Contingent workforce leads to new business models

Michael Liss | 23 May 2016

Eden McCallum has taken a different approach to management consulting. The company draws on a dynamic, international pool of expert consultants to serve its clients around the globe.

Its consultants are deployed on a project-by-project basis. Most of them have extensive recent experience at the major consulting firms.

A small in-house team and a group of young analysts supports the consultants’ work. Since its founding in 2000, the London-based company has completed more than 1,500 projects with more than 300 clients around the world.

Eden McCallum is one of many companies seeing the power of different workforce models.

Technology makes these different staffing models possible for companies that look at new business models and business processes. By thinking creatively about how to find and leverage talent, companies are providing new and better services to clients.

According to Eden McCallum, its business model takes the best elements of two sectors. From traditional consulting, the firm borrowed the infrastructure and rigor needed for success. From independent freelancing, it took extensive experience, expertise, and flexibility.

 

A changing workforce

Companies have long hired subcontractors or freelancers in many roles. But those employees are usually hired to complement existing workforces or for short-term projects. They are meant to supplement in-house staff who serve as the core of the business.

The workforce, however, is changing.

“Contingent workers,” defined as freelancers, statement-of-work employees, and independent contractors, are a growing segment. With a desire to have more flexible work and powered by hyperconnectivity, contingent workers are redefining how companies put together their labor pool.

By embracing these flexible workforces, companies can develop a global pool of capable talent. With leaner project teams, companies can provide customers with less expensive solutions than their traditional competitors. In addition, these companies carry less overhead, training, and even travel costs.

The use of contingent employees is expected to grow in the near future. Some experts predict that 45% of the workforce worldwide will be contingency workers by the end of 2017.

 

Finding freelancers

Upwork is another example of a company leveraging technology and contingent employees effectively. Upwork is a freelance marketplace company where writers, designers, and other skilled professionals bid on short-term jobs.

Clients can select freelancers based on the pitches they make, prices charged, skills, language, portfolios, and reviews from other clients. Clients can choose to pay by the hour or a flat fee.

Upwork takes a 10% commission on the projects. The company manages client payments and provides an online portal to facilitate connections, track work, and allow clients and freelancers to communicate.

Upwork’s more than 10 million freelancers generate more than $1 billion in work annually to 4 million clients.

 

The borderless workplace

This open talent economy enables companies to staff projects from an extended value chain that in many cases is global in scope. Firms embracing these strategies will move beyond seeing freelance talent as augmentative. Instead of outsourcing, these companies will be increasingly reliant on people with whom they have no full-time relationship.

For companies using a new model, there are a number of internal processes that need to be reexamined.

Resource management is one such area. Historically, resource management has sought external talent when demand cannot be met internally. Now companies need to identify and forge relationships with contractors, alumni, and freelancers. These external assets need to be mapped with internal skill inventories. Doing so lets talent be scheduled and deployed more effectively for current and future demand.

Onboarding and workforce training also will change. Companies need to be able to impart values, culture, and methodologies in a diffused structure. Internal knowledge needs to be shared effectively.

To clients, the experience with the company must be seamless. Service must be consistent and quality maintained.

Risk management will need to be rigorous in finding workers with the right qualifications, certifications, and work history. Performance issues with external workers need to be identified and addressed quickly.

The companies that can do all this internal work are poised to leverage this talent. Such companies may find that they are able to offer new services that previously were not possible.

 

Technologies needed

Managing this more complex workforce requires new technologies, too. To create the borderless workplace, digital collaboration tools and platforms need to allow for virtual collaboration among workers and clients. McKinsey estimates that online talent platforms could boost global GDP by $2.7 trillion by 2025.

McKinsey projects professional services to be the industry where these platforms can have the most significant impact. Its analysis projects a nine percent increase in output and a seven percent cost reduction for the industry from online talent platforms.

 

Engaging the virtual workforce

Let’s look at a fictitious company to see how this transformation plays out.

Imagine a customer identified a new project for the company. With a robust understanding of resource requirements, a company can leverage both types of assets — internal and external.

That understanding drives a vendor analysis to find the right external talent needed. Procurement identifies potential external talent.

Team leaders assess the potential talent and identify the right team members. Talent is secured and onboarded rapidly.

With a powerful understanding of the internal and external talent pool, companies can take on more projects and reduce costs.

 

Conclusion

Connected by smartphones, videoconferences, and online platforms, talent today can be anywhere. The contingent workforce has advantages for employees and companies alike. It offers flexibility for the former and leverage for the latter.

Companies that reimagine their business models by embracing a borderless workforce are poised to pull ahead of the competition.

ENDS

Originally published in Digitalist Magazine on 4th May 2016