Rise of the open workforce

Roping in the services of external talent is gaining traction across corporations. What are the risks in managing such a workforce?

An open workforce - where talent and resources are drawn from a melting pot of in-house teams, freelancers, contractors and external business partners - has surged in popularity in recent years. More than a-third of the organisations plan to increase their use of business process outsourcing providers (38 per cent), consultants and external advisers (34 per cent), talent sourced through online exchanges (33 per cent), and freelancers and contractors (37 per cent) over the next five years, according to a recent report by CIMA and AICPA, based on a survey of over 1,100 senior executives.

It is interesting to note that the reasons for an increased reliance on the open workforce concept vary from region to region. Cost is the top benefit cited in Europe (50 per cent) and the US and Canada (53 per cent), while in Asia Pacific, cost is an important factor for 63 per cent of respondents, though a greater exposure to new ideas and specialist knowledge (74 per cent) and improved organisational agility (67 per cent) are seen as more important.

Seventy-one per cent of respondents in the survey said external talent comprises at least one fifth of their organisation's workforce while 27 per cent reported that external talent accounted for over half of the workforce. So what is fuelling this momentum? Reasons are plentiful: globalisation is a key driving force, with business increasingly conducted across borders, and with rivals growing in new markets, many organisations now need to put far greater focus on international growth in order to compete. Technological advancements have made it easier for organisations to recruit talent from a global pool and deploy them in new markets. Third, the digitisation wave has empowered the external workforce with new digital ways of working such as virtual meetings, shared online work-spaces and cloud technology. Organisations can now access previously lost talent in remote areas, or employ skilled people such as young parents who may only be able to work from home.

But relying on an open workforce structure comes with its own set of challenges. Performance management has become harder and more critical over the years, with companies struggling to find the right tools to manage performance across employees and collaborators. This gets tougher when a corporation depends on people who are not formally on its payroll. Nearly a third of respondents indicate that their companies lack a clear gameplan on the cost and performance of their external talent. This, therefore, implies that organisations need a new approach to performance management to ensure that they are mobilising all their resources effectively.

Second, the open workforce raises the number of risks for a company, such as information leaks (cyber security issues, data security breaches, disclosure of competitively sentitive information or intellectual property theft) and less stark ones like reputational risks that arise when vital tasks are performed by people and partner organisations that do not necessarily share the organisation's values or targets for quality.

On the plus side, open workforces allow companies to reduce costs, while also unleashing a whole range of opportunities. With open innovation strategies, companies can increasingly collaborate with suppliers, customers and other business partners to deliver new products and services. The open workforce can also give companies much greater agility, so they can redeploy resources and augment their capabilities with hitherto unprecedented speed.

All said and done, adapting to the needs of the open workforce is clearly both a challenge as well as an area of untapped opportunity. But the starting point to manage an open workforce strategy is mapping your talent base. Firms need better ways to monitor resourcing levels and forecast how shifts in demand will require them to take a re-look at the medley of in-house and external talent.