Hiring Trends, Regulations and Technology: What Will 2018 Bring?

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2017 saw the surprising prediction that, based on current growth rates, freelancers are due to overtake non-freelancers in the U.S. workforce by 2027. While there are nine more years to wait before that prediction can be proven correct or incorrect, we were eager to talk to Arun Srinivasan, senior VP of strategy and customer operations at SAP Fieldglass, to see what hiring and workforce-related trends are afoot in the shorter term. Read on, and let us know in the comments what your thoughts are on what this year will bring.

Spend Matters: Let’s cut to the chase. What can we expect to see in 2018 in terms of hiring trends?

Arun Srinivasan: In general, the labor market continues to be tight, especially when we are talking about tech talent. It's another factor [behind the importance] of engaging a [multichannel] workforce and creating an ecosystem that fits the need of the business. Businesses are not going to necessarily just rely on one particular source. What's also interesting is that this trend is not just in the U.S. or North America.

The other trend that we see at a macro level is the notion of digitization. Technology is evolving so quickly, whether it's the advent of networks or the ease of use of solutions or machine learning. All these things are coming together to simplify the overall process and make it really easy to connect service providers and other sources of talent to businesses. We expect to see the emergence of the intelligent enterprise a lot more in the coming quarters.

SM: A number of reports from last year said that freelancers are going to make up the majority of the U.S. workforce within a decade. But from the employer’s perspective, would you say that the future lies in the blended workforce?

AS: Correct. While the newer sources of talent have emerged and will continue to develop and emerge, the fact remains that what matters most for a business is based on its needs, what work needs to be done and how effectively can that work be done, while keeping in mind [factors like] cost and compliance and timing.

Technology, talent, flexibility and digital awareness are all coming together to provide this blended option, [where we] figure out what's the best channel to use to get this work done. It could be a combination of different things. Through technology you can make it really easy to fulfill that process while making sure the rules of engagement for each channel are followed as per company guidelines or local laws.

SM: Last month, the EU ruled that Uber is a taxi company, not a tech platform matching drivers with passengers. Can we expect to see more of these types of regulations in the near future?

AS: Naturally there are regulatory changes that come with [new workforce trends]. What exactly that means in the U.S. or this particular market — which broadly has to do with spend management and talent management — obviously it's tough to predict that.

There are some early signs that we can see in Europe that indicate that regulation is likely to get to a point that helps provide the balance between the desire for businesses to flexibly engage multiple sources of talent with the rights and privileges of the worker population. That balance is being achieved through directives like the agency worker directive in the U.K.

It’s tough to tell exactly what's going to happen in the U.S., but if you were to look at what's been happening in Western Europe in particular, it's likely that regulation will advance to balance the forces in play in the business environment.

SM: The tax bill that was recently passed in the U.S. makes working as an independent contractor more attractive. What are your thoughts on how the bill will affect hiring trends specifically in the U.S.?

AS: Again, this still is brand new and emerging, you know? This tax bill, and the marketplace in general, is acknowledging what we refer to as the [multichannel] workforce. [It is] acknowledging the fact that there are other sources of talent and is attempting to provide guidelines that increasingly provide win-win conditions for both employers and employees.

The implications of the tax bill will vary based on industry, on their competitive environment, on what kind of talent they typically seek externally, etc., so that it's really difficult to predict what's going to happen this early. But the way we see it is [that] it is likely to support more flexible engagement models.

SM: We cannot neglect to talk about technology of course. What do you think will be most disruptive or have the biggest effect on workforce and hiring trends in the short versus long term?

AS: The availability of next-generation interfaces that make it really simple for business users is likely to disrupt the models that are in place today. We refer to [it] as a faceless experience. It's to a point where end users will have the opportunity to exercise the power of the engines.

As you move forward in the mid to long term — and we’ve started seeing signs of this already — we are going to see the next level of benchmarking, predictive analytics and other such insight and decision making tools that will help the expert user who wants to analyze large quantities of data and identify outliers and trends and build predictive models. In addition, it would help the average business user make better choices in the context of the transaction. We are likely to see that surface up a lot more in the day-to-day usage patterns of the average user.

[Furthermore], machine learning is already showing signs of disrupting the way solutions are designed in the sector, how users interact with these solutions and also how administrators manage these solutions.

SM: Let’s conclude with a look back at 2017. Which expectations were met, and which were not?

AS: Expectations were exceeded when you think about the engagement of the external workforce in the broader market. We see that this continues to be a trend, and more and more businesses are engaging external workers in all forms in the marketplace. In that sense, if you look back in time, I would say the reality has exceeded the expectations of the analysts in the space.

If there was one place where I would say, maybe the rate of growth is not what people forecasted early on in 2017, it’s in the area of gig workers. If you look at the extent to which the average organization relies on gig workers [for short-term projects], that is still relatively small. In hindsight, it didn't grow as fast as experts expected it to grow, but we still see a clear opportunity for it. This whole sector is still closely watching that space.

This interview has been edited and condensed.

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