| One of the most profound changes to have taken | | | | also determine how this program is delivered. Just like |
| place over the last couple of decades in this | | | | large IT outsourcers, the MSP providers who manage |
| ever-changing business world has been the | | | | contingent labor will create scale in their delivery |
| disintegration of what might be termed the "job for life" | | | | models. The outsourcing of recruitment is tough |
| ethos: the idea that permanent employment with one | | | | because there is a transactional layer and a BPO |
| or, at least, no more than a small number of | | | | layer. There are specialized companies that provide |
| companies over the course of one's career was the | | | | both; however due to cost compression, [they] must |
| most desirable of all professional options, and that | | | | do it efficiently. Hence the outsourcers in this space |
| mutual loyalty between employer and employee was | | | | that provide both Recruiting and Staffing outsourcing |
| something that could and should be a given (barring | | | | must continue to look at more operationally efficient |
| drastically deteriorating circumstances on one side or | | | | models, and as corporations desire for these services |
| the other). This ethos - however genuinely embraced | | | | to be global, must build help desk, customer service, |
| by workforce and employer alike - has over the | | | | supplier service models that can scale, and be culturally |
| course of only a couple of generations largely given | | | | sensitive to the global needs." |
| way to a new paradigm in which the relationships | | | | On the other hand, explains Friend, "if a company does |
| between employer and employee tend to be far more | | | | not decide to outsource this function, they may roll |
| transient and based on immeasurably more complex | | | | components of this function into a HR shared services |
| foundations. | | | | center. It may be as simple as a tier 1 helpdesk to |
| Whatever the causes of this development - and they | | | | provide transactional help (i.e. "change my password"), |
| are numerous indeed - its consequences have included | | | | or it can be more advanced to handle contracts and |
| a drastic reassessment in what constitutes a | | | | onboarding. This approach will vary, by company |
| workforce and how closely connected that workforce | | | | culture, size, goals and overall objectives around how |
| is to the corporate body. The global business | | | | they manage both recruitment and staffing." |
| environment has witnessed the rise of a vast host of | | | | While CWM strategy was initially developed within an |
| professionals whose ties to the individual businesses | | | | onshore business environment there are no |
| which pay them might last for only a few weeks or | | | | insuperable fundamental obstacles to applying it to |
| months but whose impact can go right to the heart of | | | | offshore operations, as would be required by global |
| those businesses' operations: call them consultants, | | | | businesses in order to fully leverage its potential. |
| independent contractors, contingent labor or anything | | | | "This can be taken from two perspectives: onshore / |
| else you like, but the advent of this set of temporarily | | | | offshore sourcing decisions can be supported and |
| affiliated professionals has fundamentally changed the | | | | executed through a CWM program; and CWM |
| business landscape. | | | | programs themselves are sometimes staffed |
| This is particularly true in the shared services and | | | | offshore. Typically, the capabilities in both are limited |
| outsourcing space, of course, of which transformation | | | | due to proximity and cultural barriers (business culture) |
| - which implies a temporary state of being - is such a | | | | such as service level expectations. However, since a |
| key element. The unique skills required to put a shared | | | | fully optimized CWM program accounts for the |
| service implementation, or a similar change program, | | | | entirety of the enterprise, including all locations and |
| into practice might well be totally indispensable to an | | | | non-employee classifications, this is an area that's likely |
| organization for a comparatively short period, and then | | | | to continue to mature," says Ezratty. |
| relatively useless once the change in question has | | | | Friend, however, cautions that until that maturity is |
| been made. It makes no sense for an organization to | | | | achieved, keeping the higher-level CWM activity |
| employ on a permanent basis the kind of specialists | | | | onshore may be the safest option. |
| demanded by the parameters of the change; similarly, | | | | "As noted in some of the discussions I have seen |
| for those specialists the attractions of a short-term, | | | | around HRO, the offshoring of recruitment and staffing |
| high-value, challenging and interesting contract might far | | | | operation is challenging, with the exception of |
| outweigh the appeal of a permanent, relatively | | | | transactional support processes that are concrete and |
| undynamic position on a career ladder unable to tick | | | | where desk level procedures can be adequately |
| many personal professional development boxes. | | | | defined for the worker," she says. "If there is any |
| The advantages to a company of maintaining a | | | | conceptual or situational decision-making required, this is |
| significant quotient of contingent, rather than | | | | best to keep near or onshore for greatest success." |
| permanent, employees where possible have been | | | | An organization wishing to implement a CWM program |
| especially prominent during the last few quarters | | | | should not consider it to be an overnight task: as can |
| following the sharp downturn affecting much of the | | | | be expected, it requires a degree of restructuring |
| world's business activity, during which the ability to | | | | across each part of the business within which |
| scale operations down or up to match varying | | | | contingent labor plays a role, and of course has |
| demand (scalability also being, of course, one of the | | | | significant implications for HR and finance units in |
| great boons conferred by a well-functioning shared | | | | particular. Furthermore, specific skills are required which |
| service organization, especially one operating on a | | | | may not be found within the existing workforce (in |
| global scale and able to cater simultaneously for very | | | | which case, somewhat poetically, contingent labor may |
| different economic climates according to geography) | | | | well be a useful solution for putting this change |
| has been in some cases the difference between | | | | program into practice); a certain reeducation process |
| corporate success and failure. The capability of a | | | | will be necessary right up to board level in order for |
| global shared services body to cope simultaneously | | | | existing staff to become au fait with, and |
| with, say, continued contraction in Europe, stagnancy in | | | | understanding of the need for, such a change in |
| North America and an increasingly steep upturn in | | | | practice. In addition, the greater the geographical |
| emerging Asia has been evident on many | | | | diversity of any organization, the greater the |
| multinationals' balance sheets in recent times and, while | | | | complexity arising from centralizing an activity which |
| it's probably going a bit far to say that shared services' | | | | must cope with different legislative architectures and |
| scalability has been an engine of recovery globally, it's | | | | labor cultures (although here once again companies |
| certainly had a significant impact on many companies | | | | with well-functioning SSOs will be at a great |
| which might have faced much longer and more | | | | advantage since much of that complexity will already |
| profound doldrums under their pre-SSO structures. | | | | have been negotiated to a certain extent as a result |
| Both within and beyond shared services, an | | | | of centralized accounting or HR practices). |
| organization - especially one of significant size and | | | | New technological solutions will almost certainly also be |
| scope - might now have engagement with dozens, | | | | required, such as the VMS software mentioned by |
| hundreds or even thousands of these freelance | | | | Ezratty (companies already utilizing VMS may have to |
| professionals, active within all corners of the business | | | | adapt existing systems to embrace the new strategy). |
| in advisory or delivery capacities. While the benefits of | | | | Again, this will probably demand the introduction of |
| this revolution have been immense, however, it has | | | | new talent from outside the business and a degree of |
| also resulted in a drastic increase in complexity in | | | | training for the team slated to take over the operation |
| terms of working practices, terms and conditions, | | | | of the CWM program. None of this comes for free. |
| payroll and the employee relations environment | | | | However, the dual impact of the recent downturn and |
| generally, as well as calling upon businesses to have | | | | the ongoing drive for efficiency, process harmonization |
| an immeasurably greater understanding both of the | | | | and risk reduction means that more and more |
| specific skillsets required for any given activity, and | | | | companies are turning to CWM aware that short-term |
| how to go about obtaining and retaining them. These | | | | investment could lead to significant gains in future. |
| requirements have given rise to the development of a | | | | "Companies are seeking to reduce their overall spend |
| strategic approach known as Contingent Workforce | | | | and better manage risk," Friend says. "If you go to and |
| Management (CWM; also sometimes known as | | | | select 'news', type in 'misclassification of independent |
| Contingent Labor Workforce Management, or CLWM). | | | | contractors'. The Obama administration is putting this |
| CWM "is the practice of orchestrating the contingent | | | | topic back under the microscope. Good workforce |
| labor supply chain to meet customer expectations with | | | | management programs control this and help |
| regard to quality, efficiency, cost, and risk," explains | | | | organizations mitigate this risk. As a result of the |
| Jason Ezratty, Managing Partner at Brightfield | | | | economy the outsourcing of MSP programs has |
| Strategies. "CWM programs serve horizontally across | | | | becoming increasingly popular and what services a |
| the entire enterprise. Furthermore, CWM relies on the | | | | provider will offer will continue to evolve as laws, |
| expertise and resource commitments of several | | | | needs and complexity around talent change." |
| corporate stakeholders including HR, Procurement, IT, | | | | Among the MSP community, however, the impact of |
| Legal, Tax, Finance, and Security. CWM is typically | | | | the crisis and subsequent downturn has been a |
| administered through a software platform known | | | | complicated one, with buy-side companies' need to cut |
| generically as VMS, or Vendor Management | | | | costs and further push the efficiency agenda offset |
| Systems." | | | | by a decline in overall demand and greater buyer |
| The crux of the matter, implies Ezratty, is that | | | | leverage, and a growing understanding that significant |
| contingent labor has now become such a crucial | | | | portions of a CWM strategy can be implemented |
| element of so many different parts of a business that | | | | within an organization without recourse to outsourcing. |
| it needs to be addressed strategically in order to | | | | "One of the only barriers to starting a staffing |
| facilitate the kind of efficiencies and corporate | | | | company is access to sufficient capital to consistently |
| coherence which are today a sine qua non of a | | | | clear payroll while waiting for client payments," explains |
| successful organization. Allowing each individual | | | | Ezratty. "Accordingly, the decreased availability and |
| department or location in a multinational corporation to | | | | increased price of capital has impacted many suppliers, |
| manage its own contingent labor strategies and | | | | especially smaller agencies. More importantly, however, |
| practices poses the same kind of problems as | | | | was the overall impact of reduced demand as |
| maintaining individual finance or HR organizations for | | | | companies universally cut back spending. Several |
| each of those departments or locations - solving which | | | | staffing agencies' revenues are down over 20 percent |
| has of course been a key aspect of the success of | | | | (some greater). Making matters worse, several large |
| the shared services model. And where better to place | | | | companies looked to contingent labor as a source for |
| implementation and oversight of a CWM strategy that | | | | quick savings and demanded discounts (up to 10 |
| within a shared service organization which already | | | | percent) on existing PO activity. This type of rate |
| occupies such an integral position within the wider | | | | reduction approach can be effective at driving |
| structure? | | | | immediate savings; however, I fear the long term insult |
| "Some companies are beginning to position their CWM | | | | to supplier relationships will make it harder to achieve a |
| program into their shared services hierarchy (versus | | | | fully optimized and mature CWM program." |
| Procurement or HR, specifically)," says Ezratty. "The | | | | However, Ezratty adds: "In terms of CWM suppliers |
| logic and benefits of doing so are dependent upon | | | | like VMS and MSP companies, the drive for savings |
| many internal factors, including culture, goals, skill types, | | | | actually created an uptick in business." |
| and scope of service. [Meanwhile] outsourcing can be | | | | While the theory behind CWM and CWO is perhaps |
| answered two ways: one, outsourced operations can | | | | nothing radically new, the trend towards embracing |
| be sourced and managed within the context of CWM; | | | | CWM at the heart of a company's strategizing is |
| and two, one can outsource their CWM program | | | | certainly accelerating and practices are undoubtedly |
| operations to an MSP, or Managed Services Provider." | | | | maturing at a rapid pace (again, to a certain extent |
| The idea of running certain outsourced operations via | | | | catalyzed by the economic events of the last couple |
| a CWM framework is an intriguing one - particularly for | | | | of years as well as longer-term business trends). It is |
| companies in transition for which outsourcing might be | | | | of course a trend with great relevance for the SSON |
| a temporary state before full divestiture of a unit or a | | | | community - both for those members who themselves |
| similarly radical transformation, or who have included as | | | | are classed as "contingent labor", and those whose |
| part of their outsourcing architecture roles which fit into | | | | roles may come to encompass oversight or |
| the "contingent" rather than "permanent" category. | | | | operational management of CWM strategy and |
| However, a more common association of outsourcing | | | | delivery. Implemented and managed correctly it can |
| with CWM is the outsourcing of the workforce | | | | contribute towards the quest for process perfection |
| management itself, either in part or end-to-end. This | | | | and operational efficiency which underpins the entire |
| activity is often described as Contingent Workforce | | | | space, while reducing risk on the part of the employer |
| Outsourcing (CWO). | | | | at the same time as formalizing the employer |
| "There are," believes independent MSP/RPO specialist | | | | contingent employee relationship according to |
| Tracey Friend, "three choices a company may make: | | | | corporate norms. It will be interesting to watch over the |
| manage contingent labor and professional services on | | | | next few years how fully CWM is able to be brought |
| their own; self-manage part of it and outsource the | | | | under the shared services umbrella, and how this |
| other part; or completely outsource the management | | | | development impacts on both the shared services |
| to a Managed Services Provider. Depending upon the | | | | space and the ongoing move towards maturity of |
| spend under management and geographic reach, may | | | | both CWM and CWO. |