New Study Dissects Organizations’ Ongoing and Future Use of Contingent Workforce

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Brandon Hall Group’s recently released “2017 Contingent Workforce Study” provides probing insights into organizations’ increasing use of contingent workforce. The study survey yielded a sample of “200 usable responses from the United States and Canada (75%) and 22 other countries and 30 industries,” according to a press release. The sample consisted of organizations of different size categories (60% under 1,000 employees, 38% between 1,000–9,999 employees and 44% at more than 10,000).

Here, we highlight and comment on some of the key, publicly available findings that will be of interest to Spend Matters readers.

CLAIM YOUR FREE COPYThe Impact of Disruptive Technologies and Solutions on Contingent Workforce and Services Procurement

Key Findings

The overall findings — many of which may not be a surprise for contingent workforce management services procurement practitioners — indicate that the use of contingent work, in various forms, is widespread and increasing. The study findings included:

  • Around 90% of organizations in the sample are using contingent labor, and roughly half are planning an increase in category spending over the coming year.
  • In the aggregate (averaged unweighted across all size categories), 51% of all organizations “frequently or consistently” rely on independent contractors, while 34% of organizations (once again, across all sizes) rely on labor from an agency or staffing firm. Note: as the study clarifies, staffing supplier labor is more prevalent in the larger organizations, while mid-size and smaller firms rely more heavily on independent contractors.
  • Across all sample organizations, the use of contingent work was found to correlate with size and performance level. In larger organizations, procurement tended to play a more significant role in contingent workforce sourcing and management, HR less so.
  • Nearly three quarters of organizations rated their contingent workforce as “effective or very effective,” and about the same proportion consider the use of contingent workforce to be “strategic to specific business functions or to the business as a whole.”

Some of the major factors supporting the expectation of a continuing increase in the use of contingent workforce included: “a more mobile workforce, a younger workforce, fast-changing needs that call for expertise but not necessarily on a long-term basis and a greater number of jobs that can be performed from any location.”

Clearly, according to this study, the reliance on contingent workforce is growing and is not merely tactical.

Discussion

Plainly visible to most of us, the expanding use of various forms of contingent workforce, historically and now expected, is now well documented. For example, EY’s Global Contingent Workforce Study (survey of managers in companies with more than $100 million in revenue and more than 1,000 employees) found the following:

  • 50% of organizations reported an increase in the use of contingent workforce over the last five years.
  • 40% of organizations expect to increase their use of contingent workforce in the next five years
  • 33% of organizations with more than 100,000 employees expect to have a workforce made up of 30% or more contingent workforce.

The composite trend line appears well established, and the rate of change can vary across organizational functions and types or categories of contingent worker. For example, another recent survey of more than 5,000 IT and other business managers found that an astounding 85% of those surveyed expected an increase in the use of “independent freelancers” over the next year (Accenture Workforce Marketplace 2017).

So what does this mean for contingent workforce management and services procurement practitioners? Expect:

  • Not only an increase in the usage of and spend on contingent workforce but also more categories of workforce to source and manage
  • Business users to increasingly view contingent workforce as not only tactical staff augmentation/substitution but also as mission-critical, strategic resources, which should lead to higher expectations of procurement — an expansion of perspective to delivering value instead of just delivering the goods at the best price
  • The rapidly changing demographics of the workforce, the evolving needs of the organization and new kinds of workforce-enabling technology solutions to accelerate the above, since current expectations probably don’t incorporate the future drivers and dynamics adequately (although all of the signs are in full sight)

Based on this, there is some reason to think that contingent workforce management and services procurement may face a higher chance of disruption (like taxi cabs), if it does not begin to transform itself to align with the above expectations. The clock is ticking, but there is enough time to start to get ready.

For more on how to frame this new set of opportunities and challenges, refer to our recent PRO brief: “A User’s Guide to the Gig Economy for Procurement Practitioners.”

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