The on-demand economy brings a sea change of talent management
Tuesday, July 21, 2015
What is the on-demand economy that we keep hearing about? According to Business Insider, the definition is "economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services." But what does that mean?
Remember when you used to go to Blockbuster to rent a video and make sure you returned it the next day or you would pay a late fee? Now Netflix delivers that service right to your TV. And Spotify, Pandora and now Apple deliver music right to your iPhone, iPad, computer, etc. Need a taxi? Go to an app on your iPhone or Android, and Uber will use your GPS to deliver one immediately to wherever you are.
People want goods and services easily, conveniently and quickly. This is the on-demand economy. Talent is no different.
Companies are having to look at the workforce in a whole new light mostly because they can no longer afford to hire all full-time employees. Labor costs (benefits, workers comp, taxes) are increasing significantly, which makes it prohibitive to hire too many full-time employees.
More money spent in this area means less money for technological upgrades, which besides talent, is the second-biggest expenditure. To keep costs down, 83 percent of U.S. companies are increasingly using temporary employees at all levels, including the C-suite level.
Other reasons companies are being driven to the use of more contingent workers are the shifts in skills needed today. It used to be that you could find all of your talent in your local market. Not anymore. Unless, of course you want more C, D and F players working at your company.
Today, you need to go where the talent is, even if it is halfway across the world. Online talent platforms are making it possible to find this talent no matter where it is. Look at Google. They used to find all of their talent in the U.S., but they are now recruiting globally.
The rate at which technology is changing is also driving companies to the contingent workforce. Since the technological skills needed today are so hard to find, sometimes these skill sets can only be found in the contingent workforce.
Even though unemployment is at 5.5 percent and dropping, there are still 5.4 million job openings in the U.S., the most since 2000. By the year 2020, it is projected that there will be a global shortage of 40 million skilled workers due to skills mismatch.
The U.S. Government Accountability Office reports that contingent workers make up 40.4 percent of the U.S. workforce. Ardant Partners has projected that in three years; the contingent workforce will be 50 percent of the workforce. It's evident that the need for contingent workers is not going away anytime soon.
Since it is now necessary to search outside local areas and sometimes globally for the right talent, companies are starting to demand an easier and quicker way to do that. This is bringing the on-demand economy into the staffing and consulting worlds.
Online talent platforms are popping up all over the world, making it easier to find the talent needed. You can search for the talent you need quickly and easily when and where you want from your computer or even your smartphone.
The June 2015 McKinsey Global Institute Report projects that by 2025, 540 million contingent workers will be available on these platforms with companies spending $2.7 trillion. It also shows that of the workers who are currently using these online platforms, 38 percent have gotten jobs at least occasionally through these platforms.
If this is where the talent is going, then this is where companies need to be looking.
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