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Oxford Economics, a leader in global forecasting and quantitative analysis, and SAP Fieldglass have put together new research showing the significant reliance on contingent labor in today’s modern workforce and the opportunity for the management to optimise its value in the organisation. Highlights from the report Contingent Workforce Insights 2019: Expertise Full Force was shared at CWS Summit North America held at Manchester Grand Hyatt San Diego in San Diego, California.
Over 1,000 senior executives in 24 industries across 21 countries were surveyed to understand the role of the external workforce in getting work done, how they are managed and their impact on business performance.
The research has shown that the external workforce, including contingent workers and services providers, is key to helping organisations achieve a broad range of business goals. 63% of respondents have agreed that the non-payroll workforce helps in boosting organisational agility while 61% said it helps in increasing speed to market. 62% of executives say their external workforce is a vital source of skills, which is either important or extremely important in meeting business needs for specialized new IT and digital skills. Based on average, the external workforce eats up 42% of the total workforce spend with over half of that on contingent labor.
“We are on a journey to better manage our external workforce, which is a vital source of the skills we need to compete in the digital era. With SAP Fieldglass, we have clearer visibility as to the basics of who are doing the work, which of our internal systems they can access, and their quality of work. That helps us make better decisions about things like governance and who we re-engage – and ultimately and most importantly, better serve the lines of business in getting work done,” said Wendy Stenger, Global Lead, External Workforce Programs, Thomson Reuters.
Companies seeking talent with highly specialized skills and individuals who increasingly choose to pursue more flexible options are the drivers in the global shift of how work gets done today.
“People want to be engaged the way they want to be engaged, meaning it’s not always going to be the traditional FTE,” commented Cynthia Moore, Sourcing Lead Consultant & Procurement Solutions at Allstate.
Aside from the fact that non-payroll talent works across the enterprise (from corporate staff to field services), many people with industry-specific skills such as nurses, offshore oil and gas workers, and insurance claims handlers also prefer contract work.
Arun Srinivasan, newly appointed General Manager at SAP Fieldglass shared that contingent workers play critical, high-value roles operating at the heart of the enterprise to deliver value to customers and drive business success. He added:
“Our research confirms this, but it also reveals the significant need to better manage this sizable workforce to maximize value and minimize risk.”
Opportunity to Optimise
Despite recognizing the contribution of the highly skilled contingent labor in enabling companies’ success across industries and geographies, they are still frequently under-managed. The report cited that 47% of executives are highly informed about non-payroll workers’ contract terms while merely 31% are highly informed about their quality of work. This poses a challenge for the executives, having such limited insight into the contingent workforce, on how to effectively manage and optimise their value.
The ripple effect from the lack of sufficient management could lead to security and compliance issues. The research has shown that: 47% of executives report digital security breaches with non-payroll workers sometimes, frequently or nearly every engagement; 40% say the same for compliance issues; and 36% for worker misclassifications.
The Sister Report
In the sister report Services Procurement Insights 2019: The Big Reveal also conducted by Oxford Economics and SAP Fieldglass, four key actions for organisations to take to better manage non-payroll workers where specified.
- Illuminate your invisible workforce
- Mange with rigor
- Rise above silos
- See your new contribution in a new light
As stated in the report, these actions can help companies maximize the value of these important resources, achieve better business outcomes and reduce risk.
The key findings from this sister report that focused on services providers as the other half of the external workforce were presented at the CWS as well.