(Editor’s note: Rob Eleveld is CEO of Shiftboard, Inc. He submitted this story to VentureBeat.)
Although many businesses utilize some contractors or temporary staff, the magnitude of the trend towards contingent labor (contractors, hourly, part-time) may surprise you.
According to Aberdeen analyst Christopher Dwyer in a June 2010 report entitled “Contingent Labor Management,” contingent workers already make up 20 percent of the labor force – and could reach 25 percent in the next year. And the slow recovery from the recession is only reinforcing the trend.
Business managers, recently having gone through major cost reduction measures, are dipping their toe in the water by bringing on contractors or filling gaps with part-time positions until they have the confidence to make full-time hiring decisions.
Like any big trend in the economy, this one offers both opportunity and risk. As you determine how this might affect your business, here are five things to you should keep in mind:
Experienced labor – cheap! Contractors and freelancers often offer expertise you might not be able to afford or keep full time. As a quick example, we have a great designer and layout specialist here at Shiftboard. We only need 20-30 hours per month of her considerable skills. We couldn’t afford to have her full time, and even if we could, she would soon be bored. Instead, we receive incredible expertise, but balanced with engagement levels we can afford. Think of the needs in your company where you need someone really good, but you only need them for a specific project or limited time each month.
Change is inevitable – Its essential to focus on how the growth in contingent labor affects your customers and markets. Let’s take just an obvious example: payroll services and human resource management software. These are huge markets, but they will change significantly as more credentialing, compliance, and security tracking shifts from captive W2 employees to a looser, larger network of contractors. Smaller, nimbler vendors in these segments have an opportunity to quickly tune offerings and become leaders where customers have changing requirements.
Outsourced firms are getting more capable – Outsourced service providers are already improving in quality and complexity of services. The first phase of outsourcing focused purely on cost reduction, often moving repetitive tasks abroad. Quality sometimes suffered, especially with more complex services. Think how many complaints you have heard about overseas call centers, for example. But the number of domestic virtual call centers is growing. These businesses employ well-educated domestic contractors working from home, combined with a real-time technology platform to provide high-end call center services. Can your business use those services? Are they a threat to a current offering you provide?
Flexibility as a recruitment tool – Quickly do a mental check of how many people you know, either at the office or personally, who require “flexibility” as a key requirement to their job. They may be caring for an ailing parent, work two jobs, move often with their spouse/partner, or have young children. Regardless of why, they make decisions on where to work not just based on pay and benefits. Rather, they balance those items with how flexible their job can be in terms of hours, days of the week, commuting requirements, etc. Be flexible, because it has value in the minds of the candidate you are trying to hire or the key employee you want to retain.
It’s only getting bigger – Demand for comprehensive, real-time communication with a company’s labor force will continue to grow. Companies large and small are managing a larger, less rigid network of employees, contractors, and part-time labor. More team members are working odd hours, or working in different cities, or rarely work in the office. Companies that provide seamless products and services to tie together those distributed workforces together, allowing them to collaborate and communicate via web and mobile platforms, will have a lot of market to run with.