CWS 3.0: January 5, 2011 - Vol 3.1

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Feature: Looking Ahead

By Barry Asin

As we close the books on 2010, it is a good time to think about the coming decade and what it is likely to bring all of us involved in making contingent work an important and vital part of the global workforce. In that spirit, I'd like to offer my thoughts on what we are likely to see in the years ahead.

First, contingent work usage will continue to grow. And not only will it grow, but it will grow significantly. To understand this, it's important to understand what drives the users of contingent labor. We've surveyed end users of contingent work for a number of years now and no matter how we ask the question, by far and away the top- rated factor driving contingent work usage is "a variable and unpredictable workload."

Expect the Unexpected 

Now, I don't know about you, but I'm hard-pressed to name a single major trend out there right now that would suggest workload levels are likely to become more stable in the years to come. In fact, it's almost comical to imagine a world where people feel that the pace of change is moderating or that they find the business environment too predictable. If nothing else, the ongoing global economic crisis is proof that instability is here to stay. For further proof, consider the pace of technological change, globalization, the instant flow of information, political turmoil -- the list goes on.

With instability and unpredictability in the business environment, the use and adoption of contingent work is a natural response to smooth out labor costs. CEOs and CFOs will increasingly understand that real savings and real opportunity come from the use of just-in-time labor. Having idle resources is not an option in today's business environment, while having resources exactly where and when you need them is more and more an imperative.

Once we've agreed that demand for contingent work will grow, the natural question is what will usage look like into the future? For starters, as CEOs and CFOs recognize the importance of contingent work, organizational cultures will shift to viewing this development more as a strategic tool as opposed to a necessary evil.

To see that shift already in progress, we need look no farther than the growing role of professional, skilled contingents. Our tracking of spend shows a clear transition over the past decade from lower-skilled to higher-skilled contingents. In the United States, spending on professional agency temporary staff now constitutes nearly 60 percent of spend up from only 40 percent in the mid 1990's. These are often highly paid workers focused on strategic projects that have a real impact on organizational results. And as we look into the future, it will be increasingly hard to tell who's an employee and who isn't.

Of course, acceptance of the use of contingent work doesn't at all imply that it will be done in the same way as in the past. We'll see the emergence and growth of operating models that help organizations manage this newly accepted contingent component of an organization's workforce. Principal among these new models will be the development of program management offices that incorporate the latest vendor management system (VMS) technology (and whatever new technologies that may emerge) as well as managed service providers and their future evolution. Increasingly, this will mean that VMS will stop being the "next big thing" and just be the accepted way of doing business. And while large players were the first to adopt, smaller users will benefit as "lite" versions of VMS tools help them manage their spend more efficiently as well.

As organizations demand more from their supply base, they will also want more integration between their systems and their suppliers. Suppliers will want it as well, in order to reduce the inefficiency inherent in linking with many different VMS and client systems. As data flow more freely and with more connections, there will be new opportunities for savings and for delivering a speedier, higher quality and even virtual contingent workforce.

Going Global

We'll also see CW programs that are increasingly global in scope, as companies seek to leverage the savings and efficiency they found on a national level to areas of the world where they don't yet have the same level of control. Our research shows that about 40 percent of large US companies are planning to take their programs global in the next several years, in addition to the more than 20percent who already have.

Additionally, the boundaries of contingent work will get fuzzier, as programs seek to manage a wide array of suppliers delivering services to the organization. That means programs will increasingly incorporate the management of statement of work (SOW) consultants as well as service outsourcing concepts like recruitment process outsourcing (RPO).

We will also likely see ongoing consolidation of suppliers as clients seek greater efficiency and global reach. We've seen that trend over the past decade with the percent of the U.S. market taken by the top 10 suppliers rising to 28 percent in 2008 from 22 percent in 2002. Of course, that doesn't mean the end of smaller players, because by definition the trend noted above still leaves a solid majority of staffing business being done by smaller players. There will continue to be a demand for those firms with specialized skills, or unique capabilities in a given geography or market.

If there is a potential problem area ahead, it may lie in the legislative realm. The last couple of decades have seen economic liberalization on the rise, leading to fewer restrictions on flexible work. Now, in the aftermath of the global economic crisis, the very concept of market liberalization has come under fire in parts of the world. How the desire for more regulated markets plays out in the world of contingent work will undoubtedly affect the adoption of contingent work worldwide.

Next Up

We are likely going to see more change in the years ahead than in the years past. That's all to be expected. With growth in demand and changing models, there is a great deal to be excited about. I'm looking forward to a new era of innovation in contingent work.

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