ERP Associates
Hiring Trends for 2016

Friday, 20 May 2016

Hiring Trends for 2016: Welcome to the gig economy

The future of the job market sits with non-employee workers, says a study from Fieldglass, a software company that supplies vendor management systems, in partnerships with Ardent Partners, a research and advisory firm. The study surveyed 210 business professionals from small, medium and large businesses, and found that as of 2015, “nearly 35% of today’s total workforce is comprised of non-employee workers,” which includes freelancers, temps, contractors and statement of work-based labor. The result of this is that 95% of companies view this new workforce as a vital component to developing and running a successful business, which means huge changes for hiring trends in the next year.

Arun Srinivasan, senior vice president of Strategy & Customer Operations of SAP Fieldglass says, “The changing needs of today’s workers, the war for talent and the globalization of the workforce are just a few reasons that today’s technology is evolving so rapidly. All of these forces are driving workforce management to the top of the business agenda, especially as talent becomes a true differentiator for organizations.” The study says that this is a relatively recent trend, because only a few years ago the majority of a business’ employee pool was made up of full-time workers, while non-employees were used less often. However thanks to online hiring platforms, more compaies have found it easy to get in touch with and hire temp workers.

In search of gig workers

The largest sources that business use to find this new class of talent includes;

  • Freelancer networks,
  • Job boards,
  • Marketplaces,
  • “In network” talent and
  • Social Media

The study reports, “By understanding where this talent exists, how it can be engaged, and the general parameters of how is should be managed, they will be able to drive additional value from the wealth of skillsets available in the on-demand talent marketplace.

Thanks to the “on-demand” nature of this, it has only helped to enhance the popularity of freelancers, contract workers and other non-traditional hires. Employers can look for profiles, post opportunities and connect fast with candidates without a lot of expense or effort.

These channels also offer employers a resource to find workers with specific skills that they need for a project. The study also shows how it is easy for an employer to go online, put up a job opportunity with a specific skill set listed to find the best candidate. Business can now get shorter term hires for highly specific projects instead of internal employees having to work on things that they are either not interested in or qualified to do.

When the time comes to get the results from these non-employee workers, companies can frequently just use the same website as they have used to hire a freelancer or contractor. The study accentuates the capability to not only manage projects through a lot of these websites, but also to safely and securely send payment. This fundamentally eliminates any concerns that employers may have with regards to hiring a remote worker who isn’t necessarily a permanent part of the team of who is working virtually.

A well-known term for this new workforce is the “flex economy, “or the “gig economy,” but however you call it, it definitely not traditional. From 2015 the average business’ workforce consisted of 20 % contingent workforce and 54% traditional full time employees. The remaining 26% is a grey area for the people that fit into both of those categories, which could be part-time employees or remote workers. Fieldglass predicts that by 2017, this will change to 25% contingent and 41% traditional workers while the rest, being 34%, will remain in the same grey area.

Srinivasan goes on to say, “Utilizing an external workforce can offer a variety of benefits for employers, whether an organization is focused on keeping down costs, finding the highest quality workers or under time constraints.”

Full-time workers are safe…for now

Nonetheless, anybody hat has a concern about the situation involving full-time work does not have to worry for now. The study envisions that while non-traditional workers are beginning to edge out traditional workers, it is a slow process. Srinivasan says that he foresees a 50/50 split down the middle, but that businesses are always going to rely on full-time traditional workers in some form. “For a company’s core competencies, employees will always be needed and an important part of the overall culture and business operations. That said, we do see more organizations exploring ways that a flexible workforce makes sense and can help them achieve their goals.”

Despite the fact that this trend is growing in popularity, there are also challenges with the reality of contingent workers. The study showed that 48% indicated a lack of visibility and intelligence into the ultimate consequences of the gig economy. For example, it’ hard to make sure that these freelancers are up to speed on compliance, training and their overall impact on the business; all things you easily teach a traditional worker. Out of the people surveyed, 46% specifically said that they had concerns regarding compliance with federal, state and regulatory labour guidelines as they start hiring people from other countries or states.

Spending costs is also another concern with there being a percentage of 45 thinking that there will pressure to lower costs and improve savings. Companies will need to consider the cost of hiring individual talent for new projects and actions. A focus on creating realistic cost evaluations and budgets around non-traditional hires will need to happen. One of the final worries that 37% of businesses saw, was the ability to grow its workforce. With a traditional workforce, businesses can concentrate on on-demand growth opportunities and training, but it isn’t as simple with contract workers and freelancers.

As the gig economy grows, companies can expect more support. Like the websites that help a business to hire, manage and pay these workers, more software and products will be developed to help the gig economy. An example of this is companies are embracing Freelancer Management Systems (FMS) that make it efficient to manage this new load of non-traditional employees. As the trend in hiring changes, companies need to readjust and innovate around their current talent management strategies.

Srinivasan says that ultimately, what companies are realising about the gig economy is that, “It affords companies access to pre-screened, pre-trained workers with niche skills, who can get to work quickly and stay on only for as long as they are needed. And, as company’s needs change, an external workforce can be called up or down quickly.”

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