Discovering the Current Market Point of View

The current market perspective on the external workforce presents both opportunities and challenges. With several technical and social innovations converging, companies are increasingly relying on the external workforce to meet immediate needs for specialized skills, creating a new labor dynamic.

Among those innovations are:

• Automation and AI: Where automation has been disrupting traditionally blue-collar areas such as manufacturing for decades, AI is now beginning to disrupt the white-collar workforce by automating routine creative and analytical tasks. This disruption, however, brings opportunities and a demand for workers with specialized skills in areas like data analysis and machine learning. And considering the speed at which AI is gaining abilities, companies will need a more agile and flexible workforce, increasing the market for external workers.
• The Rise of the Gig Economy: Innovations in the way many services are performed are contributing to a steep rise in what is called the gig economy. Barriers to entry in certain professions are falling, opening more opportunities for individuals to earn a living through freelance and contract work. This trend offers businesses flexibility and access to specialized skills on a project basis. The emergence of gig economy platforms has made it easier for companies to access and manage external talent, enabling them to quickly find the right skills they need for specific tasks.
• Remote and Hybrid Work: The pandemic accelerated the adoption of remote and hybrid work models, in effect loosening the geographic restrictions that often limited a talent pool. Companies can now reach across borders to access workers rather than having to limit their talent pools to specific locations.
• Diversity and Inclusion: Companies are increasingly becoming aware that innovations are driven by fresh and diverse perspectives. To tap into these differing perspectives, these companies are expanding their hiring practices to include a wider pool of workers who may otherwise have been overlooked. As with gig economy and remote/hybrid opportunities, diversity and inclusion means that the breadth and depth of the talent pool has increased dramatically.
• Connected Experience: Prior to kicking off their hiring processes, many organizations manage the contract negotiation and execution with their service vendors in an external ERP or Contract Management solution. Being able to integrate these platforms as part of their external workforce management solution is paramount in creating a transparent and connected workflow.

Watch the video to see some other business trends driving changes in the workforce.

Recent technical and social innovations have changed the labor dynamic, driving many companies to rebalance their total workforce. To stay agile and competitive, these companies are relying more and more on external workers. These factors collectively shape the evolving landscape of the external workforce, driving businesses to adapt and innovate in their workforce strategies.

Some areas where companies may find a greater need for external workers include:

• Specialized Skills: Constant change means that companies often have trouble recruiting for newly emerging technologies, such as AI. These new business trends often require specialized skills that may not be readily available within their internal teams. External workers can fill these gaps with their expertise.
• Cost-effective Solutions: Many organizations are looking to leverage the external workforce to reduce costs associated with traditional full-time employees, such as benefits and overhead expenses. And external workers are often more cost-effective for short-term projects.
• Scalability and Agility: External workers can bring fresh perspectives and innovative ideas, driving business agility and adaptability. Companies want to be able to scale their workforce up or down based on demand, and an external workforce allows for this level of agility without having to constantly recalibrate the internal workforce.
• Workforce Transparency: Indeed, with this trend toward utilizing more and more external workers comes the need for companies to have transparency into their total workforces so they can make appropriate, cost-effective decisions to staff in areas where workers are needed most. They need to see not only how their internal workforces are distributed, but also the gaps that external workers are filling. The data needs to be combined to provide a big picture of the total workforce.

The contemporary business landscape is characterized by constant evolution, driven by rapid technological advancements, shifting market dynamics, and changing consumer behaviors. This relentless pace of change presents significant challenges for companies striving to build a workforce that is not only adept at handling current demands but also equipped to adapt to future needs. As new skills become essential and traditional job roles transform, businesses are constantly facing challenges when trying to properly allocate their workforce.

Here are just a few of the most pressing workforce challenges that businesses face today:

• Compliance and Legal Risks: Managing an external workforce comes with legal and compliance challenges, not the least of which is complying with a vast and distinct number of regional labor regulations. These can include differing wage and work hour codes, discrimination laws, worker misclassification, and health and safety standards, among others. SAP Fieldglass offers customers functionality that can capture labor regulations, manage global taxes, and manage shift and wage variances dependent on business needs.
• Data Protection and Privacy: Protecting sensitive data and ensuring compliance is crucial when engaging external workers, especially in industries with strict security requirements. SAP Fieldglass provides customers with a private and dependable platform where worker data can be securely tracked for compliance to defined requirements.
• Talent Acquisition and Retention: Both HR and procurement teams struggle with today’s competitive recruitment environment. The pressure is on to gain reliable, real-time access to talent pools, and to create an attractive and streamlined experience for all involved. SAP Fieldglass allows suppliers to establish candidate pools of job seekers, made immediately available to customers in an efficient and engaging UI.
• Integration with Internal Teams: Bringing external workers into the fold and integrating them with internal teams can be a challenge for organizations. Because external workers may work on multiple projects for multiple clients, they often have to assimilate into differing corporate cultures, raising communication challenges and potentially hindering effective collaboration. And they likely won’t have the same level of institutional knowledge or context about a project, leading to increased onboarding time and possible delays with deliverables. Conversely, knowledge transfer to internal team members may be hindered. Through many channels, SAP Fieldglass helps define extremely clear requirements for worker preparation, as well as supports specific onboarding activities and information to help eliminate productivity gaps.
• Management and Oversight: Managing a dispersed external workforce can be complex, requiring effective communication and project management. Performance tracking, quality controls, security and confidentiality, compliance and legal risks, and cost management contribute to the need for tools to help manage all aspects of an external workforce. A strength of SAP Fieldglass is seen in its robust Analytics module, where data can be viewed in real time to assess worker and supplier performance across multiple parameters. It provides quality insight regarding the operational management of a customer’s workforce.
• Quality Control: Ensuring consistent quality and adherence to standards can be challenging when working with external workers who may have varying levels of experience and commitment. Because external workers are generally with an organization for a limited time, they may not be able to get up to speed to match the expected standards of quality and productivity set by internal teams. By capturing customer feedback and worker assessment ratings, SAP Fieldglass provides transparency across a temporary workforce in regard to the quality of their performance, skill level, and overall hireability.