Responding to Questions About SaaP: Legal Issues

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I love to receive comments and questions here at Spend Matters, and I was delighted recently to receive some excellent ones on my article “IQNavigator and iTeam Partnership Bringing Service-as-a-Product to a Business.” Following up on my response to the second of 3 questions about service-as-a-product (SaaP), today I wrap up this series by taking on a very current topic.

Question 3: SaaP and Employee Classification

Do the growing legal issues with contractors being re-classified as employees create momentum behind the SaaP effort?

I think the theory behind this question is that businesses might be inclined to use SaaP models instead of directly engaging specific independent workers to perform work that results in an equivalent service output, because with SaaP they are shielded from misclassification risk. In fact, with SaaP, client businesses enter into a service contract with the SaaP platform business, which is the entity that engages the contingent or independent workers.

But to answer the question: At this stage, I have not observed that client businesses are, due to this reason, increasing their use of SaaP models compared with direct engagement – say via an online freelancer marketplace like Upwork or freelancer.com. It seems, to me at least, that the main reasons have been convenience, efficiency, cost and quality afforded by the SaaP models.

That said, as procurement begins to attend to business spend on directly engaged independent workers compared with SaaP services, one might very well see a leaning toward SaaP. This is sheer conjecture at this point, however.

The Final Answer

When it comes to SaaP, there is no final answer – just questions as to how it will evolve. However, one thing that can be concluded is that early SaaP platforms are showing that it can work and scale. Procurement professionals should probably start to assume that business users in their organizations will increasingly be turning to SaaP models as a way to consume labor services, in the form of standard service outputs. Therefore, they should be on the look out for these new kinds of suppliers and spend for the services they provide, and they should starting thinking through what will be required to manage these new relationships and processes.

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