More companies and individuals are using recruitment or matchmaking platforms that connect multinational corporations with pre-qualified project-based workers around the world. These online services enable small to medium-sized companies to leverage freelancers and independent contractors with strategic expertise in certain geographical regions in order to contend for big contracts worldwide and this workforce trend is only going to increase.
Contingent workforce utilization globally is an estimated $320 billion per year industry, according to a 2018 analysis by Accenture
Workforce compliance concerns are top-of-mind for HR and Procurement professionals and this year promises more of the same in the U.S and around the world as companies manage their extended contingent workforces globally.
The shift to utilize platform and engage workers is being driven by Generation X & Z hiring managers. These managers report using independent contractors sourced globally for short term and fixed term or SOW project in addition to the traditional longer-term assignments. Comparatively speaking over 2.5 times as many Generation X & Z compared to older workforce managers indicated they would increase their company’s use of freelancers in 2019.
ADAPTING TO THE CHANGES
As more companies embrace this trend, certain challenges are emerging. Small and large business companies alike are learning that they must adopt new policies and new guidelines to keep up with these changes and to ensure they maintain compliance within their extended workforce and minimize their business risk.
The major shift in today’s open talent economy is global and applies to almost every industry sector. It requires employers and employees come to terms with a new environment, where flexibility and adaptability have priority over job security and long-term employment. For HR, this means that lessons learned last year will continue to apply, and new challenges will arise.
Meanwhile, in the U.S., many of the employment classification concerns still exist. Federal and state agencies are monthly uncovering miss-classification of workers by companies and their talent acquisition partners. This ongoing issue has reached new highs in the USA and now has companies looking at how they classify their extended contingent workforce globally.
Limited visibility into how workers are sourced externally presents risks for companies when looking at their expansion. Worker misclassification, with the increased use growth of global contractors, has increased the necessity to properly classifying workers as Independents, Self-employed or employed. Companies that ignore an internally or externally managed process with a thorough classification vetting and validation process, also expose businesses to more complex risks including companies’ intellectual protocol and financial stability.
“Thanks, in large measure to innovation, the American workforce and the very nature of work is experiencing some profound changes. It’s not just the growth of new technologies, but also the rise of entirely new industries and new job structures. We’re seeing the tech-drive expansion of the gig or on-demand economy, giving workers flexibility and enabling them to monetize existing assets, like their cars or extra rooms in their homes,” Tom Perez U.S. Secretary of Labor.
Accessing Talent across International Borders
Diving deeper into compliance of all types, cross-border commerce does not mean exemption from local laws, whether the business is virtual or just accessing talent in-country. Practicing a compliance first strategy and partnering with a global workforce compliance specialist, who knows the employment regulation in specific regions, will ensure growth is not stalled as a result of not knowing local laws. Governments globally are paying close attention to workforce miss-classification trends in the USA to set their guidelines. Additionally, governments are aware that nationals of their country are now being engaged to work for global companies via the emerging talent platforms and payments to these workers for services rendered might not always be passed through traditional, tax monitored channels.
At CXC, our core values to our clients and partners include a compliance first approach. For the last 27 years, CXC has assisted companies as they navigate and engage talent around the world, to achieve a competitive advantage, through compliantly managing their contingent workforce efficiency and avoiding risk, while reducing costs. As technology has emerged and companies are utilizing these new platforms, CXC is acting as the compliance engine utilizing our proprietary CXCCOMPLY platform to ensure workers are engaged globally.
Beeline welcomes this guest post from our partner, CXC Global. This post represents CXC Global’s opinions and not necessarily those of Beeline.