IT Staffing Report: Nov. 6, 2014

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The rise of freelancer management systems

In our recently released report, The Rise of Freelancer Management Systems, Staffing Industry Analysts addressed an emerging and potentially disruptive technology. A freelancer management system (FMS) is unique among contingent workforce technologies in that it combines the disintermediating power of online staffing (enabling direct engagements with talent through the platform) with the HR tools/management functions/compliance solutions required by large enterprises, in one seamless platform. To fall within the FMS category, a provider must offer a complete, end-to-end technology that allows users to search for and find a particular worker and activate, complete and pay for the work engagement within the system. At the core of these FMS model offerings is a viable platform technology (an enterprise/SaaS system) that a business can use to initiate, manage, complete, track and analyze engagements with individual independent workers who can be identified through their profiles on the system as approved members of that business’ (independent worker) talent pool.

While freelancer management systems share the disintermediating characteristic of online staffing platforms, they are not the same. Unlike online staffing platforms, which facilitate direct one-to-one or “one-off” engagements between an individual buyer and an individual worker, an FMS facilitates an enterprise-wide engagement and deployment model. This arrangement still allows for direct engagements between buyers and workers, but the key difference is the rules and processes of the FMS platform can be uniformly enforced across an organization. In other words, with online staffing platforms, each engagement is a one-off experience; with an FMS, although the engagement is still “direct,” it can be managed under the enterprise’s rules and system of controls.

For example, Elance-oDesk is primarily an online staffing company. However, it has a separate FMS offering (Private Talent Cloud) that allows for enterprise-level management. OnForce is known for its online services business (much like online staffing except that workers are typically on-site) but provides FMS through its Private Talent Network business.

In some cases, an FMS acts as the only workforce management technology for an enterprise (a likely scenario for small to medium sized business clients). In other cases, typically larger organizations with sophisticated contingent workforce programs, it can work in an integrated fashion with a vendor management system (VMS). A VMS is a technology designed to manage vendors (e.g. staffing companies) which then manage temporary workers whereas the FMS is designed for direct engagement of independent workers.

The FMS is a technology we will likely see more of in the staffing industry, especially in IT staffing. In the study used for our report, all five FMS providers that participated noted some type of technology-related occupation as either their first- or second-most common occupation served. Elance-oDesk noted “technology (developers, testers, administrators)” as the second-most common occupational category in its Private Talent Cloud business. Field Nation, OnForce and Work Market, which all have their roots in IT field services, noted “IT hardware technicians,” “IT service technicians” and “technology services personnel,” as their top occupational category, respectively. MBO Partners reported “software engineer/developer” as its second-most common occupation served through its FMS offering.

Our report, The Rise of Freelancer Management Systems, is our first in-depth look at this new technology, and its potential implications for the staffing industry.