The outlook for both B2C and B2B human cloud adoption appears rosy. That’s according to the recently released 2017 update to Staffing Industry Analysts’ (SIA) annual report on The Gig Economy and Human Cloud Landscape.
The report showed substantial benefits for the forward-thinking businesses willing to embrace the human cloud model through disruptive technologies like Upwork Enterprise. Even better, these are opportunities that are open to all businesses.
It might be assumed that a majority of human cloud revenue was generated by large enterprise clients. Surprisingly, the report found that “82 percent of human cloud revenue was generated from clients with less than $100 million in annual revenue in 2016.” In contrast, human cloud spend at large enterprise clients amounted to less than 0.5 percent of total program spend on average.
But while smaller, more nimble startups may have taken an early lead, SIA’s data suggests that the benefits of flexible staffing models are driving human cloud growth among B2B businesses of all sizes.[See also: How to create an awesome job post that attracts top talent]
B2B Human Cloud Usage is Growing
Overall, the SIA report found that human cloud usage nearly doubled from 2015 to 2016. The report attributes the bulk of this growth to the business-to-consumer (B2C) “gig economy,” as SIA includes companies such as Uber, Lyft and Instacart in its definition of the “human cloud.”
Despite substantial B2C growth, business-to-business (B2B) human cloud usage wasn’t far behind.
- Human cloud companies selling primarily to businesses generated between $5.8 million and $6.5 billion in 2016.
- The B2B segment of the human cloud grew approximately 20 percent year-over-year from 2015 to 2016.
The two biggest driving forces behind these trends are Upwork, the world’s largest global freelancing website, and Zhubajie, China’s largest online platform for creative services. According to the report, the two companies, “are substantially larger than their nearest competitors, and thus have an outsized impact on overall growth trends.”
The Benefits of B2B Human Cloud Engagements
Growth in human cloud adoption can be attributed to its many benefits. This includes access to a broader, worldwide talent pool, and lower overhead costs compared to traditional hiring.
In total, Staffing Industry Analysts identified eight benefits driving adoption of the human cloud (listed below, along with how often those surveyed identified each as a primary consideration):
- Greater talent access (63 percent)
- Reduce costs (50 percent)
- Expand skills coverage (46 percent)
- Ease of use (38 percent)
- Centralize management/control (33 percent)
- Decrease legal risk (25 percent)
- Reduce time to deploy workers (25 percent)
- Track spend better (17 percent)
More businesses are facing increased competition as a result of globalization and diminished barriers to entry. The benefits offered by the human cloud may provide a competitive advantage over companies using traditional, less flexible hiring methods.
Addressing Human Cloud Challenges
Despite the clear benefits of flexible human cloud models, these programs aren’t without their perceived challenges.
One such challenge limiting human cloud adoption is concern over how effectively remote contracts can be managed. “In our interviews with program managers, many indicated confusion about how remote workers are vetted, and some expressed risk management concerns, especially related to company assets and IP,” states SIA report author David Francis.
Indeed, launching a human cloud initiative may feel uncomfortable to organizations that haven’t undertaken remote work before. Companies can cut their learning curves significantly by tapping into the many strategies and best practices established by early adopters.
One such company others can learn from is Instapage, a marketing tool provider that relies on freelance professionals to cost-effectively secure top-rated talent for their projects, regardless of the talents’ location. Instapage optimizes efficiencies with Upwork Enterprise, a leading solution for engaging independent contractors, which saved Instapage 40 hours a week in administrative support time by streamlining communications, billing, and payment onto a single platform.
Another early adopter is large financial media company, Motley Fool, which engages hundreds of top freelance financial writers worldwide to meet its flow of content needs. Motley Fool centralized payments and streamlined payment processing by integrating Upwork Enterprise with their existing financial system. This reduced administrative time by 87 percent and ensured their freelancers were paid promptly.
Answering Human Cloud Compliance Questions
Beyond the issue of remote talent, compliance questions remain the largest barrier limiting human cloud adoption. In the SIA report, however, Francis is quick to point out that these questions shouldn’t limit companies’ embrace of this new model:
“While legal challenges around worker classification have cast a shadow on this otherwise sunny market, we see these merely as growing pains of a fresh industry, rather than serious impediments to the human cloud market.”
The rise of disruptive Freelance Management System (FMS) technologies is poised to solve these growing pains by “providing access to both talent sourcing and the operational and compliance solutions needed to work with independent talent all in one technology system.”
Robust solutions, like Upwork Enterprise, facilitate easier sourcing and payment, in addition to offering compliance and classification services. This makes it possible for companies to administer remote contracts and complex compliance needs from one central location.
Getting Started with the Human Cloud
Getting started with the human cloud is easier now than ever before, as emerging technologies and services make it easier for companies to engage freelancer help at scale.
In short, companies that are willing to jump a few easily-overcome hurdles will quickly realize the benefits and competitive advantages of tapping into a worldwide talent pool. The organizations that remain open to the possibilities of the human cloud and all the benefits it presents will be the ones that come out ahead.
Will your company be a leader in the human cloud revolution? Reach out to Upwork Enterprise today.