If you hear that a software engineer was hired to oversee the implementation of a new solution at a Fortune 500 company, would you say that person is a part of the "gig economy"? How about an HR expert who was hired to handle employee-related issues during the merger of two major companies? Or a cybersecurity professional who was brought on to contain a crippling data breach? Even though these positions weren't designed to be permanent, we clearly need a better term than "gig economy" to describe them.
Enter the alternative workforce, which encompasses the full range of independent employment -- from gig workers to highly trained contractors. As it becomes more and more difficult for companies to satisfy the increasingly demanding human capital requirements in today's economy, they're looking for new ways of building their workforces. By hiring highly skilled workers for bespoke positions, companies are capable of affording top-tier talent, streamlining their workforces, and getting projects done more effectively and efficiently than ever before.
With that in mind, here are the top three reasons why the alternative workforce is only going to keep growing, along with strategies to help your company make the most of it.
1. We've entered the age of specialization
Consider how drastically the American workplace has changed over the past few decades. The inexorable process of digitization, for instance, has fundamentally changed the way companies interact with consumers, manage their internal processes, and so on. While an issue like information security has always been important, it has become far more complicated and consequential now that companies have access to huge amounts of consumer data and rely upon a vast array of connected devices that are vulnerable to all sorts of infiltration.
Changes like these require an increasingly specialized workforce. Spotting this shift from inside the private equity world, Sean Mooney left his partner position in 2016 to launch BluWave, an advisory firm that connects specialized, third-party resources with businesses in need of specific skill sets. "After spending two decades in PE, I had countless problems related to episodic needs within businesses," Mooney says. "On the one hand, we had our private equity-funded companies that were under pressure to perform rather quickly. On the other hand, executives at those companies didn't have every various skill set required to take their company to the next level. How could they? I needed to use short-term, third-party resources, but at the same time the process of using third parties was difficult and fragmented. What those companies needed were specialized groups or individuals who could swoop in and provide solutions quickly and efficiently."
For example, roles like data protection officer have become more common, while managers familiar with issues like cybersecurity and data management are in greater demand. It's no surprise that a 2019 survey conducted by HR People + Strategy found that the second-most cited benefit of hiring independent workers is their ability to bring "more specialized skills" to the company.
Another firm, Coact, leverages the alternative workforce to solve episodic needs and produce short-term projects in the marketing and advertising space. Founder and partner Billy Dec launched the company after spending over two decades in the entertainment and hospitality industries: "In today's environment, clients don't want to carry the unnecessary overhead of a big agency," Dec says. "We can identify a need, adapt quickly, and build a specialized team of creative talent that fits the client scope."
Companies have to determine exactly what skills and experience they're looking for to take full advantage of the specialized talent in the alternative workforce. They should openly engage with managers and other employees about what they need for specific projects and what sort of team members they're looking for. Companies should also conduct a thorough assessment of their capabilities to figure out exactly where new talent is needed and where existing talent can be repurposed. And, finally, to be successful, it's vital to facilitate collaboration between independent workers and the rest of your workforce.
2. Top-notch talent isn't easy to come by
Because of the surging demand for specialized skills, low unemployment, and several other worker-friendly trends, companies are facing big challenges finding and recruiting top talent. According to a global survey on talent acquisition conducted by Cielo, a recruitment process outsourcing firm, 70 percent of C-suite executives, HR directors, and other business leaders say the talent pool is shrinking, while 54 percent say they have an unprecedented number of unfilled positions.
Mooney argues that it's extremely difficult to source top-notch talent, because as a business's needs increase in complexity, the more complex the skills required to solve the problems become. "It's not only that the people who can provide solutions to these short-term projects are scarce, but also finding the right skill sets at the right time is hard," says Mooney. "Glorified job boards aren't capable of assessing that capability and fit process. Instead, we use outcomes data and human ingenuity to calibrate those needs."
In other words, the gig economy works for commoditized skill sets but not for complex skill sets. BluWave seems to have struck a chord: In a relatively short period of time, the firm has more than 300 private equity funds across North America coming to it regularly to fill gaps quickly and efficiently.
The Cielo survey also found that 65 percent of respondents "expect flexible workers, contingent workers, and project-based workers will take over a significant amount of the work currently being done by full-time employees." Similarly, Deloitte's 2019 Global Human Capital Trends report points out that the alternative workforce has "grown and gone mainstream even as talent markets have tightened."
While the labor market is always liable to shift, the alternative workforce isn't going anywhere. This isn't just because the market happens to be conducive to short-term, project-based employment right now -- it's because the alternative workforce has many unique advantages regardless of the economic environment. It allows companies to build teams around specific projects, adjust those teams as circumstances change, and maximize productivity by connecting the right people with the right jobs.
3. Harness the power of networks
There are plenty of services designed to connect job seekers with companies, but talent networks are even more important for the alternative workforce. This is due to the nature of alternative employment -- because contractors are hired on a project-by-project basis, they're frequently moving from company to company. This means transparency and accountability are essential, for workers and their employers.
To date, Coact has attracted over 250 highly specialized boutique firms and freelancers across the globe with both agency and corporate backgrounds. Dec notes: "For our clients, this diversity of top talent allows access to the right person to fill their need, instead of a traditional agency model that provides a solution based on internal resources or a limited number of freelancers. What's more, we help our clients hold them accountable for deliverables. It's another positive aspect of the network effect."
According to Deloitte, specialized talent networks "now manage over $2 billion in outsourced activity, employing hundreds of millions of people in every geography of the world." These numbers are only going to increase in the coming years, as the alternative workforce continues to help companies keep pace with the demands of a rapidly shifting economy.
In the end, the alternative workforce is all about relationships -- and curated, intelligent networks can help make them as healthy as possible. And, as these networks continue to expand, companies will have ever-greater access to specialized, top-tier talent.