With more job openings than people to fill them, the skills shortage is starting to bite. We’ll show you how to get the talent you need – and the pitfalls to watch out for.
Talent is the lifeblood of the enterprise. Yet with unemployment low and continuing to fall, it’s in short supply. According to CNBC, the U.S. currently has 1.4 million more job openings than unemployed people.
This shift has a huge impact on businesses, which are finding it increasingly difficult to source the capabilities they need to achieve their goals. For example, a new global research study titled Services Procurement Insights 2019: The Big Reveal published by SAP Fieldglass in collaboration with Oxford Economics found that:
- Only 29% of organizations have enough skills in cybersecurity.
- Just 31% have enough skills in newer technologies such as AI, machine learning, blockchain, robotics and the Internet of Things.
- Only 48% have enough skills in new product development.
So, the big question is: How do you source the skills you need to be competitive when those skills aren’t available as employees?
A vital source of talent
The research reveals that to source in-demand skills, organizations increasingly rely on the external workforce, which includes contingent workers (such as freelancers and independent contractors) and service providers (such as consultancies and marketing agencies).
According to the study, many executives say the external workforce helps them achieve a broad range of business goals, such as improving the customer experience/client satisfaction (67%) and increasing speed to market (61%). These are just some of the reasons why the external workforce accounts for a mighty 42% of workforce spend.
A powerful part of your workforce – but it needs proper management
The contingent workforce is now on more people’s radar than ever (we have recently published a report revealing fresh insights into contingent workers, which you can read here). However, when asked to picture their workforce, many people still don’t think of service providers.
That needs to change. Service providers are hugely valuable because they enable organizations to source many people with diverse, in-demand skills quickly and flexibly. The research found that service providers play pivotal roles in getting work done and operate at the heart of the enterprise. Many of us are familiar with consulting firms that help organizations build and execute their strategies, particularly around digital transformation. And, of course, companies rely on technology providers and outsourcers for massive development projects, as well as to run parts of their IT infrastructure. There are also marketing consulting firms, brand agencies, PR agencies, law firms and more.
Service providers are also pivotal in providing expertise in critical industry applications. For example, in the oil and gas industry, service providers play a major role in shutdown/turnarounds, which cost millions each day and must therefore be completed as soon as possible. Banks rely on IT consultancies to improve their online and mobile banking platforms and call centers to support their customers. Utilities and rail companies look to service providers for expertise in infrastructure maintenance, among other parts of their business. Service providers are embedded across organizations today, helping them get work done.
Despite the strategic importance and significant amounts spent on service providers, many organizations under-manage them. We call service providers an “invisible” workforce because they perform vital work, yet many companies do not treat them as a workforce.
Under-managing service providers means companies miss out on the full value of this powerful resource. This can result in unsatisfactory project outcomes. For example, the research reveals that one in four projects done by service providers is not completed on time or on budget. In addition, only 27% of executives are highly informed about service providers’ quality of work, making it difficult to assess return on investment.
Under-management of service providers also exposes organizations to risks in security, compliance and more. For example, 44% of executives experience digital security breaches with service providers sometimes, frequently or nearly every engagement.
There is a golden opportunity to improve the management of service providers. Our research presents four key actions organizations can take to reap more value from service providers, boost ROI and mitigate risk. To see the four actions and more key findings, download the report.