CWS 3.0: June 4, 2014

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Here a SOW, there a SOW. Everywhere a ...

The contingent workforce of the future will likely include more statement-of-work contracts.

Staffing buyers plan to increase use of SOW workers over the next 10 years, according to a recent survey of buyers by Staffing Industry Analysts.

One possible reason: the simplicity of using SOW may be preferable to the relative complexity of temporary workers from staffing firms, says Bryan Peña, vice president of contingent workforce strategies and research at Staffing Industry Analysts.

If it’s a true SOW, buyers just pay for the deliverable and the need to oversee is less.

SOWs may also be added to contingent workforce programs as the programs evolve and include more types of nonemployee spending other than just temporary agency workers.

“That’s a sign of evolution in the marketplace,” Peña says.

An SOW is a document that captures the work products and services such as work activities and deliverables.

Staffing Industry Analysts asked buyers what type of employees they plan to use over the next 10 years. Forty-seven percent said they plan to moderately increase use of SOW workers and 10 percent planned a significant increase. Twenty-seven percent said they would use about the same amount of SOW and only sixteen percent said they would reduce their use.

Among the various categories of labor — including offshore workers, agency workers, online staffing workers, former employees, etc. — SOW was the second-most-frequently cited for expansion plans. The type of worker most frequently cited for expansion is high-skill contingent workers.

Yvonne McAteer, vice president, sales at MSP and VMS provider Superior Workforce Solutions, says she is seeing increased use of SOWs (double-digit growth) by existing clients that already have SOW management under the MSP program. And she sees buyers who don’t now have SOWs in the system planning to add them.

Firms can use SOWs to leverage expertise for a specific period of time for a specific project, McAteer says. And that expert knowledge can be in a specialized niche. “There’s a deeper level of expertise and project ownership in some areas that [buyers] are getting from statement-of-work suppliers.”

SOW contracts are also different than temporary agency worker contracts, she says. SOW deals give contingent workforce buyers more levers in terms of deliverables — such as whether the deliverables are done to the satisfaction of the buyer — because the SOW takes ownership of the success of deliverables.

However, there can still be a gray area between temporary agency workers and SOW, McAteer says. Superior will validate whether a contingent workforce buyer might be better served with agency temps or SOW.

Peter Parks, COO of vendor management system provider Provade, also says he sees SOW spend increasing and it’s also increasing as a percentage of total spend in some programs.

And in the future, the use of online staffing could push up use of SOW, Parks says. A lot of the staffing with through online staffing firms such as Elance-oDesk is being done on an SOW-basis. “We need to get that online staffing into our programs, so that for us will represent a further increase in SOW spend,” Parks says.

Use of online staffing also represents a difference in thought about SOW, he says. While people have traditionally talked about SOW in terms of large processes costing $1 million or more, online staffing engagements are typically for far less. For example: projects for a few thousand dollars are not uncommon.