The Great Recession is in the rearview mirror and the unemployment rate has largely regained its footing, but America’s labor market will never be quite the same as it was before 2008. It’s undergone significant – and permanent – changes in the past decade, as companies continually face pressure to be more efficient, save money and boost their bottom lines.
This overarching push to increase output and minimize cost has led to the rise of the flexible workforce, with temporary labor, project-based services and independent contractors now the norm. Some of the industry’s largest companies spend billions of dollars each year on their flexible labor alone. According to research from Deloitte, 42 percent of business executives expect to increase or significantly increase the use of contingent workers in the next three to five years.
At the same time, more and more workers are embracing freelance opportunities – 36 percent of the U.S. workforce, finds an October 2017 survey from Upwork and the Freelancers Union. While many land months-long projects, others bounce from client to client more frequently. In the last few years, the gig economy has redefined the notion of work even further. Today workers can access opportunities that last just one shift, one ride or even one five-minute errand, with companies like Shiftgig, Uber and TaskRabbit.
This seismic shift in the way we think about work has forced companies to adjust their hiring practices. This means talent management companies – from RPOs to MSPs to staffing firms, and everyone in between – must adjust as well. How are providers in both the recruiting and staffing ecosystems navigating these changes and responding to new client workforce needs?
How Companies are Responding
In the current market, companies have a wide variety of needs when it comes to talent, as they’re hiring across the whole spectrum of roles – full time, part time, interns, temporary, contract, freelance, hourly, etc. At the same time, they want to consolidate the number of vendors they work with, and they want their providers to be more all encompassing. Many large corporations can be working with dozens of staffing firms simultaneously, which can be cost prohibitive and difficult to manage.
It’s also common for both HR and Procurement to own different pieces of the workforce puzzle. While many forward-thinking companies bridge this gap by forging strong partnerships, others still very much manage employees and flexible labor in silos.
How Providers are Responding
This has led to increasingly blurred lines between different recruiting and sourcing solutions, as they all seek to increase their share of the workforce under management. Now, we’re seeing Recruitment Process Outsourcing (RPO) companies start to offer various contingent hiring services, and traditional Managed Service Providers (MSPs) are seeking out opportunities for RPO work.
More Services = Improved Margins
In addition to pressure from the companies they service to offer more varied solutions, talent management organizations themselves are seeing the business benefits. The long-standing wall between employee and non-employee management is coming down.
With margins much tighter on the staffing side of the house, firms are learning that quantity isn’t going to scale their business effectively. This means they must look to offer other services that have better margins, like for example, RPO.
While all of this is happening, companies also need to have a better understanding of the types of workers they truly need, which opens to the door to a new type of consulting services, or what some are calling “talent advisors.” In “The Future of Recruiting – The Talent Advisor Model Dominates,” in ERE, Dr. John Sullivan shares the growing importance of these talent experts, with their primary goal being to tie talent strategy to specific business outcomes. Firms needing to diversity and raise their capabilities are likely to offer this type of service more and more.
A constantly changing workforce is something we can expect in the years to come. There’s likely even more to come as automation and AI start to impact how companies function, the talent needed to succeed, and the ways that recruitment and staffing firms work to deliver that talent.
