The Contingent Workforce and Services (CW/S) Insider’s Hot List: July 2020
Welcome to the July 2020 edition of Spend Matters Insider’s Hot List, a monthly look at the contingent workforce and services (CW/S) space that’s available to our 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.
In the last Hot List, we covered key events and developments that took place in May, a pivotal month in the COVID-19 crisis. Among those were the first damage-control numbers reflecting the dramatic cut earlier this year in contingent workforce jobs by organizations across the U.S. The ASA Staffing Index dropped from 85.3 in early March to a low of 59.8 at the start of May, but only rose by 12% to 60.7 in mid-June. At the same time, a sliver of the market made up of online platforms — like Fiverr (which raised another $100 million) and Upwork (which released decent quarterly results) — appeared to be faring better than ever, having shown an uptick in their businesses even as early as April. Elsewhere, VNDLY received an additional injection capital, while, on the worker side, the emerging sector of neo-banks for freelancers continued to percolate.
June seemed to start with a high level of business optimism, and the Dow reached a peak of 27,572 on June 8. But by the end of the month, large parts of the country have started to reapply COVID-19 restrictions, and the economic recovery could be heading for its first major bump in what is going to be a long road.
In the CW/S space, there was a lot going on, which we’ll dig into now before heading into the Independence Day weekend.
What was hot in ‘the industry’
June saw a burst of announcements of innovative developments.
- VNDLY made several splashes in June, starting with its announcement of its partnership with EverHive.
- As we noted this month in “EverHive and VNDLY partner on ‘Quick Deploy’ contingent workforce solutions,” the partnership is centered on VNDLY’s Quick Deploy model that allows organizations to jump-start many VMS capabilities in a very short time, while postponing the heavy-duty integrations that can often take organizations months to complete. With the technology in place, EverHive can provide audits to address metrics, reporting and recommend best practices for an eventual contingent workforce management program implementation. Other VMS providers say they offer low-integration, quick-start versions of their solutions. What appears to make the EverHive/VNDY offer different is the presence of EverHive to get the information flowing and transformed into decision support.
- Later in the month, VNDLY was back in the news, when it announced that it had partnered with the single sign-on and identity management technology provider Okta. VNDLY also received an investment from Okta’s venture arm, making it the second technology solution provider, after ServiceNow, to invest in the young company. VNDLY has received $57.5 million from investors since its founding in 2017, including an $8.5 million series B round earlier this year. For more on the partnership, see our recent article, “VNDLY receives investment from identity security partner Okta.”
- VectorVMS and direct sourcing solution provider Will Hire also announced a partnership in June. The partnership will allow VectorVMS clients access to an integrated direct sourcing solution (something that Beeline, through TalentNet, and SAP Fieldglass, through TalentNet and Shortlist, have offered for some time. WillHire is an independently-run business, owned by Compunnel. To learn more, see our recent post “VectorVMS, WillHire partner up.”
- Workforce Logic launched a new analytics-based solution geared to what it calls the COVID-19 “now-normal” workforce environment. Its IQ Location Optimizer enables organizations “to make data-driven decisions on where to source talent and whether or not a remote work arrangement makes sense for the role.” We had a demo, in which we saw how a recruiter or other manager can begin with a job req and game out the options for where a specific role could be sourced, whether on-site or near site in/around one or more of the organization’s office locations or in some remote geographic area or areas. For additional information, see our June article, “Workforce Logiq announces new solution to optimize talent location as return to work proceeds.”
- NextSource launched its Contingent Workforce Management Program Maturity Assessment (PMA). According to the press release, PMA is “a diagnostic that leads to a prescriptive discussion and decisions” and provides organizations with a “holistic assessment of their contingent workforce management programs.” The assessment is survey-based. Practitioners are presented with an online survey, that nextSource says can be completed in “as little as 15 minutes.” From there, the survey data is analyzed by data scientists to create a diagnostic report. Based on the report, NextSource provides consultation with organizations on how to improve their programs. Since we’re on the subject of program maturity, we just published, “Spend Matters previews Everest Group’s contingent workforce management (CWM) best-practices study.” Check it out.
Recent HBR article considers knowledge-work gigs and COVID-19
A June Harvard Business Review article, “Will the Pandemic Push Knowledge Work into the Gig Economy?” provides an analysis of “why the knowledge-based gig economy hasn’t grown,” and how it now could. The article states that it is necessary to “look beyond technology and economics, and consider instead the role played by organization and culture.”
“The organizational factors that act as barriers for knowledge-based gig work,” the article continues, “are the same ones that in the past have inhibited remote work by full-time employees. If these issues can be resolved, whether a remote worker is full-time or gig-based is simply a matter of contractual documentation.”
The article states that “the lesson is that all knowledge-based work can be unpacked into a set of different tasks,” and it is necessary to “analyze things at the task level rather than at the work level.” Three key questions should be asked of specific tasks to make a determination:
- Is the task codifiable?
- Is there (an acceptable) delay between value creation and value consumption?
- Can the task be done remotely?
The article presents a more fleshed-out decision tree and discusses real-world situations and concludes “the simple task-based categorization we propose will help managers make smarter choices about how just what tasks should be contracted to gig workers.”
Read the article here.
Digital platforms continue to trend upward
Though representing just a fraction of contingent workforce spend, online platforms continue to trend upward in terms of numbers and kinds of solutions, enhanced solutions for enterprises and the number of engagements completed and total spend.
- Upwork has been busy — on several fronts — as its share price rose about 17% from $12.21 on June 1 to over $14 on June 29, significantly outperforming the market. In addition, on June 29, Upwork announced its launch of “the Upwork Talent Solution with Citrix Workspace, a unique offering designed to deliver a best-in-class secure remote infrastructure for companies to boost efficiency and productivity as the world increasingly adopts the benefits of remote, on-demand talent.” According to the press release, “Citrix Workspace is a unified, secure and intelligent work platform that transforms the employee experience by organizing, guiding and automating all activities people need to do their best work.” Upwork will deliver Citrix Workspace to customers through A2K Partners, a Citrix service provider and solution advisor.
- Braintrust, a self-described blockchain-based “global network of highly skilled technical and design talent,” announced it had exited stealth mode and began conducting business in the light of day. The company has also announced that it had closed a $6 million seed round from a range of investors.
According to the June announcement, “companies have been turning to Braintrust to build distributed teams before it became a public health necessity.” In the last year, the company “has earned the trust of dozens of Fortune 500 customers, including Nestle, Blue Cross Blue Shield, and most recently from the space agency, NASA.”
The press release asserts that what makes Braintrust unique is its governance model: “The marketplace is talent-controlled.” Compared to other marketplaces which “take 30-60% of the talent’s earnings, Braintrust enables the talent to retain 100% of their earnings. The benefit for enterprise clients is that Braintrust can dramatically reduce costs and match them with vetted talent, who are very difficult to hire and retain internally, to quickly step in and create value so organizations can reinvest in innovation.
The press release asserts that Braintrust expects “to be the first user-controlled talent network that provides enterprises with highly skilled technical and design talent that they need.” It states further that “Braintrust’s unique network model allows talent to retain 100% of their market rate, and enables organizations to spin up flexible teams and make their budgets go 2-3x further by cutting out the middlemen. This new network model of minimizing fees and giving value to the users instead of maximizing fees and concentrating value at the top is uniquely enabled by a blockchain token.”
According to another source, Braintrust is free for tech freelance pros, and clients pay a fee of 10% for each job invoiced through the platform. That source states that “Braintrust can keep its fees lower because it operates as a nonprofit organization.” In the future, “top freelancers and clients will own a piece of the action.” The founders, the article states, “are developing a token-based cryptocurrency system that will give people votes in future decisions.”
- Flexwise Health and Prescience Health announced a merger to “provide health systems with a comprehensive platform to address the increasing challenges in meeting clinical workforce demands.” According to the press release, “The combined company will operate as Flexwise Health and will deliver the first modern enterprise float pool management platform to help hospitals leverage data science and optimize nurse coverage, automate float pool deployment, and access on-demand nurses.”
Flexwise describes itself as “a technology-enabled business support services company with an on-demand staffing platform that provides healthcare organizations with direct access to fully-vetted healthcare professionals available on a flexible basis.” Prescience says it “helps hospitals predict patient demand and align clinical staff,” using advanced algorithms to enhance scheduling predictability and integrates with staffing and scheduling systems and EMRs to optimize clinical coverage.”
“Hospitals and regional health systems are facing unprecedented challenges in managing their clinical staffing needs while controlling expenses,” Kevin Godsey, CEO of Flexwise Health, said in the release. “With this merger, our goal is to provide an integrated solution that will help facilities reduce premium labor costs without compromising patient care by implementing innovative enterprise float pool capabilities powered by data science.”
A new slew of platforms that try to help gig workers
- Steady, a unique platform solely focused on “advising and advocating for workers seeking stable income in America,” announced it raised an additional $15 million in Series B funding led by Recruit Strategic Partners, a venture capital arm of Recruit Holdings Co. Ltd. Other investors include Flourish Ventures, Loeb Enterprises, Propel Venture Partners and CMFG Ventures.
According to Crunchbase, Steady — “an app that finds part-time and temporary work that fits location, interests and schedules,” has raised $38.5 million since its inception in 2017.
According to one of the investors, “Gig and LMI are … the backbone of the American economy but they are facing low wages, lack of healthcare and no realistic idea of what the amount of their next paycheck will be.” And Steady has “created an app that streamlines the work and financial lives of 2 million gig workers and counting, providing the support they need to navigate these challenging times.”
Steady is not on an online gig marketplace where gigs can be found, but more of a platform that provides “community-based support.” The press release states: “Workers using the Steady platform can track their income, receive personalized income insights, receive guidance on relevant work opportunities, get paid to improve their financial health and receive access to benefits relevant to hourly and gig workers, such as Steady’s new telemedicine support.”
The press release also notes that the COVID-19 pandemic has accelerated Steady’s mission. According to Steady CEO Adam Roseman: “Steady’s mission of utilizing the power of our community data to better the outcome for the entire community is more critically important than ever, and we are very excited to have the capital to be able to build aggressively to support America’s core workforce.”
- CareerGig, an online marketplace that uses blockchain and other technologies announced the closing of its initial seed funding round on June 2. The amount of the funding round was not disclosed.
On June 15, the company announced that it had launched an initial set of offerings. The press release says the launch “begins a set of benefit-offerings customized exclusively for freelancers and contractors, including life insurance, health services accounts (HSA), and financial services benefits. On the employer side, HR professionals are able to access a streamlined and secure verification process allowing for multiple assessments and background checks, saving time and resources.”
The announcement also notes the “initial launch will be followed shortly by the CareerGig marketplace with expanded benefits such as health, dental and vision insurance specifically tailored for freelancers and contractors.”
- Opolis has launched the Employment Commons, which brings together freelancers, creatives, consultants and gig workers to access high-quality, portable benefits and financial services, according to a June press release. Spend Matters began covering Opolis in August 2019.
In the announcement, Opolis describes itself “as a Commons for Employment, (that) is built as a public utility framework so that services and technology can be delivered to anyone, anywhere, at a sustainably low cost while allowing freelancers and gig workers everywhere to access the same health benefits, life and disability insurance, and other services that only corporate employees have had access to traditionally. All of the benefits are portable — they move with the individual from project to project or gig to gig.”
The press release states that Opolis’ Employment Commons services currently include:
- Portable, multi-state group healthcare benefits (and life, disability, unemployment, retirement benefits)
- automatic payroll deduction & tax compliance
- Federal and state tax deduction and remittance
- Business budgeting
- Payment in USD, bitcoin, ether, DAI or a percentage split
- Health coverage and more stay the same as you switch between projects/companies over time
Opolis has also started a podcast and YouTube series, Opolis Public Radio (OPR), which “connects with industry leaders about tech innovation, social evolution, the future of work, freelancing, finances, the gig economy, blockchains and more.”
Neo-banks serving freelancers/small providers not cooling off
One of the most consistently covered topics in the Hot List has been neo-banks (or challenger or just digital banks). Not all neo-banks explicitly address the needs of freelancers, contractors, microbusinesses, etc. — but many do and consider these population segments to be a key part of their growth plans. This is no doubt an emerging sector, but one that has been attracting considerable investment as it acquires millions of new accounts, and it is now adapting to conditions of a pandemic. Two neo-banks serving freelancers, etc. had announcements in June 2020.
- N26, the German neo-bank launched the N26 Business Metal account, according to Business Insider.
The neo-bank, which raised $100 million in May, launched the N26 Business Metal account. N26 has raised $782.8 million since it was founded in 2013. The new product is “a premium business account for entrepreneurs, freelancers and the self-employed,” with a $19 monthly subscription fee.
“Business Metal joins two existing business accounts from N26,” also geared toward freelancers and the self-employed, the article stated. And it provides “access to standard N26 features, including automatic spending categorization and its flagship “Spaces” subaccount feature, which allows users to separate savings for dedicated purposes.”
According to Business Insider, “N26 is building a niche among the growing market of freelancers and self-employed consumers. Workers’ demand for financial tools that fit their unique needs will rise along with the global gig economy: It generated $204 billion in customer volume in 2018, and is expected to reach $455 billion by 2023, per a 2019 Mastercard estimate — and though the effects of the coronavirus pandemic could dent some of that growth, the opportunity remains big.”
Business Insider distinguishes “N26 from UK neo-bank Starling, which did roll out sole trader offerings two years ago, but has recently appeared more focused on building out offerings for small- and medium-sized businesses.” The article also suggests that “N26 should continue to differentiate its offerings by adding and emphasizing targeted perks. A wide stable of features — which it’s already on its way to building, with everything from money management tools to travel insurance — could effectively cater to the breadth of needs among freelancers and self-employed customers and help to simplify money management.”
- Lili, which offers an all-in-one banking app designed for freelance workers, announced it had raised a $10 million seed funding round, led by Group 11 and joined by several other venture firms. The company, founded in 2018, reports that “tens of thousands of freelancers across dozens of industries and all 50 states have opened Lili accounts via the iOS and Android mobile apps.”
According to the press release, Lilli “combines banking services with real-time expense tracking, tax tools and financial insights, so freelancers can stay in control of their finances. Lili’s customers span across many industries, from e-commerce shop owners to designers, programmers, fitness instructors, construction workers, chefs, beauty professionals and more.”
The press release states that Lilli’s current features include:
- No account fees, minimum balance requirements, overdraft fees or foreign transaction fees
- Free access to 38,000 ATMs across the country
- Early direct deposit; provides access to payments up to two days earlier than with traditional banks
- Free expense management tool that allows users to track spending and categorize expenses in real time with a quick swipe
- Tax savings tool that automatically puts aside a percentage of income in a “Tax Bucket” sub-account
- Visa Business debit card and mobile check deposits
- Real-time mobile alerts and insights on all income and expenses
- Instantly send and receive money through mobile payment apps like Cash App and Venmo
The investment funds will be used to build out the platform and scale the business.
When you’re hot you’re hot …
So that brings the July 2020 installment of the Contingent Workforce and Services Insider’s Hot List to a close. We plan to be back with more next month. In the meantime, stay safe, stay the course and all the best.