ADP’s Acquisition of WorkMarket: Just Moving Pieces Around on the Board or Starting a Whole New Game? (Part 2) [PRO]

ADP is a top player in the employee payroll, benefits, tax and compliance, PEO and core HR software markets, where customer (buyer) profiles are conservative and tend to favor scale, efficiency and established brands. For years, ADP and its peers have served and competed in these markets, and almost as if in parallel universes, a distinct population of solution providers (ranging from Adecco to SAP Fieldglass) have served and competed in separate contingent workforce technology and services markets. But while the contingent workforce sector has many things in common with the human resource sector, there is one increasingly important deviation — and it starts with “g” (as in “gig”).

The freelancer and independent contractor management market segment — the contingent workforce solution segment home to WorkMarket — is about as different a solution market as one could imagine compared to both classic HR and staffing-based labor models. It is blossoming, dynamic and high growth, as well as fraught with disruptive dynamics, unsolved problems and evolving regulatory dilemmas. So, we ask, perhaps part tongue in cheek, “What the heck is ADP doing buying WorkMarket?”

Yes, WorkMarket: the first-to-market, leading-edge, “gigish” technology solution that has been enabling businesses to (a) compliantly pay and administer essentially any type of external, independent worker (b) digitally profile these contractor workers and employees of the organization in labor clouds and (c) allow an organization’s business managers to directly source and deploy those workers into projects and programs.

This Spend Matters PRO series attempts to answer this question, not only by looking at WorkMarket — a provider we have profiled and analyzed in past Spend Matters coverage (see here, here and here) — in a brand new context but also exploring ADP’s rationale to acquire and embed this capability alongside its other offerings (spoiler alert: possibly getting closer to payments and emerging compliance needs in its customer base). The first part of this series provided insight into the deal itself, where WorkMarket fits in the ADP organization and our own analysis of what the acquisition could mean for ADP customers, shareholders and the freelancer/IC solutions marketplace. In this second part of the series, we share perspective on what a “WorkMarket Inside” offering could be like for ADP and clients, along with some speculation on what ADP’s “opening move” in the contingent workforce space might mean longer term.

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