The 2019 Contingent Workforce Strategies (CWS) Summit took place in San Diego last month. This was the first time I attended CWS as an official representative of Coupa. Between various booth and hallways interactions I had, the three round table sessions that I hosted on classification and decision trees, and the sessions that I attended, I came away with one clear message: The next step in our contingent workforce evolution is statement of work/consulting and it’s already happening. To be clear, there is a lot of different vocabulary when it comes to consulting. In simple terms, Staffing Industry Analysts generally defines three major buckets of contingent labor: (1) staff augmentation, (2) SOW consulting services, and (3) outsourced services. What I’m talking about is the second bucket, which includes is independent contractors. According to a survey we conducted at the event, at least 54% of organizations classify independent contractors as SOWs.
What do I mean by the next step in our evolution? Like any great idea and valuable solution, we are only as good as the current problems we are solving as no one is keeping score about how well we solved yesterday’s challenges. With the vast majority of organizations already having a contingent workforce program, including an outsourced or insourced MSP as well as a VMS, the challenges of having too many vendors combined with a lack of control over staff augmentation have been mostly solved. The newest problem – access to talent while mitigating risk – leads us to the frontier of SOW consulting.
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According to the survey we performed at the CWS Summit, the majority of companies believe that 60% or more of their total contingent workforce spend is in SOW consulting, oftentimes, and spend at least 400% more on SOW than staff augmentation. Yet 49% of organizations have less SOW spend than staff augmentation as part of their contingent workforce program. Additionally, since most organizations see ICs as a subcategory of SOWs, it’s interesting to note that only 31% of companies have some sort of IC or freelancer system in place to help manage that population.
None of this is new. We are not in 2009 when companies and vendors were first learning to spell SOW and IC. The fact, that 40% of companies have SOWs included within their contingent workforce program is amazing compared to 10 years ago. But more telling is that 60% of companies say that want to add or increase the SOW spend within their program. For the first time I can remember, “Going Global” is no longer the No. 1 initiative for organizations. Adding SOW consulting to the program has taken over the top spot, especially under the umbrella of total talent management. Close behind adding/increasing SOWs, organizations want to add or increase IC management in their programs. To me, the two go hand-in-hand.
Learning that companies are looking at total talent inclusive of SOWs and ICs was not news to me. What I learned, however, was just how much companies and program managers are struggling with how to wrap this all together and focus on the up-front demand management and planning. This primarily includes helping individual business lines plan for the right workforce mix, helping hiring managers make the right sourcing channel decisions, and providing a user-friendly experience to allow people to make the right choices easily. This was reiterated multiple times at my roundtable. I heard stories of lengthy and clunky decision trees that take forever, or obvious rigging of the system by managers looking for the path of least resistance to get the talent “they” want working for them.
What’s the solution? Over and over, CW professionals told me there needs to be a way to direct managers to the right sourcing channel without a lot of onerous questions. Instead, asking one question in natural language like, “What do you need?” and then allowing technology to suggest the right path for the decision maker, would be far more prescriptive. Allowing users to get to the “right” answer efficiently is critical to ensuring adoption, compliance and even control. If the goal is to bring all types of external labor into one program, then the number one metric should be user adoption. To do that, you need user-centric tools. This aligns with my governing philosophy that I’ve repeated for 15 years: Make it easy for people to do the right thing so that it’s hard to do the wrong thing.
