Savior or Competitor: The new age of IT workforce management Pt. III


tumblr static workmarket logo 672x149Welcome to the third installment in our series on online IT workforce solutions.

SMB Nation has been exploring the rise of Workforce-as-a-Service (WaaS)

staffing models and how vendors meet the unique temporary or freelance staffing needs of the IT industry.

In Part One of this series we talked to OnForce President and CEO Peter Cannone. In Part Two we talked to Field Nation CEO Mynul Khan and CMO Billy Cripe. In this installment we have input from Work Market founder and CEO Jeffery Leventhal.

Work Market takes WaaS to the enterprise

Work Market is Jeffrey Leventhal’s second venture in the WaaS world. In addition to founding his current venture in 2010, Leventhal founded OnForce in 2003, selling it in 2007.

While SMBs have traditionally been leading the charge on the use of freelance IT talent, the Enterprise sector is now getting into the game. Work Market has signed up numerous Fortune 500 enterprises, including SAP, Avaya and many of the large project management consultancies. This marks a dramatic evolution of the workforce, and perhaps provides key evidence of the paradigm shift that started with the economic busts of 2000 and 2007.

Jeff Wald, who partnered with Leventhal to found Work Market and serves as the organization’s COO and CFO, outlined the changing staffing paradigm in a recent guest blog for The Huffington Post:

“Between a variable cost structure and access to an increasingly large pool of top talent, companies are realizing that utilizing freelancers makes economic sense. There are currently 17 million independent workers – a number that is projected to grow to 24 million by 2020; at which point 50 percent of the labor force will have done freelance work at some point in their career.”

With large enterprises now engaging freelancers on a large scale there is a rising need for platforms like Work Market, OnForce and Field Nation to help those companies manage their freelance workers. As a result online staffing, a $1.5 billion-a-year industry today, is expected to grow into a $20 billion industry by 2020.

According to Leventhal, the rise of freelance talent economy is being driven by three factors: Utilization, Geography and Skill Set.

Staff utilization – or more specifically staff underutilization – is a major factor for a small MSP or VAR, possibly much more so than it is for a large enterprise. When you have to invest $100,000 or more in salary, benefits, etc., for an engineer, you need to make sure that resource is working all the time to maximize your ROI.

Geography is a specific concern of the IT industry, which makes up the largest segment on Work Market. While a one-off creative project like a website, or app can be completed almost anywhere around the world IT work, such as installing a new system, usually has an on-site component so you need workers who are local to the project. This adds numerous other wrinkles to the relationship that go beyond the workers’ skills. Suitability includes the various insurances that are required, drug tests, back ground checks and other factors.

Skill set is also more complicated than it may seem. You want to make sure you are getting the right talent for the right task. All the WaaS platforms we’ve looked at in this series allow contractors to create detailed profiles, including all relevant skills and certifications. Furthermore, they include a rating system that enables companies to provide feedback on the freelancer which can then be used in the future to help others make hiring decisions. Work Market also provides a single place where all other relevant data can be tracked like security checks, drug tests, etc. This kind of data is unnecessary when assigning a one-off remote job like designing a poster, but become very important when you are hiring an IT resource to represent your company at a customer’s site.

“The problems I solved with OnForce were ‘find and pay,’” says Leventhal. “But our clients needed more tools. You have find people, verify the talent, engage them and pay them. That’s the end-to-end process for freelancers. That used to require the use of multiple tools. (At Work Market) we built a framework so they can do all that in one place. We consolidated all those tools in one place. People don’t want to run their background checks in 15 places, or do 15 different drug tests. We give them a way to consolidate their human capital right now.”

The benefits can be significant on both sides of the freelancer/organization axis.

From the freelancer’s perspective, you can fit work around a lifestyle and still afford that lifestyle. You also – perhaps counter-intuitively, have increased job security. Because you are not tied down to one company, you aren’t screwed if that company goes out of business. As a freelancer, you can just log onto Work Market and find another client to work for that day.

The hiring company gets to enjoy the advantage of a variable cost workforce. Utilization is no longer an issue – just hire the workers you need for the jobs you have. You even have a way to maintain institutional knowledge. You can work with the same people over and over again, and maintain freelance relationships with your people past retirement age.

“If you sign up to Work Market today and have a good background and relevant skills you will see opportunities come through to your phone within four hours. That’s remarkable,” says Leventhal. “We have 8000 people showing up to work in the US and around the world to work. We get 8000 people work every day. That’s astounding. We take tremendous pride in that.”

Key Questions for working in IT environments:

Who pays?

Work Market is free to sign up for and create and profile for both freelancers and hiring organizations. The company hiring the talent pays all fees associated with actually completing work and can choose either a subscription or transaction-based model based on how much work they are assigning.

Who owns the long term relationships?

Work Market’s role is to facilitate the management and curation of the workforce, says Leventhal, not to get in the way of the work itself. “The relationship is truly between them, and Work Market’s infrastructure allows and supports that relationship. If I owned the relationship, then I’m just another temp agency in the machine. If I owned the relationship, then I am essentially competing with my clients.”

What if an end user has hired an IT contractor directly and needs parts and equipment? Does the contractor do that or does Work Market act as a reseller? Or does the client order them directly?

Says Leventhal, “A lot of our clients end up being large project management firms. The end user may also have a logistics company in place that will manage the equipment, and the set up of the equipment. A lot goes into this. These projects are often valued in the millions of dollars.”

What about software licences? For example, if a client wants an Office 365 install who is the partner of record? Who gets the 6% commission?

Not work Market. As previously stated big jobs may have a lot of organizations involved. Who gets the commission depends on the structure of the project.

Who carries the professional errors and omissions insurance? Who gets sued if something goes wrong?

Freelancers are responsible for maintaining their own insurance, just like they are responsible for maintaining their own certifications and qualifications.