Rethinking The On-Demand Workforce

In this era of chronic skills shortages, rapid automation, and digital transformation, companies are confronting a growing talent problem, one that has the potential to become a strategic bottleneck. How can they find people with the right skills to do the right work at just the right time? The half-life of skills is shrinking fast, and many jobs now come and go in a matter of years. 

Platforms that provide workers who have four-year college degrees or advanced degrees represent an increasingly important but understudied element of the emerging gig economy. To better understand this phenomenon, we undertook a survey of nearly 700 U.S. businesses that use them. We then conducted in-depth interviews with many corporate leaders whose companies are relying on the platforms and with platform founders and executives.

To compete in the years ahead, companies must do better. They’ll have to acknowledge and embrace the full potential of digital talent platforms—which is to say, figure out how to engage strategically with what you might call the on-demand workforce.

In this blog, we’ll take stock of where most companies now stand on this front. We’ll show how some pioneers are speeding ahead to take advantage of what the new talent platforms have to offer, and we’ll explain how you and your management team can do the same.

The Maturing Gig Ecosystem

As the gig economy has grown, three kinds of platforms have emerged:

The Maturing Gig Ecosystem

Marketplaces for Premium Talent:

These platforms, which include Toptal and Catalant, allow companies to easily source high-end niche experts—anybody from big-data scientists to strategic project managers and even interim CEOs and CFOs. Toptal, for example, claims it culls the “top 3%” of freelancers from across the globe. Experts might be hired for strategic initiatives or embedded in teams, and the projects they’re assigned to can range in length from a few hours to more than a year. The Covid-19 crisis is increasingly turning companies toward this kind of platform: Consider that this past spring Catalant reported a 250% increase in demand for supply chain expertise. (Full disclosure: Coauthor Joseph Fuller is an adviser to Catalant’s board of directors.)

Marketplaces for Freelance Workers:

These platforms, which include Upwork, Freelancer, and 99designs, match individuals with companies for discrete task-oriented projects—designing a logo, say, or translating a legal document. For example, when Amazon wanted to explore creating custom social-media content for its new TV shows, it tested the waters with Tongal, which connects companies to individuals with media know-how. Many freelance platforms offer access to workers from around the world with a wide variety of skills, and payment is often per completed task. Covid-19 is accelerating the move toward these platforms, too: As large swaths of society began working remotely, Upwork saw a spike in demand for digital marketing expertise from companies trying to reach consumers in their homes.

Platforms for Crowdsourcing Innovation:

These platforms, which include InnoCentive and Kaggle, allow companies to post problems among large communities of technically sophisticated users—and reach a far broader base of them than could ever be found or developed in-house. The challenges run the gamut from simple coding projects to complex engineering dilemmas. Working with the platforms, companies often create competitions and offer prizes for the best solutions. The U.S. Transportation Security Administration, for example, ran a $1.5 million competition on Kaggle to help improve the algorithms that predict threats using images from airport scanning equipment. Enel, the Italian multinational energy company, uses multiple crowdsourcing platforms to generate ideas for a host of issues: how to improve recruiting and even what to do with defunct thermal plants. And the pharmaceutical company AstraZeneca has turned to InnoCentive’s “solvers” to develop molecules used in genetic research and testing.

The Growing Supply

Millions of well-qualified Americans today are attracted to contract work. Freelancers are now estimated to make up roughly a third of the U.S. workforce, and those who are highly skilled represent a small but growing slice of it. And for the first time since 2014, the number of freelancers who say they consider gig work to be a long-term career choice is the same as the number who consider it a temporary way to make money. Early signs suggest that Covid-19 will also speed up this shift.

The Growing Supply

Care Responsibilities:

Single-parent and sandwich-generation families are on the rise. Burdened with childcare and eldercare, many employees are dropping out of the workforce or struggling to manage full-time jobs. Gigs allow them the flexibility to handle their family obligations while delivering quality work.

Female Employment:

Women’s participation in the U.S. labor force has been declining steadily since 2000. Highly skilled, experienced women who take time off to have children and for other life events are finding it difficult to restart their careers or are seeing themselves get sidetracked in traditional organizations. According to a 2009 Center for Work-Life Policy survey, more than two-thirds of “highly qualified” women—that is, those with advanced degrees or high-honors BAs—who drop out of the workforce would not have done so if they’d had access to more-flexible job arrangements. Online talent platforms allow them to more smoothly reenter the workforce and advance their careers.

The number of freelancers who say they consider gig work to be a long-term career choice is the same as the number who consider it a temporary way to make money.

The Aging of America:

Workers who are laid off or edged out of traditional firms once they hit their fifties often find that talent platforms offer them a way to continue to use their skills and experience—while maintaining satisfying work/life balance. Given that by 2030 one in five Americans will be older than 65, talent platforms expect that experienced workers with hard-to-find skills will flock to their fold.

The Millennial Ascendancy:

Millennials, who are already the largest generational cohort in the workforce, tend to be tech-savvy and to prefer to work for themselves rather than for traditional organizations. They want more autonomy and control over their job security than previous generations had.

Early Lessons

In studying how talent platforms are being used, we’ve identified three areas where companies have consistently found platforms most useful:

Early Lessons

Labor Force Flexibility:

When the head of technology at the PGA, Kevin Scott, found himself frustrated by the need to constantly improve and upgrade the organization’s digital capabilities and offerings despite a lack of in-house digital talent, he partnered with Upwork to quickly engage software engineers to generate and develop promising ideas. Using Upwork, the PGA was able to get projects started and finished considerably faster than before.

Time to Market:

Many managers have turned to talent platforms to fast-track processes, meet deliverables, and ensure outcomes. When Anheuser-Busch InBev wanted to quickly expand into new, disruptive products, it realized that despite having a workforce of 150,000, it needed outside help. By tapping into Catalant, the company was able to rapidly get consumer data analyzed and find experts to help roll out products like kombucha tea and spiked seltzer. Similarly, when Matt Collier, a senior director at Prudential PLC, was on a tight deadline to overhaul the training given to insurance agents in Singapore, he turned to Toptal to find designers and other talent that could help him create course materials quickly—and ended up getting the job done for less than it would have cost with traditional vendors.

Business Model Innovation:

Digital talent platforms can also help companies reinvent the way they deliver value. In 2015, when Enel made the strategic choice to embrace the United Nations’ 2030 sustainable development goals and build new businesses around them, it engaged the services of several crowdsourcing platforms, among them InnoCentive, which alone gave Enel access to more than 400,000 of its highly skilled problem-solvers worldwide.

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In the end, of course, it’s not titles that matter. It’s finding leaders who understand their companies’ strategic positioning, who recognize the revolutionary potential of engaging with the on-demand workforce, and who can inspire a cultural shift in their organizations that will make a genuine transformation possible.