SI Review: May 2012

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Expert’s Corner

Why e-platforms are a force to reckon with

By Andrew Karpie

Years ago, job boards, and then vendor management systems, changed the way staffing firms do business. Now it’s clear that was just the beginning of a more fundamental development: “electronic platforms” are now a force causing disruptions, and promising new opportunities, in the staffing industry.

Generally speaking, platforms enable useful interactions and transactions among different parties. A good example of a “physical platform” is a shopping mall. An “electronic platform” performs the same intermediary functions, but is based on information technology capabilities (for example, Amazon.com). “E-platforms” can radically transform physical processes and the form and substance of economic interactions, transactions and relation- ships, thus frequently altering or transforming whole industries.

For some time now, e-platforms have been insinuating themselves into the staffing industry in a variety of ways: first as job boards, then as vendor management systems. Finally, social networks have recently taken center stage, presumably expanding the ways in which talent can be cultivated and engaged.

While staffing firms have adjusted to working with job boards, VMS has significantly disrupted the way staffing firms conduct business. Platforms like oDesk and Elance, moreover, even eliminate staffing firms from the equation, putting buyers in direct contact with talent. These platforms also provide the added value of “virtual workplaces” for many types of work.

New Forms of Work

E-platforms are not only altering the established talent supply chain; they are also radically transforming the forms and nature of contingent work engagements into something approaching “Talent as a Service” (TaaS) or “talent on-demand utilities.” Furthermore, by supporting social dynamics and communications, e-platforms are also making possible entirely new forms of contingent work (e.g., crowdsourcing, or collaborative problem-solving by virtually connected talent and expertise, incented by the possibility of contingent rewards that are much higher than average salary or wage compensation).

Whether affecting the specific relationships between buyers and sellers of contingent labor or the way in which contingent work is organized, carried out and compensated, it is clear that e-platforms — as exchange platforms, social platforms or both — have been and will continue to significantly trans- form the staffing industry and many (if not most) of the firms in it.

Change and Opportunity

While seen by staffing firms as a wide range of disparate developments, there is really an underlying unity for these many different developments: the emergence of e-platform as an economic structure and a powerful force driving industry transformation and innovation, potential disruption and opportunity.

In addition to bringing potentially disruptive or even value-destructive change and innovation to business relationships and practices, e-platforms can also open up new opportunities to define and expand markets, service offerings, revenue sources, et al. Correspondingly, an increasing body of research is showing that platform models are valued more highly as assets than non-platform models (for example: Outsell found that a $100 million information services company that generates 25 percent of revenue from platform services has a valuation of $62 million higher than a company that does not have platform services).

No wonder forward-looking staffing firms have begun to take clear account of e-platforms in the planning, conduct and positioning of their businesses.

‘Platform Thinking’

E-platforms are real and coming home to roost in the staffing industry. In planning and conducting business, most staffing firms will need to take account of the strategic significance of e-platform business models, both outside and inside of a firm’s boundaries.

Even if, as in retail (with Amazon), the industry transformation may not be total (after all, there are still shopping malls), it will be significant and eventually pervasive. The adoption of “platform thinking” and understanding of e-platforms may very well become a necessary condition for survival in the 21st century contingent staffing businesses.

Andrew Karpie is a research analyst at Staffing Industry Analysts. He can be reached at akarpie@staffingindustry.com.

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