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The evolution of the external workforce

(Image credit: Image source: Shutterstock/gpointstudio)

In today’s fast-paced economy, constantly evolving technology has radically transformed the way global enterprises manage their corporate operations. The traditional permanent IT roles of the past are being rapidly replaced with contractor positions, utilising highly talented individuals who possess dedicated bespoke skills that are only required for a limited period of time. Furthermore, the evolving employment landscape and the continued prevalence of the ‘gig economy’ is encouraging increasing numbers of rising talent in ultra-skilled niches to turn away from traditional employment routes in favour of more flexible opportunities. This evolution in the workforce is incredibly beneficial for organisations operating in the digital age, however finding and maintaining groups of IT workers continues to present enterprises with many challenges.

Finding the right expertise

External IT is efficient, but often painful for large enterprises. One of the biggest challenges facing companies is sourcing niche IT talent that has the experience of working in larger enterprises. Finding the best fit among external high quality talents that would fit the existing team or unit is often a difficult task. Deciphering exactly what resource is required is only half of the battle if an organisation doesn’t have suitable access to individuals who meet the brief. This leads to extended recruitment drives which can drain valuable time and resources, not to mention inflated salaries. This sentiment was echoed in May 2018, when the Recruitment & Employment Confederation (REC) scored demand for temporary IT workers at 61.8, their highest index score since August 2017. REC’s Tom Hadley was quoted as saying: “A lack of candidates remains a major challenge, particularly in IT. Because of the lack of candidate availability, employers [are] paying higher salaries.”

Avoiding sourcing costs

Even if the process of finding the right staff is relatively smooth, organisations are often stung by high and non-transparent sourcing costs. Considering that many traditional staffing agencies charge between 10-35 per cent of the total project cost, this method for sourcing talent can quickly chip away at the budget before work has even started. While some calculations have indicated that the costs of hiring a permanent employee aren’t too dissimilar from contractor agency rates, organisations remain stuck between hiring quickly at an elevated rate and holding out for what may be six months or more to secure the perfect permanent employee.

Embracing a higher degree of ‘risk’

Due to the nature of contracting, high quality talent now comes in all shapes and sizes. The difficulty with this is that many organisations battle with traditional risk management criteria, leaving them unable to hire smaller suppliers who are deemed too high risk. This red tape prevents many organisations from tapping into some of the best talent available and can severely restrict their ability to remain at the forefront of the industry. This sentiment is reflected in the Office of Government Commerce’s ‘Smaller supplier… better value?’ report which stated that many SMEs “supply higher quality specialist products or services than larger suppliers, either because larger suppliers are discouraged by the limited demand, or because the SME has skills, originality and commitment in that field that are greater than those found in their large company competitors.”

Managing complex HR issues

Once the right talent has been secured, there are often an array of HR-related problems surrounding contracts and processes, most of which were created to manage permanent employees. As a result, many organisations are finding that the internal processes for securing and managing contract workers are no longer fit for purpose. Contract management, reconciliation and invoicing is often manual, leading to an expensive back-office function in comparison to in-house employees.

Sourcing new suppliers

Many organisations have developed a list of existing ‘preferred’ suppliers and some have even placed caps on working with new suppliers. This means that enterprises are likely to be paying too much across a few suppliers, with little transparency in identifying the most expensive suppliers. In addition, organisations will be missing out on working with new and emerging talent that falls outside of the ‘preferred supplier list’ and could possess critically important emerging skills and capabilities.

This area is understandably complex considering that most global enterprises at any time run hundreds of external IT projects with hundreds of suppliers. Some opt to use Vendor Management Systems (VMS) and/or Managed Services Providers (MSP), but often these are not efficient enough due to high costs or their non-holistic setup.

The emergence of talent-sourcing tech

It is clear that the industry is in desperate need of a more efficient operating model for managing IT talent, which has paved the way for innovative tech solutions that serve to address their often complex needs. AI is now becoming the driving force behind supplier and candidate matching, providing verifiable history, education and experiences to enable greater confidence in supplier selections. Cloud-based solutions offer organisations a simple, centralised marketplace, efficient digital payroll services and the functionality of top class sourcing and vendor consolidation software. As a result, technology is enabling organisations to fill even the most specialist positions within a matter of days, safe in the knowledge that they have explored all that the market has to offer, offering a healthy and competitive environment for both new and existing suppliers.

Naturally, organisations are drawn to developing such capabilities in-house, but the reality is that most have neither the time, expertise or budget available to create a fully functional solution. This has led to a surge in demand for third-party talent-sourcing tech solutions which can take care of the entire process, providing significant efficiency gains, no contractual overheads, full compliance and audit trails, alongside granularity down to transaction level.

In summary, the growing need for specialist contractors for short and mid term projects is transforming the way that organisations approach their staffing and selection processes. To satisfy this demand and help prepare organisations for the future, talent-sourcing technology is establishing itself as an emerging solution which is likely to see substantial growth in the coming years as more organisations embrace the benefits that this innovative approach brings to their business operations.

Igor Putrenko, founder & CEO, IT-Suppliers.com