role of the agile workforce.
- The continued impact of the talent experience and worker empowerment.
What is the importance of the contingent workforce for the future of work?
The contingent workforce offers organizations a depth of talent and flexibility that has allowed them to create an agile workforce and optimize the way that work is done on a project-by-project basis.
Over the next three years, the vast majority (68 percent) of businesses expect their total workforce to be truly “agile” in nature, with both traditional full-time employees and contingent workers contributing equally to critical projects.
This need for an agile workforce that can be engaged and leveraged dynamically, is the most important aspect of the future of work. Today’s businesses require scalability, top-tier expertise and an on-demand workforce that can deliver in an efficient, effective and cost-savvy manner.
The evolution and growth of the contingent workforce plays a key role in how businesses reimagine how work is done. Companies are now able to engage skilled workers for the specific projects that they are required for.
The report found a staggering 98 percent of businesses today state that their non-employee workforce is “critical in getting work done”.
The study found four top reasons why businesses use contingent labour:
- Access to highly specialized skills and talent (68 percent).
- The ability to enhance their current talent and workforce (62 percent)
- Increased speed to fill open/required positions (51 percent)
- The diversification of an organization’s total talent pool (47 percent).
Top areas of contingent workforce management focus over the next two years
Contingent workforce management programs have evolved over the past couple of years to reflect the many innovations in technology, services and talent engagement changes associated with the contingent workforce.
Today’s organizations not only have a significantly larger non-employee workforce than before, the management of them is far more strategic. As a result, many businesses will be focusing on these four areas for the next two years.
Talent pool curation and development (74 percent): Companies will be particularly focused on building talent pools that give them quick access to “already known” contingent talent. These talent pools could be made from former employees, retirees, those who have previously applied for a position and many others. The creation of a talent pool cuts down the risks associated with temp worker hiring and dramatically reduces time-to-fill metrics.
Direct sourcing initiatives (69 percent): Traditionally temporary workers are sourced through staffing agencies and staffing suppliers. Other methods are now being used in tandem to staffing agencies to improve a company’s access to highly-skilled contingent workers, and direct sourcing is one of the hottest methods. Direct sourcing is essentially when you hire temporary workers internally, as opposed to through a staffing agency. Want to learn how this method can improve your contingent workforce management strategy? Read our blog titled ‘4 Ways Direct sourcing will Benefit Your Contingent Workforce Program’.
SOW management and services procurement (64 percent): Statement of work (SOW) is a crucial aspect of gaining visibility and control over your company’s contingent workforce. Over the next couple of years, many midsize and enterprise-level organizations will be prioritizing SOW spend in a bid to gain the necessary oversight into what is often considered the largest area of contingent labour spend.
Data analytics and reporting (60 percent): Contingent workforce management is almost impossible without access to the data, analytics and business intelligence that guides your processes. That’s why most organizations will be focusing on using vendor management systems (VMS) over the next two years to gain control of their contingent workforce program and automate/consolidate the processes associated with it.
Best-in-class contingent workforce management programs are using VMS technology and outsourced MSPs
The very best of today’s contingent workforce management programs are using vendor management systems to link contingent workforce management and operational efficiencies. In fact, VMS tools are in place in nearly nine out of ten of the best-in-class enterprises found in the study.
Meanwhile, 85 percent of best-in-class businesses are leveraging managed services providers (MSPs) to manage their contingent workforce management programs.
Best-in-class companies are also:
- 1.4 times more likely to conduct a consistent review of employer-contractor relationships;
- 1.5 times more likely to leverage a supplier optimization strategy;
- 1.6 times more likely to have standardized SOW management operations;
- 40 percent more likely to institute collaboration between procurement and HR;
- have directly sourced 25 percent more of their talent than all other businesses;
- 33 percent more likely than others to include diverse hiring strategies as part of their overall talent acquisition programs;
- nearly twice as likely to leverage AI in talent acquisition and talent pool curation;
- and nearly 2.5 times more likely to leverage integrated total talent data in greater workforce planning.
Ardent Partners - “As businesses understand the foundational elements of the Future of Work movement, the relative criticality of the evolving, growing contingent workforce comes to light. For enterprises to thrive in changing times, the year ahead must bring about revolutionary attitudes in how the totality of talent can play a pivotal role in succeeding within a globalized, fast-paced marketplace.
Do you have any further questions about the future of work, and how your organization can improve on its contingent workforce management strategy to build an agile workforce that makes your business competitive long into the future? Contact HCMWorks today. Our team of contingent workforce management experts would love to help.