Why CIOs Should Care About Your Organization’s Contingent Workforce Program
Non-employees now account for over 40% of the average company’s total workforce. That percentage is even higher in financial services, insurance, and technology companies, and higher still in the IT departments of those organizations. With continued growth of non-employee usage and increased focus on digital transformation, now is the time for IT to take charge and positively transform contingent workforce (CW) programs to ensure that there is an avenue to attract and retain the best talent. Given the challenges of any digital transformation initiative, a flexible workforce is all but essential to provide skills needed at different stages — and to drop skills/experience into a company. Streamlined sourcing platforms and integrated procurement systems mean less time administering software and more time getting important project work done.
The evolution of contingent workforces
CW programs, defined as the ongoing management of the non-employee workforce or sometimes called ‘managing contractors,’ have historically been managed out of HR and Procurement, with IT involvement limited to occasional participation in implementation projects, integration development, and VMS system support. However, CW utilization for IT roles is expanding and transitioning to a more mobile and remote workforce, and demand for IT talent is only increasing. The rapid pace of change in types of technology coupled with the rush to ramp back up post-pandemic is leading to a multitude of engagement types — from the traditional staffing-supplier staff augmentation to freelancer / independents to gig workers to consulting to outsourced and managed services. Simply put, IT is the largest consumer of non-employee talent, and for many organizations in some of the most strategic roles as digital transformation sits at the forefront of the C-suite.
Digital transformation is necessary to support remote work
Entering a post-pandemic workforce requires digitized, cloud-based solutions to facilitate the demand of remote work. Evaluating, deploying, and maintaining these solutions will outstrip current FTE capacity and some work (like hypercare) may not be needed on an ongoing basis. As upwards of 85% of all organizations are seeing a significant uptick in IT needs, hiring contingent labor is a flexible and cost-effective way to support digitization projects.
What we’re also seeing is a shortage of talent. This has been true for some time, especially in the high-skill IT roles most associated with leading edge technology — AI, natural language processing, blockchain, data science, etc. So in 2021, as the world comes back online, a shortage of talent will be coupled with a burst in demand. This creates an extreme situation, similar to what we saw in 1999 in the Y2K scare, when staffing companies held all the cards and got away with charging exorbitant mark-ups.
But now, CIOs have the tools to get ahead of this War for Talent and put themselves in the front of the line. Whilst in the past we may have been talking about shaving a few days off of time to fill, we may now be looking at months. We have to look no further than how various countries have handled the procurement of vaccines to understand the real world impacts of not getting your house in order when there is limited supply. Those countries or unions overly burdened by bureaucracy and too focused on upfront cost are now months and months behind those countries who prioritized value. Paying 6 cents less per dose matters little when it takes 3–6 more months to acquire the vaccines. Same is true for contingent workers when the digital transformation and IT projects they will work on are of such strategic importance for an organization.
The benefits to IT leadership of effective CW management are demonstrable: Optimized cost of workers, reduced time to find talent, increase in worker quality and productivity, and mitigation of business risk by providing the ability to create a truly flexible resource pool and deliver the right talent at the right time during a project.
So what are we recommending? That IT ‘own’ the contingent workforce program, manage the relationship with the technology provider and/or managed service provider? Not necessarily. This can still sit within HR or Procurement. What we’re recommending is that IT sits in a sponsorship role and is involved in the ongoing governance. This is already true at some of the most mature organizations with long standing contingent workforce programs, often in their 2nd or 3rd generation. But it is now more and more an imperative, because:
- IT departments are typically are the largest consumers of contingent labor, and therefore have a vested interest in utilizing an efficient technology solution to source for this labor category.
- In addition to being heavy consumers of contingent labor, IT departments are commonly responsible for administering and maintaining the contingent workforce technology (e.g. VMS). To reduce workload in maintaining a cumbersome application, IT should be a key stakeholder in any technology sourcing decisions to ensure that a scalable solution is selected.
- IT leadership in most organizations already have significant clout and stakeholder buy-in, making them natural leaders to manage the necessary cross functional management needed to support a contingent workforce program. As many IT departments are global in nature, their centralized footprint is ideal to push through scalable processes and policies.
Our approach: Coupa Contingent Workforce
From a technical perspective, Coupa believes that stand-alone contingent workforce technology (formerly called VMS systems) will be extinct in the years to come. As IT departments necessarily take a bigger stake in contingent workforce programs, the central philosophy of minimizing the number of enterprise systems will prevail. This will be coupled with enterprise applications, like Coupa and our Business Spend management Platform, building in-platform contingent workforce capabilities, like Coupa Contingent Workforce. Fewer integrations, fewer systems, faster deployments means the best access to in-demand talent. So for IT departments we are both reducing their internal effort while increasing their productivity, output and strategic value. Meanwhile, including IT in program governance provides greater visibility into the use of contingent workforce and therefore closer alignment with HR and Procurement. IT won’t be left having to accept rules and processes dictated by central functions disconnected from their day to day business reality.