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The Contingent Workforce and Services Insider’s Hot List: March 2018

03/02/2018 By

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This is the second edition of Spend Matters’ new monthly feature, “The Contingent Workforce and Services Insider’s Hot List,” available to Plus and PRO subscribers. In the depths of the evolving and expanding contingent workforce and services (CW/S) space, innovations and emerging practices may be brewing but escape observation. To shed some light, at the top of every month, we select, summarize and provide some brief commentary on noteworthy developments that have recently appeared on our radar.

February was mostly cool and did not bode well for the hot list. But fortunately, things really heated up late in the month.

Hot Off the Presses

Is VMS Alive, Dead or Becoming Something Else?

Feb. 22 was something of a surprise in the VMS space: Provade was acquired by Smart ERP Solutions, a small enterprise software solution/services company.

It has been years since we’ve heard much of anything encouraging about Provade. There was talk among some of the Provade executives last year about a new open source strategy, which seemed to mean not so much a VMS with all the bells and whistles but more of an open platform that clients, other solution providers and application developers can leverage to build unique procurement/talent management solutions and ecosystems. That was my interpretation, but details were short.

The press release revealed little information about the transaction or what it would bode for the now merged company. Interestingly, the acquisition was positioned in relation to Smart ERP’s Smart Onboarding solution. According to the company, Smart Onboarding is an “onboarding solution that supports the talent you are hiring, regardless of whether they are contractors, temporary workers, or internal employees.”

“Smart Onboarding is a robust platform that complements the key functionalities of Provade’s VMS solution,” Hans Bukow, president and CEO of Provade, said in the press release. What the exact fit or synergy is remains unclear at this point.

And what about Smart ERP Solutions? Founded 2005 by Oracle/PeopleSoft veterans, the company has been mainly a solution/services business rather than a software product business (it appears Smart Onboarding launched in October 2017). Smart ERP says that it operates in the “enterprise business applications space providing innovative, cost-effective and configurable solutions as well as a wide range of consulting services that efficiently extend the capabilities of ERP systems (our emphasis) to meet specific business process needs”

Bukow also said that the acquisition would allow Provade to “begin [its] next phase of growth by leveraging the technologies, resources and customer relationships offered by Smart ERP Solutions to accelerate the delivery of our innovative cloud solutions and vision.” So, does this connect back to Provade’s open source strategy mentioned above?

We’ll have to see — next week I’ll be getting a briefing by the Provade and Smart ERP management, and I will at least know more about the game plan. I also think we can expect more surprises ahead in the VMS segment.

Upwork’s 2018 Future Workforce Report — The Future Looks Bright

Now an update on what’s happening in the world of online platforms for independent workforce.

Global online freelancer marketplace and enterprise solution provider Upwork just released its second annual “Future Workforce Report: Hiring Manager Insights on Flexible and Remote Work Trends.” The overarching goal of the study, which focuses on knowledge work, is to understand hiring managers’ perspectives on current and future skilled talent engagement.

The study addresses perceptions of talent shortages and the use of remote workers, flexible workforce, freelancers and specialized skilled talent. It finds, not surprisingly, that business’ reliance on flexible workforce (freelancers, temporary and agency workers) will continue to grow. Fifty-three percent of hiring managers agree that companies are using more flexible workforce compared with three years ago, and the consensus of hiring managers is that the use of flexible will increase by over 150% in the next 10 years.

With respect to just independent freelancers, 48% of hiring managers report that they currently use freelancers. Four out of five hiring managers expect to increase their usage of freelancers in 2018, and 90% of hiring managers are open to hiring freelancers rather than hiring temp workers through a staffing firm (only 10% would always turn to a staffing firm exclusively).

These findings certainly reflect changes in how businesses will engage and utilize talent. But how much and how fast are legitimate questions. We know smaller businesses are more apt to use freelancers, for example, and the survey was based on reports of hiring managers in businesses ranging in size from under 50 employees to more than 5,000 (with a median employee size between 500 and 1,000 employees). We are going to get a chance to look at the stats based only on the businesses with more than 1,000 employees (about 40% of the businesses in the sample). So, there may be more to that story.

For now, if you’d like to read our summary of the research, see “How Hiring Managers View the Changing World of Work: Upwork’s 2018 Future Workforce Report. Or you can download Upwork.”

Or you can download the full Upwork report here.

Business use of flexible workforce and, more specifically, freelancers will likely continue to grow. But what about online freelancer marketplaces? There the signals seem mixed. One sign of optimism may be the continuing flow of capital into the segment.

Online Marketplace for Healthcare Practitioners Gets an Infusion

An interesting (and probably not well known) marketplace, Nomad Health, announced on Feb. 22 that it had raised $12 million in its Series B financing. The company was founded in 2015 and raised a $4 million Series A round in 2016. According to the company, it has built “the first online marketplace where clinicians and medical employers can directly connect for freelance healthcare jobs, including locum tenens, travel nursing and telehealth.”

The online marketplace company says it “digitizes the entire hiring process for doctors and nurses — including job matching, applications, insurance and payments,” saving time for employers and clinicians.  It also “eliminates third-party recruitment brokers from the hiring process and drives substantial efficiency for both sides of the marketplace,” which can save medical employers “up to 40% on recruitment fees.”

Nomad Health also states that “more than 30,000 clinicians and 1,500 healthcare facilities have already joined Nomad and the network continues to expand rapidly.” Since 2016, the company has expanded its network coverage into 12 states and intends to use the current funding to scale staff and expand into all 50 states. It should be noted that medical staffing and licensing must be addressed differently across states — potentially both a plus and a minus. That said, the online marketplace is expanding both in terms of geography and numbers of employers and clinicians on the platform.

To learn more about Nomad Health, visit the website.

In Other News

Online Marketplace Freelancer Ltd Reports 2017 Results — Is Something Wrong?

For online markets that manage to sustain themselves through self-funding or external investment, growth has not been the major issue. Achieving profitability, however, has been, as marketplaces have been continuously fiddling with their fees, trying various new types of offerings. But more recently, growth of some of the larger marketplaces also seems to be slowing.

Freelancer Ltd is a good example of all of the above. Based on its recently released 2017 annual report, the online marketplace continued to show significant growth in terms of registered hirers, freelancers and projects posted through 2017, but top-line (gross payouts and fees) growth seems to have been flattening over the past three years. So maybe online marketplaces for people are not all they’re cracked up to be — at least for the platform owners.

We have reported in the past about how many online marketplaces, in an effort to penetrate large enterprises at scale and on a consolidated basis, have extended or complemented their marketplaces with enterprise solutions. This includes companies like Upwork, Catalant, Contently and, more recently perhaps Freelancer, as discussed in last month’s Hotlist.

Randstad’s twago Goes Enterprise — Now for Something Completely Different

A new development in this area involves twago, a Berlin-based pan-European freelancer marketplace that was acquired by staffing giant Randstad in 2016. On Feb. 28, twago announced the launch of “twago enterprise.” But unlike some of the online marketplaces mentioned above, twago did not build an enterprise solution to increase enterprise usage of its marketplace. Instead it built a solution independent of its marketplace, in some ways putting it into a class of providers such as WorkMarket, TalentNet and others.

Twago enterprise was essentially incubated within Randstad, in particular the MSP/RPO arm Sourceright, where Sourceright FMS took shape as a part of Sourceright’s comprehensive solution/services suite. Twago enterprise is not the same solution as Sourceright FMS; rather, it has had its own design and development path — and can be used by any MSP as well as enterprises. That said, the design philosophy and approach taken appears to have been influenced by its emergence within Randstad (insofar as the solution tries to address business needs that arise within the existing contingent workforce environment where there is a VMS, and MSP, and so on). In effect, the solution is both customer-centric and MSP-centric.

According to the recent announcement, “twago enterprise is a talent pool system that which fully integrates into an organization’s existing VMS and MSP processes. As an integral part of VMS and MSP operations, twago provides a vital link to the growing contingent workforce by managing the functionality of talent pool curation, engagement and automated matching. Additionally, twago provides customized interfaces to existing talent pools or job boards. The solution is transparent and entirely client-branded to utilize and reinforce an organization’s employer brand.”

Client requisitions for workers in twago-enabled talent pools originate, like all other requisitions, at the VMS user interface. Thus, the announcement continues, “twago enterprise acts as a direct sourcing channel for an organization and does not require hiring managers to learn a new system or decide which type of employment contract is needed while posting a requisition.” Currently, twago integrated with SAP Fieldglass, and six Fortune 500 companies have already implemented the solution prelaunch. For more information on twago enterprise, visit the website.

Here’s the Kicker

Let’s now turn to the staid, static world of legal services (not).

Legal services have actually become a hotbed of innovation and applications of cutting-edge technology.  I don’t know how, but it’s interesting to watch, and there’s probably a lot to learn from what’s happening there — especially in the application of artificial intelligence and what it will mean for the future of work.

Human Attorneys Get Whooped by AI — Is This Bad?

LawGeex, a legal technology provider that uses AI to help “legal teams automate the review and approval of contracts,” recently showcased its technology in a “IBM Deep Blue-Garry Kasparov” kind of contest, but in this case, the competition involved LawGeeks AI and 20 experienced attorneys. The contest, actually a part of a serious study, conducted in consultation with law professors from Stanford University, Duke University School of Law and the University of Southern California, was documented in a report, “Comparing the Performance of Artificial Intelligence to Human Lawyers in the Review of Standard Business Contracts.”

As summarized in the report, “U.S.-trained lawyers, with decades of legal experience ranging from law firms to corporations, were asked to issue-spot legal issues in five standard NDAs. They competed against a LawGeex AI system that has been developed for three years and trained on tens of thousands of contracts. Following extensive testing, the LawGeex Artificial Intelligence achieved an average 94% accuracy rate, ahead of the lawyers who achieved an average rate of 85%.” Furthermore, it took an average of 92 minutes for the lawyers to review all five NDAs. In contrast, it took the LawGeeks AI a total time of 26 seconds to review all five NDAs.”

To download a copy of the report and see a cool infographic, see here.

So, does this means that attorneys will be replaced by efficient machines — a services procurement practitioners fantasy? Not quite. But does it mean that what legal professionals do and what they don’t do is changing significantly? Yes, and it’s already started.

Though hard to believe, legal services is changing in many different ways. Industry disruption is being driven by many forces, including the application of new technologies.

How far will it go? Well, the jury’s still out on that.

To learn more about these changes and the implications for services procurement, read our series:

That brings the February installment of “The Contingent Workforce and Services Insider’s Hot List” to a close. We’ll be back with more in April. In the meantime, remember: when you’re hot you’re hot, when you’re not you’re not.