Whatever you call it — the gig economy or the sharing economy — this “as a service” employment model is here to stay. It’s growing, in fact, with advocates on both sides of the spectrum: the employers and the talent themselves, who are discovering the benefits of independence and stronger earnings. Yet somewhere in the middle lies the gray area of payment processes, performance management, billing, classification, adherence to regulatory policies and fair treatment. In the end, the trillion-dollar question becomes, “How do we manage a workforce made up of non-traditional talent?” Fortunately, the answer isn’t new or novel. MSPs have been immersed in these issues since their inception, and they continue to innovate. Partnering with MSPs could keep your gig economy boom from going bust.

Rethinking the “Permanence” of Gigs

In the not too distant past, we looked upon freelancing as a desperate measure. During bouts of economic decline, employers concentrated their recruiting efforts on contingent workers — in all their various stripes and categories — to keep operations running smoothly while containing statutory and other costs associated with full-time employees. Conversely, in economic booms, companies returned their focus to building up their permanent staffs. For talent, economic conditions carried similar sway. Freelancing became a temporary fix for cash-strapped workers struggling to find “gainful employment” in down times. And that’s all changed.

According to the Workforce 2020 study conducted by Oxford Economics and SAP, close to 85 percent of executives surveyed planned to increase their utilization of contingent labor regardless of economic factors. Even the more conservative estimates presented in Deloitte’s Global Human Capital Trends 2016 report painted an equally compelling picture. Across 130 countries, 51 percent of the business leaders polled intended to contract with freelancers in the next three to five years.

What about talent? The most recent study from the Freelancers Union and Upwork revealed that 54 million Americans are working independently. Of those workers, 60 percent changed their career course by choice, and 50 percent said they would never abandon freelancing in favor of a traditional job. They embrace the freedom, the ability to control their own destinies, the entrepreneurial rewards, the variety, the exposure to new industries and skills, and greater income.

These individuals are professionals. Their ranks include Ph.Ds., data scientists, physicists, engineers, specialists, former executives and even Google programmers. The inevitability and composition of the gig economy is longer a question of if — it’s a question of when.

Legislators are actively brainstorming ways to change outdated labor regulations to accommodate new classifications of workers, as we’ve discussed in the past. Some companies are taking proactive approaches to ensure a compliant, mutually beneficial arrangement between gig workers, the companies that rely on them, and government agencies panicking over the potential loss of tax revenues. Consider the radical move Gawker recently announced.

The popular digital media organization has become the first newsroom of its kind to unionize. As Fast Company reports, “The contract, under which the Writers Guild of America, East will represent Gawker staffers, offers expected perks like minimum salaries, annual 3% raises, locked-in medical benefits, and two months of severance pay for laid-off workers. But it also starts to redefine the rules for contract workers, in the hopes of giving freelancers more of a fair shake.”

Seeking to migrate away from the “permalancer” model that predominates most editorial newsrooms, Gawker will offer freelancers permanent work (under the established collective bargaining terms) after one year of full-time contracting. Otherwise, their assignments end. Sara Horowitz, executive director of the Freelancers Union, praised the outcome as a way to “make freelance jobs better.”

Despite Advances, Burning Questions About Freelancers Remain

Although Gawker’s new model certainly reinforces the viability of the gig economy, while innovating new ways of making it work, its solution may not fit every organization. Despite the momentum gained in getting the gig economy right, there remain a slew of questions that must be addressed

  • How do we address the already large compliance issues associated with contingent talent?
  • As more workers become mobile or remote, how do we pay them? In what currency? What are the specific tax requirements, liabilities or obligatory employer contributions? As we know, independent contractors abroad remain eligible for some employer sponsored benefits, depending on the country.
  • How we do resolve payment disputes that may arise?
  • How do we ensure the fair protections and ownership of intellectual property, copyrights and other created works?
  • How do we measure performance?

As the workforce becomes more dynamic and more infused with various classes of contingent talent, how can hiring managers and HR leaders effectively oversee all the different types of complementary workers while maintaining compliance, productivity and profitability? There are new technologies flooding the market, catering to the administration of these professionals: online work platforms, freelance management systems, independent contractor compliance and administration tools, and others. However, for a lot of employers, this means they’re forced to learn and operate even more software applications. The solution? Call in an MSP!

By Design, MSPs Are Perfect Fits for “As-A-Service” Engagements

Attracting gig talent. Different types of gig talent suit different environments, and they satisfy specific needs. To engage the right workers — be they independent contractors, freelancers or agency temps — MSPs work closely with clients to analyze requirements and determine the appropriate personnel for each position, mining data and evaluating predictive analytics for those roles. Yet, not all workers have the same motivations or objectives. That’s where an MSP’s seasoned staffing partners come into play. Their expertise in social recruiting, developing and promoting compelling employment brands, and communicating a targeted value proposition to each candidate type is essential. Beyond that, they understand how to match business cultures to individual workers whose professional goals and values mesh.

Comprehending organizational needs. Client hiring managers, procurement leaders and HR officers know what they want, yet all from their varying, independent perspectives. MSPs, by nature of the engagement, get a rare opportunity to survey the entire organization’s employment landscape. Through the information they are provided and stakeholders to which they are given access, MSPs develop a heightened level of visibility and objectivity. This insight, and accompanying program data, allows them to see short-term, near-term and long-term needs; identify the skills needed today and in the future; and determine the best talent to fill all of those demands.

Focus on quality and compliance. With greater variance in labor types, a blended talent strategy of this complexity runs the risk of introducing non-compliant practices into the program if left uncurated. MSPs have always committed themselves to tackling those problems. In the gig economy, this oversight becomes more imperative. Fortunately, MSPs have been cultivating compliance procedures for years that extend beyond assignment length and breaks in tenure. Many have specific compliance solutions for independent contractor qualification, worker classification, exempt vs. non-exempt policies, Statement of Work (SOW) management systems and more. Clients who enlist the support of an MSP instantly gain access to these resources, which is mission critical in a talent population comprised of more than agency temps.

Comprehensive management. This is a hallmark of MSPs and speaks to their core competencies. Most MSPs have long been exposed to working with different contingent talent groups. They know firsthand how these workers’ needs differ, as well as the nuances in scheduling, measuring attendance, reporting on metrics, executing the proper agreements, ensuring compliant billing, the appropriate management techniques and more. And because managing outsourced enterprise workforce efforts is their job, MSPs aren’t overwhelmed by all the other corporate obligations that fall on hiring managers. They have the resources and dedicated account teams to install for each contingent talent group. In the end, all the moving parts involved in overseeing a gig economy workforce appear seamless to clients, who can focus on running their businesses.

MSPs Will Be Crucial to the Success of the Gig Economy

There is no single or simple solution to the challenges of the gig economy. Yet we know that many rewards await those of us who get it right. And we can. While client hiring managers endeavor to adjust to the workforce changes that come with this new paradigm, MSPs feel right at home. They understand these different talent categories. They’ve already immersed themselves in learning the new freelance and online work platforms. Many of their leading VMS providers have even integrated the functionality into their systems. And, more importantly, MSPs have been consolidating blended workforces for years.

MSPs already possess the expertise to oversee independents. They’ve designed compliant processes for onboarding, ongoing administration, billing and invoicing, and mitigating their clients’ exposure to risks. They handle performance in the same way they would with any outsourced service provider or supplier — in relation to agreed upon contractual obligations and service level agreements. This easily translates to success in managing gig freelancers. For clients who enlist MSPs, the new economy will not dawn as a terrifying reckoning; it will flow easily like any other productive day at the office.