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The changing world of work heralds a new employee base – what does this mean for businesses?


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Henrik Smedberg, Head of Intelligent Spend Management UKI, SAP

By: Henrik Smedberg, Head of Intelligent Spend Management UKI, SAP

As businesses pivot their attention towards a post-Covid world, there is an even greater emphasis on recovery and filling the gaps to ensure that productivity lost during the pandemic can be regained. In parallel to business priorities, the last 15 months of remote working has smashed the traditional working model for many employees and has coincided with a new wave of worker empowerment and expected flexibility. This has seen a rise in the number of freelance – also known as contingent or external – workers and those undertaking ‘side hustle’ projects due to near elimination of geographical limitations. In the technology sector alone, roughly 17% of the UK’s IT and software workers were self-employed in 2020. As a result of these two trends, there is a thriving external workforce for companies to tap into. Harnessing and managing this pool of external talent may prove crucial to retaining a competitive advantage.

History repeating itself

In truth, 2020/2021 is not the first time that the external workforce has risen in prominence. After the 2008 financial crisis, there was a significant migration towards self-employment, with research from London School of Economics estimating that self-employed workers accounted for almost 33% of the total net rise in employment between 2010-2015.

External or freelance workers could once again prove to be a boon to economic recovery in 2021 and beyond. Businesses can take advantage of this network to meet critical challenges at the right time. Particularly when there is such a broad pool of talent now available, the scope for these individuals to add value to an organisation is equally broad.

Research conducted by SAP in collaboration with Oxford Economics, found that 64% of executives say that the external workforce helps to boost agility and 62% say that this part of the workforce helps to provide extra capacity to help manage peaks in demand. Perhaps most importantly for now, though, is that over half of respondents (54%) said that this talent helps their business recover from downturns.

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Leveraging the burgeoning pool of talent

Considering what the external workforce has to offer, the challenge doesn’t stop with identifying talent, but rather managing and nurturing it to best suit your business requirements. As previously mentioned, given demand, freelance workers are now more empowered to choose their roles and the companies they work for. Hiring organisations need to make a strong case  to be chosen.

A contingent worker wants to know that their onboarding is going to be slick, that they will be provided with the right materials to conduct the job and that they will be paid for their services quickly and well. This could well be the deciding factor in selecting companies to work for, so it’s concerning to see that only 33% of organisations have the technology to track and manage statements of work to purchase order invoicing for projects. The delay in payment this could cause, for example, could easily deter a freelancer from taking on work with an organisation, with the business ultimately losing out on the much-needed talent and resource.

Another key principle for good workforce management, and one that is often overlooked, is visibility. Executives that do not have insight into how their external workers are recruited, onboarded and developed are unlikely to devise good management strategies. There are numerous risks in not investing correctly in contingent worker management. For instance, 40% of executives report “maverick spend” and “compliance issues” arising from external service providers and almost half report digital security breaches via engagement with contingent workers.

A key solution for both of these kinds of onboarding and management issues for HR and procurement managers is to invest in technology, such as contingent management software. Solutions of this type can be configured for a cloud-based environment, enabling more flexible onboarding and training of external workers (regardless of their physical location). By allowing for rapid exchange of information on policy, finances and other key information, managers can reduce the risk of compliance issues. Additionally, managers can gain insight of all ongoing projects and contractors via an intuitive platform allowing for real-time decision making over how spend is allocated. With our research showing that 42% of total workforce spend goes to the external workforce, the importance of a smart, intuitive platform for managing this investment is considerable.

The continued prevalence of the external workforce creates a challenge for HR and procurement managers in developing an effective management strategy that combines digital capability with sound decision making. However, by leveraging the right solutions, it is also an exciting opportunity for organisations to maximise the benefits of these external workers and embrace the hybrid model of working to support their future plans and growth.

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