Andrew Karpie's Blog

Contingent Workforce Management, CIT, and What Lies Ahead: Digital Platforms, Service Ecosystems, and the “New-Net-Work-Force”

There is no doubt that CIT (communications and information technology) in many forms changed the staffing industry over the past 25 years, though little formal study of these changes and their effects has been accomplished to date (a lack of knowledge perhaps better filled sooner, rather than later, for all involved). 

CIT has not only been seeping -- and now often pouring -- into existing staffing business processes to achieve efficiency and effectiveness gains (think applicant tracking systems to analytics), it has also been coming together in platform models, supporting entirely new kinds of processes and ways of “doing staffing” or supplying contingent labor/talent-as-a-service (think industry newcomers like VMS platforms, online staffing platforms such as Elance-oDesk, and more than 250 contingent workforce-related digital platform businesses that have been started in just the past 10 years -- the overwhelming majority of those in the past five years). 

In this post, I want to focus on this second broad set of CIT-driven changes.

After more than 10 years of increasing penetration and levels of standard “supply chain management automation” through VMS, now other innovative contingent workforce solution models are increasingly appearing on the scene. These solutions are based on configurations of advanced CIT as “two or multi-sided platforms” that enable different populations of agents (workers, businesses or hiring managers or recruiters, and a range of other types of service provider entities) to “digitally interact” and create/produce value-added outcomes (e.g., work or a project gets done, someone’s competence and trustworthiness gets verified, someone or a business purchases insurance, someone learns a new skill, et al). This digitally supported web of interactions around and across these “platforms” is what is a termed a “service ecosystem.”

As CIT-based solution models have been changing, we have also begun to see a coinciding set developments in the workforce as well (often referred to as “rise of the independent workforce” or by some similar epithet).  Deep structural economic shifts (including the pressing evolution of more flexible, extended enterprises) are certainly driving the reported and often observed increases in flexible alternative work arrangements (work from home, remote work) and offline and online contingent work arrangements (freelancing, solopreneuring, crowdsourced contributing, etc.). But CIT (in the form of broadband, wireless, mobile, social, et al) is also a critical factor that is at least enabling, if not driving, this change. 

As the entire workforce becomes “digitally connected” (some, 24 hours a day), that workforce not only has the (often preferred) means to “interact and transact digitally,” is also increasingly has a digital representation of itself that is stored in digital devices or in digital clouds.  All individuals have “digital profiles,” no matter if these are organized, controlled, or owned by the individual himself or herself or by some other legal entity (like a LinkedIn, a Gild, an Entelo, etc.). CVs/resumes, sometimes inaccurate, are rapidly becoming a thing of the past; and when work arrangements must occur quickly, there will be less time for passing around resumes. No matter whether we are talking about long term work engagements (as in “permanent jobs”) or short-term ones (ranging from projects to microtasks), the workforce of the future will be increasingly engaged based on digital representations and increasingly through more and more CIT-intermediated, digital processes. This digitally-capable, digitally-enmeshed population of workers that will “interact and transact digitally” with extended enterprises and various service providers (across digital platforms and service ecosystems) I refer to as the “New-Net-Work-Force.”

So what are some of the concrete signs of this shift toward digital platforms, service ecosystems, and the “New-Net-Work-Force” as part of the future of contingent workforce management?

  • First of all, over the past two years, SIA has published a large corpus research on the growth of new online work platform companies around the world. This has included highlighting of many different kinds of “Human Cloud” platforms in three broad categories of Online Staffing, Online Services, and Crowdsourcing. 
  • Second, more recently, SIA has focused on a new important use of digital platforms that will intermediate, enable, and control the direct sourcing and engagement of enterprises’ hiring managers and the private talent pools or clouds of their “desired” independent workers. The term FMS or Freelancer Management System, first used in early 2014, spread late summer/early autumn at the time of the Beeline-OnForce merger, and it is now being used across the industry by platform providers, staffing firms, and a range of analysts to describe this emerging kind of solution (one platform provider, Work Market, even applied for a trademark for the term, Freelance Management System®). 
  • Indeed, some platform providers in both of the above categories are clearly demonstrating their pursuit of strategies that entail building service ecosystems, not just the CIT-based platforms.  A few examples of businesses the development of service ecosystems as “general strategies” would be Elance-oDesk, MBO Partners, and a very interesting case of Envato in Australia.  In addition, Work Market could be cited for pursuing a customer-specific service ecosystem approach in its deal with SAP to use the Work Market platform to knit-together an ecosystem among SAP SMB customers, SAP VARs, and SAP certified technicians/developers.

While for some time some in the industry viewed the emergence of digital platforms (online staffing, freelancer marketplace platforms, etc.) in terms of a threat of disintermediation of traditional staffing businesses, this threat is probably as serious as the threat of complete disintermediation of retailers in the retail industry (in other words, overstated). But that doesn’t mean that staffing businesses don’t need to become more digitized and change the way they operate as well as business models.  An interesting look into a possible future of the staffing industry, shifting from “supply chain” to “service ecosystem,” came in the announcement by DCR Workforce of its new offering called “Smart Track xCHANGE” which it has described as an extension of its VMS platform built to support a “collaborative ecosystem” between client businesses, staffing suppliers, and the “non-traditional” workforce of freelancers, independents, etc. (talent not typically supplied as “temps”). DCR’s “Smart Track xCHANGE” is in effect a digital platform that supports a special kind of ecosystem/set of defined processes which allow more direct visibility and engagement across client businesses and workers, but maintain the centrality of staffing suppliers as talent acquisition/curation and compliance service providers.

With so much CIT entering the staffing industry, it is a fool’s errand to try to make broad, sweeping predictions about what the industry will be like in the future. But there are some broad statements that will probably hold true for the remainder of the decade; these are: 

  • The staffing industry will become more and more digitized, networked, and peer-to-peer,
  • More and more contingent work arrangements will be accomplished with more and more digital intermediation (meaning more technology will be doing ore of the job of getting people to work)
  • And, last but not least, the practice of contingent workforce management will focus increasingly on digital platforms, service ecosystems, and the “New-Net-Work-Force.”

My suggestion: Don’t “just wait and see.”

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Kate 12/17/2014 02:26 pm

really loved the article added to my favourites.


Staffing Industry Analysts

Andrew Karpie 11/30/2014 11:19 pm

Michael, Certainly a lot of change in the mix of healthcare insurance and work arrangements-- "the great unbundling " is occurring. The healthcare insurance distribution/access landscape has been undergoing a shake-up with ACA and technology (in just a few years we have state and federal healthcare exchanges, various private exchanges of different kinds, and companies Zenefits). Employers and employees are adapting--in various ways and with more or less ease or difficulty-- to these changes. And the consumerization of access to healthcare benefits should be a factor allowing more workers to work as independents (The New-Net-Work-Force), rather than being employed by a single company. This development seems to be only beginning to happen. But there are early indicators of change such as the recent partnership between Elance-oDesk and The Freelancers Union. See: https://www.freelancersunion.org/benefits/ and https://www.freelancersmedical.org/.


MK&A

Michael Kassin 11/25/2014 02:47 pm

One more challenge to be faced with the New-Net Workforce: a sea-change in how healthcare benefits are bought, paid for and managed. Simply put, healthcare exchanges are shifting the landscape for employee benefits while putting additional burdens on employees and employers alike.

Wal-Mart, Home Depot, Target and Trader Joe’s have dropped some healthcare benefits in response to the Affordable Care Act. Many small businesses (fewer than 50 workers) are following suit by giving stipends to employees and having them find their own insurance because some employees can now do better buying state healthcare exchanges than they can with “one-size-fits-all” coverage from their employer.

This puts much more pressure on both sides because workers now need to take time to find the right plan for themselves or their families and learn to budget for it. For example, I heard about one individual whose new plan costs him an extra $46 a month, which is the same amount he currently uses to pay his phone bill. Where does someone like that find $46 so he doesn’t have to choose?

Many businesses are now bringing in experts to help their employees solve these problems. Some consultants specialize in helping employees find the right, affordable healthcare plan. Others help with financial planning and budgeting – everything from finding ways to squeeze extra bucks out of their take-home pay to finding ways to get emergency cash when a health crisis hits without sinking into permanent debt. I heard about this one program called FinFit that combines help with budgeting and small loans.
So while employers may seek to spend less on healthcare benefits, they need to be prepared to invest more sweat equity in helping employees find – and fund – their own health coverage, while also providing ways employees can access emergency cash when illness strikes and they haven’t yet gone over their deductible for the year.


Total 3 comments


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