The Contingent Workforce and Services (CW/S) Insider’s Hot List: February 2019

Welcome to the February 2019 edition of Spend Matters’ monthly Hot List, an insider’s look at the contingent workforce and services (CW/S) that’s available to PLUS and PRO subscribers. For those new to the Hot List, each edition covers the prior month’s important or interesting technology and innovation developments in the CW/S space.

Last month’s Hot List edition marked the first 12 months of Hot List coverage and took a slightly different approach. In the January 2019 edition, we examined the increasing awareness and importance of complex services (vs. contingent workforce), reviewed some new data about legal services procurement and a new S2P solution for “purchased services” in healthcare facilities. We also covered the emergence of complex services marketplaces and highlighted some vendors, such as Science Exchange and others providing outsourced R&D services in the biopharma industry.

Perhaps overcome by the polar vortex, for many, January turned out to have been a frigid month. But the CW/S space continued to percolate, with a number of developments and changes and a new third-party report that offered insights into various aspects of this evolving space.

Some Not-So-Sea Changes at the Core

We always use the term “evolving” to describe the rate of change in the CW/S industry over all. We also speak of transformation and not disruption.

Yes, the emergence of new technology and services solutions and new ways of sourcing and managing different forms of the contingent workforce and services are major factors driving this evolution more and more. But at the same time, the established core of this decades-old industry is vast, and the established providers and the practitioners (in established providers and in enterprises — procurement, HR, et al) are on average changing gradually (in both thought and deed). And so it is that we visit some developments and new data that came up on our radar in January 2019.

Personnel Changes: MBO Partners announced that Staffing Industry Analysts’ (SIA’s) Bryan Peña will be joining its leadership team in March. Peña has been with SIA since 2008 and has served as the senior VP of contingent workforce strategies for the past two years.

The announcement refers to Peña an “expert on flexible staffing programs and strategies, including workforce management programs, MSP models, VMS technology, variable and full-time labor, pricing options, RFx processes and supplier negotiation strategies.” According to the announcement, Peña and his team also developed the Certified Contingent Workforce Professional (CCWP) program. And he has been recognized “for his work with CWS Council members — amounting to more than $100 billion in contingent spend — in managing their extended workforce programs.”

At SIA, Peña was mostly focused on the enterprise buyer-side of the industry and contingent workforce management programs, but as a neutral industry observer he’s had a good opportunity to observe what’s happening and changing on the demand and supply sides of the industry over the past 10 years. According to the announcement, at MBO, Peña will focus on “overall market strategy, partnership development and enterprise capabilities to support the growing demand for independent workforce solutions, as well as act as an industry advocate to elevate the role of the extended workforce.”

“It’s no secret the world of work is rapidly changing,” Peña is quoted as saying. “MBO has always been at the forefront of that change. I am excited to be joining the MBO team in creating the next generation of workforce solutions in an increasingly challenging global economy.”

And in related news, in January, it was announced that “Ursula Williams  the first chief operating officer of Staffing Industry Analysts, overseeing all the company’s commercial operations.” According to the announcement, Williams joined SIA as senior VP of global strategy and marketing in 2015, and among a number of achievements, lead the company in the addition of its newest conference, the Collaboration in the Gig Economy.

More changes in the core: The temp staffing space has historically been cyclical and a leading indicator of recessions, though much has been debated over the past years about whether it is becoming less cyclical as organizations make using contingent workforce standard operating procedure.

Source: American Staffing Association website

Whether the trend data (seasonally adjusted) depicted above suggest as much is unclear. But what we can say is that the number of temp jobs increased from 1.9 million in December 2009 to 3.1 million in January 2019 (more than 50%) and a record for the staffing-penetration rate, which hit a high of 2.06 in November. However, while U.S. non-farm job growth overall continued to surge in January, in the same month, the seasonally adjusted number of temporary jobs increased by only 1,000 (and temp jobs increased by 10,300 and 8,300 in December and November, respectively). The penetration rate was posted at 2.03 for the second month in a row.

A slowdown in temp jobs would not be surprising — and could be in keeping with its leading indicator role. But there is the lingering question of how much of a contraction there will be in 2019. Moreover, temp staffing is not the only way organizations engage workers on a contingent basis, and the use of independent contract workers and services may be increasing, both broadening and complicating the question and the answer.

What’s Been Going on Outside the Core?

What’s been going on in January outside of the core? It turns out plenty.

The Gig Workforce is Alive and Well: PYMNTS.com published its quarterly Gig Index report in January. The study starts with a statistical sample of over 9,500 workers and identifies a percentage of those as having participated in some form of “ad hoc” work over the course of one quarter. In the most recent January report, that percent value for Q3 2018 was 35.6%, which was up from 29.5% in Q3 2016, when the study began. Now to be clear, PYMNTS has a very broad definition of gig workers, which is a worker that engages in any type of “ad hoc” (read: contingent or limited time frame). But even allowing for on-call or temporary-term employees of an organization (which would result in a lower percent of workers that we would consider gig or independent contract workers), the number would still be large.  And many of the findings of the study would apply and inform our views. This chart is an example:

Source: Gig Economy Index

This chart shows, over the 1st to 3rd quarters of 2018, how the total percent of gig workers broken down by employment category. So for example, in Q3 2018, 54.1% of gig workers in the overall sample also held a full-time job, while (at the bottom of the chart) only 18.5% had no other form of employment besides gig work.

What is interesting about this — and what makes the independent workforce difficult to measure — is that gig workers can have other employment while sometimes working gigs. And some workers may only perform gig work intermittently. So when some measures count 40 million, 50 million or a further upwards number of gig workers in the U.S., this is one of the reasons. But it also means that businesses have access to liquid workforce that may not always be available nor accessible. Businesses need the tools and processes (which are only beginning to emerge) to be able to leverage that pool of liquid workforce.  Note: Spend Matters also recently published its analysis of its own pulse survey in the PRO brief entitled Are Organizations Using More of the Independent Workforce?

Innovative Solutions Continue to Propagate: While the core and its temp staffing ingermediaries may also be evolving because of growth in more flexible workers and work arrangements, technology continues to play a big role. And — no surprise to us — there was evidence of that in January. We came across a number of innovative, technology-based solution providers that were not previously on our radar:

• In the January Hot List, we wrote about the emergence of online marketplaces and talent/service provider networks serving bio-pharma and other science-based businesses and institutions. Last month found Kolabtree, a global online platform for freelance scientists. The company, founded in London in 2015, reported that it now has 6,000 freelance scientists from 131 countries registered with the platform. According to Kolabtree, “the company’s database includes freelancers, many with PhDs, specialised in over 2,000 scientific disciplines including medical, food and environmental science.” And the “freelancers offer advanced services, including data analytics, scientific writing and experiment design, to provide small businesses and research organisations with the specialized skills and experience required for their projects.”
• Throughout the last 12 months of Hot Lists, we have focused frequently on various blockchain-based intermediation platforms. Thanks to an article in Distruptor Daily, we now have a few other blockchain platforms to the list. These include platforms like Teller (founded in late 2017), Mentat (2016) and, a microtask platform, Fragments (2018). The one we found most interesting was Teller, described as “a blockchain-enabled banking solution suited to anyone maintaining their own accounting system,” with financial resources such “checking and savings accounts, a Visa debit card and liability protection” and tools to track and forecast expenses and income. This ties back to our recent coverage of independent workers and online or digital-only banks and the importance of fintech and payments in catalyzing the independent workforce.

And so the CW/S industry continues on its evolutionary path, propelled by technology that spawns seemingly countess innovative solutions and gradually influences and reshapes the establsihed core of the industry. Even within a polar vortex, things don’t entirely cool down.

And that brings the February 2019 installment of “The Contingent Workforce Insider’s Hot List” to a close. We plan to be back with more in March. In the meantime, remember: When you’re hot you’re hot, when you’re not you’re not.