Halfway There: HR, Platforms and the Extended Workforce

The Good News:

Human resources (HR) is engaging with the extended workforce to solve skill shortages and achieve C-Level priorities that are driven by pandemic-intensified turnover rates and the greater adoption of flexible, remote and hybrid working arrangements.

The Numbers:

      • Recent estimates of the extended workforce, or the combination of non-regular employees who provide their skills, experience and services to organizations, range from 35% to 47% of the total workforce in the United States.[1],[2]
      • Almost half, at 45%, of organizations report that their extended workforce program is “owned” by HR, while participants identified procurement as the next most likely department at 42%. These numbers have been relatively consistent for a decade. [3]
      • Nearly 90% of business leaders report that crowdsourcing, freelance or on-demand and external talent platforms are important for their organization’s future competitive advantage.[4]


The Opportunity:

The top trends among the abundant 2022 HR reports released over the past few months are no secret to anyone on the front lines of talent acquisition, development or deployment. Talent acquisition and retention, skills and competencies and managing change are all top-of-mind for HR leaders for a good reason. We are experiencing a tremendous amount of innovation throughout our global economy along with a sea change in where, why and how people work. We are hopefully and finally entering a “post-pandemic” normal, but this new paradigm is more dynamic and uncertain than ever. Regular, employee-based talent acquisition and management models still have their place, but by themselves are too slow and narrow for meeting the needs of today’s dynamic businesses.

Fortunately, access to sought-after skills and new thinking is readily available through the extended workforce, which is either a source often relegated to backup status in HR talent models or assigned to the procurement department as a cost-saving measure. The rapid adoption of virtual or hybrid work alongside the increased control afforded to those with in-demand skills both fuel the explosive growth in non-employee workers, organizations and their HR teams. This increasingly makes the extended workforce a pillar of their overall enterprise talent strategies.

Simultaneously, the market for extended workforce solutions, including external digital solutions such as freelance, on-demand and crowdsourcing platforms, is burgeoning. Between 2009 and 2020, the number of solution providers offering such platforms increased from 80 to more than 330, and the number is still growing.[5]

The reason for this growth is simple. These platforms promise easy access to the extended workforce and non-traditional candidates, broadening available talent pools while leveraging digital business models for speed, productivity and innovation. Some of these external talent platforms are playing an important role in improving the work lives and experiences of the non-traditional workers themselves, which is something that human-centric enterprises should consider as well.

The benefits to organizations and their HR teams for more fully engaging the extended workforce are many. Among these benefits is the dramatic increase in access to people with in-demand skills and diverse backgrounds. This is in addition to the increased speed-to-market, the reduced fixed costs associated with a full-time employee base and the new ways of thinking and working. There are many more benefits of accessing the extended workforce depending on each organization’s unique market position and strategy, which we’ll cover in a future post.

The Challenges:

While there are many benefits to HR incorporating the extended workforce into its total talent strategy, doing so is not without challenges. A few common issues threaten to dampen enterprise access to all the skills, diversity, innovation and value that it offers to businesses:

      • Cumbersome technology – While software-as-a-Service (SaaS) has enabled digital transformation and is a huge step ahead of “on-prem” solutions, many of the existing solutions for the extended workforce are simply not agile enough to handle the variety in enterprise requirements and new vendors coming online.
      • Increasing complexity – In addition to a large number of external talent platforms coming online regularly, new ways of working are ahead of current regulations regarding classification and co-employment. Navigating these regulations and adopting changes in these spaces requires both expert knowledge and operational agility.
      • Change fatigue – The past half-decade has been gruelling for HR as a result of digital transformation, hybrid working and coronavirus (COVID-19) responses. Unfortunately, the change isn’t slowing down, especially with the advent of the metaverse. Simple prioritization is not a solution.

The Solutions:

Fortunately, solutions to the challenges above already exist in the market and in many organizations. To fully leverage the power and flexibility of the extended workforce, businesses can embrace the following:

      • Platform-as-a-service (Paas) – More agile and configurable than SaaS, platform-as-a-service brings multiple value-added systems and service providers together on a single platform. This creates a unified solution that helps organizations solve specific problems at scale while maintaining the agility to incorporate and adopt new solutions. Many PaaS providers, Salesforce, for example, have extensive ecosystems of solution providers that are already built out and ready to plug into your platform with surprisingly quick application programming interfaces (APIs).
      • Functional and domain expertise – Many solutions and service providers have invested heavily in developing their expertise of the extended workforce and are readily available to assist organizations in staying ahead of changes in the field. While it does require the right knowledge and platform to integrate into extended workforce technologies, this expertise is adjacent to or included in the most common HR, talent management and procurement capabilities.
      • A willingness to experiment and learn – The right mix of employee and non-employee workforce is unique for each organization, depending on its business strategy and talent maturity. Different business units may also be more suitable for certain segments of the extended workforce than others. The right technology and expertise can leverage already developed people analytics and change management capabilities stemming from digital transformation.

HR has stepped up in so many ways over the past few years, leading digital transformation, keeping employees safe, developing hybrid working models and building workforce wellness and experience. The extended workforce may already be a component of or adjacent to current HR talent strategies. It’s time to go beyond the traditional workforce and leverage these accomplishments to accelerate enterprise growth, extend digital transformation, create a people-first mindset.

[1] The US Gig Economy, 2021 Edition, Tony Gregoire and Timothy Landhuis, Staffing Industry Analysts, 2021

[2]The Extended Workforce Is A Cornerstone Of The Future Of Work,” Christopher Dwyer, The Future of Work Exchange, January 26, 2022

[3] Workforce Solutions Buyer Survey 2021, Curtis Starkey, Staffing Industry Analysts, 2021.

[4] Building the on-demand workforce. Fuller, J., Raman, M., Bailey A., Vaduganathan N., et al. Harvard Business School and BCG, 2020.

[5] Building the on-demand workforce. Fuller, J., Raman, M., Bailey A., Vaduganathan N., et al. Harvard Business School and BCG, 2020.

Jeff Mike

Jeff Mike

Managing Director, Flextrack

Jeff Mike works closely with HR, Procurement and IT leaders to design extended workforce ecosystems that fuel and future-proof enterprise talent strategies. Jeff brings over 15 years of experience leading HR functions, along with five years leading global HR- and workforce-related research, to combine the best thought leadership, business practices, and platform technology into purpose-built solutions.

Jeff Mike