direct source and engage highly skilled independent talent with controlled cost and risk
TRANSCRIPT
Copyright © 2014 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 1
Direct Source and Engage Highly Skilled Independent Talent with Controlled Cost and Risk
July 30, 2015
Today’s Speakers
Dennis Kanegaye Chief Client Officer MBO Partners
Dustin Talley Director of Solution Design MBO Partners
Andrew Karpie Research Analyst: Services and Labor Procurement Spend Matters
Jason Busch Founder & Managing Director Spend Matters
Who We Are and What We Do
Parent Company – Azul Partners • Founded 2004, headquarter in Chicago • Spend Matters (www.spendmatters.com),
MetalMiner (www.metalminer.com) • A blend of media and analyst insight
focusing on procurement • Our sites are collectively called
Spend Matters Network™ • 150+ new articles published weekly
across the sites • Over 130,000 unique visitors/month • Our combined traffic makes us one of the
largest B2B web publishers in the US • Diverse audience: procurement, supply
chain, manufacturers, service companies, retailers...
MBO Partners Background
• Compliance, engagement, and payment solutions for internally sourced ICs
• First and largest “Independent Contractor Engagement Specialist”
• Strong F500 relationships with 98% enterprise client retention
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KEY CREDENTIALS
• Largest “Agency of Record” service provider*
• Most experienced* • Shortest on-boarding
time* • Highest % of F500
accounts* • GSA schedule since 2003
* Source: Staffing Industry Analysts, “2014 Payrolling and IC Evaluation / Compliance Landscape Report”
Industry Trends: It’s the Era of “Going Direct”
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BANKING SHOPPING ENTERTAINMENT
TRAVEL MUSIC
All product and company logos are property of their respective owners.
SOCIETAL TRENDS Unprecedented independent
workforce growth
REGULATORY TRENDS Increase in compliance laws
and enforcement
BUSINESS TRENDS Accelerating use of independent talent
TECHNOLOGY TRENDS Direct sourcing through
virtual talent pools
Trends Point to a “Perfect Storm”
Est. 40 million independent workers in 2019
Source: MBO Partners “2015 State of Independence” report
U.S. Independent Workforce: Last Five Years
7
$
U.S. Independent Workforce: Other Key Metrics
Gen Y 28%
Gen X 29%
Boomers 30%
Seniors 14%
INDEPENDENT WORKERS BY AGE, 2014
Source: MBO Partners “2015 State of Independence” and “2014 State of Independence” reports
Macro Industry Trends
• External talent – Half or more of workforce for over 1/4 of organizations – Contractors, outsourced service providers, temp staff, freelancers
• Shift from employees to external resources set to accelerate over next five years (1)
• “Independent contractor usage within enterprises will continue to grow exponentially as companies adapt to the changing workforce, and enjoy the benefits of a variable labor” (2)
“Jump ahead to the year 2020. Half the people you rely on don't actually work for you and that's a good thing—if you're ready.” (3)
(1) Source: Chartered Global Management Accountants (CGMA), ‘New Ways of Working ’ 2014 (2) Forbes, “What The Rise Of The Freelance Economy Really Means For Businesses.” 2014 (3) Source: Deloitte, “The Open Talent Economy,” 2013 9
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Accelerating Use of Independent Talent
US GDP in 2014 Source: MBO Partners “State of Independence in America” report, October 2014
Independents Contribute to the Economy
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Global GDP in 2025 2.7 Source: McKinsey Global Institute “Connecting talent with opportunity in the digital age” report, June 2015
Digital Platforms Make “Going Direct” Possible
• Platforms have been entering the world of work
MSP
VMS
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
Tier 2
Large Enterprises
Small Businesses
Supply Base
Existing Contingent Workforce Supply Chain
10 Years Ago
CW Supply Chain for Enterprises: Enabler or Constraint?
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
Tier 2
Large Enterprises
Small Businesses
Existing Contingent Workforce Supply Chain
5 Years Ago
Work Intermediation Platform/Ecosystem
Supply Base
MSP
VMS
Emergence of Digitized Work Intermediation Platforms
VMS
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
Tier 2
Large Enterprises
Small Businesses
Existing Contingent Workforce Supply Chain
2-3 Years Ago
Supply Base
MSP
Increasing Digital Channels to Independent Workers
VMS
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
Tier 2
Large Enterprises
Small Businesses
Existing Contingent Workforce Supply Chain
1-2 Years Ago
Supply Base
MSP
FMS
FMS-types of solutions tend to be different in many ways including origin, focus, sourcing, compliance, etc.
Emergence of Freelancer Management Systems (FMS)
Recent Regulatory Activity
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New Hampshire and Massachusetts
sign MOU
Memorandum of Understanding with 11 states,
IRS, DOL
2012 federal budget includes $23M for
“Misclassification
Initiative”
California Senate Bill 459 goes into effect
Solicitor of Labor indicates that misclassified labor is
one of agency’s top priorities
DOL FLSA suits reach all-time high in 2012
Payroll Fraud Prevention Act of 2013
introduced in U.S. Senate
Iowa signs MOU
New York signs MOU
IRS re-starts Questionable Employment Tax Practices
program
Affordable Care Act goes into effect
Payroll Fraud Prevention Act of 2014 introduced in Congress
Executive order adds compliance requirements for federal contractors
Alabama signs MOU
Wyoming signs MOU
Florida signs MOU
Louisiana signs MOU
Wisconsin signs MOU
California AB-1897 passed
2016 Fed Budget focuses on IC
misclassification in “fissured workplace”
NY JETF Audit: 12,000 audits 133K misclassified workers
Rhode Island signs MOU
Kentucky signs MOU (22nd state)
DOL offers new classification
guidance
SOW and STAFF AUG EMPLOYEE / EMPLOYER
RELATIONSHIP
IRS
DO
L
FR
EE
LA
NC
ER
S
SM
AL
L S
VC
.
PR
OV
IDE
RS
COMMON-LAW TEST ECONOMIC REALITIES TEST
A-B-C TEST
The Compliance Tug-of-War
“Managed Talent Network” with embedded compliance and engagement solution
MSPs / staffing firms
Engagement Risk
Current State: Managers sourcing and engaging contractors
Freelancer marketplaces
Low High
Serv
ice C
ompl
exity
High
(P
rojec
ts)
Low
(Tas
ks)
IC / SSP Sourcing and Engagement Landscape
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Safe, cost-effective solutions that make it easy to
source, curate, and engage
independent talent
“Next Practice”: Managed Talent Network
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65% of companies cite the creation
of a visible talent pool as the largest
contractor workforce-related issue.
Source: PageUp People Survey, 2014
The Need for Virtual Talent Pools
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Sourcing Supported by Full-Service Model
ACCOUNT MGMT. • Reporting • Education
• Continuous improvement
CLIENT SOURCING NEED
• Self-identify • Negotiate
• Select
ASSESS • Technology-
enabled • High-touch • VAST
ENGAGE & PAY • MBO Exec • MBO Sub
• MBO Staff
SUPPORT • Dedicated
support • Relationship-
driven
MBO CONNECT™
Talent Pool Sources
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Talent Market Network
Active contractors
Provider community
Recruiting efforts
Existing payrollers
Marketplaces/ networks
Small vendors
Full-time alumni
Solution: Share the upcoming project with your talent pool in an RFI format.
Challenge: A Business Unit has a large upcoming need but is not ready for specific candidates to apply. But pre-project awareness within the talent community may enable applicants to be ready when the project nears.
The BU can vet interested workers earlier by positioning their proposed solution and value. Workers can be placed on a “virtual bench” and assigned to project teams when the project
commences.
VALUE:
Use Case: Large Upcoming Project
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Challenge: Reporting shows a high level of contractor “re-use” across departments and managers, with most billing at the initial recruiting mark-ups. The client lacks ability to schedule and engage alumni workers at a reasonable cost.
Solution: Create groups by skillset in the talent pool. Invite these contractors to join your talent pool for future opportunities.
By strictly enforcing/modifying talent ownership clauses in supplier contracts, managers can compare previously engaged talent from all suppliers and re-engage
the best at lower payroll markups.
Use Case: Talent Ownership
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VALUE:
Use Case: Dynamic Rates
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Compare all talent quality and rate information to retain the best resources for the job. Use this information as leverage in driving down market rates of
preferred resources by up to 20%.
VALUE:
Challenge: The client has engaged 10+ contractors of the same discipline / expertise on different projects across the organization. This self-sourced talent is rarely shared with other managers, so the client does no know if it is consistently engaging the best talent at the best price.
Solution: Create groups of existing talent according to area of expertise. Broadcast opportunities to these groups and request “best and final pricing” from interested workers.
Sourcing + Engagement: Advantages
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INCREASE TALENT QUALITY CONTROL USAGE EMPOWER USERS
CUT COSTS ENGAGE ICs SAFELY
Copyright © 2014 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 29 29
Copyright © 2014 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 30
Thank You!
Dennis Kanegaye [email protected]
Dustin Talley [email protected]
Andrew Karpie [email protected]
Jason Busch [email protected]
For contract workers Provides a pipeline of relevant project opportunities and creates a steady stream of assignments from their “clients of choice.”
For organizations Provides the ability, through independent talent access and engagement, to fast-track critical projects and initiatives not otherwise achievable without just-in-time access to resources.
Talent Pool Growth: Value for Both Sides
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