The next BriefingsDirect digital business innovation discussion explores the growing importance of contingent workforces.
As more businesses look to external workforces and services to satisfy their skills and information technology (IT) needs, the ability to manage those workers and services is lagging.
Even as upward of 42 percent of workforce spend is now going to external workforces, many organizations lack visibility into the nature of that spend. As a result, they can’t manage the productivity, nor the risk.
Stay with us now as we hear from a contingent workforce expert at Capgemini on managing the processes that best procure and support talent and skills agility.
To learn more about making the most of a diversified portfolio of workers, please join me in welcoming Andreas Hettwer, Vice President and Group Procurement Category Director at Capgemini in Berlin. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: Andreas, what’s driving the need for external workforce management -- and specifically the role of contingent workforce workers -- there at Capgemini?
Hettwer: We are a big company with roughly 250,000 employees worldwide. At Capgemini, as a consulting digital transformation company, we innovate and address the entire breadth of client opportunities in the evolving world of cloud, digital, and platforms.
And that means we have a huge variety of roles, skills, and capabilities that we need to deliver to fulfill all of these kinds of projects. There are constraints in both capacity and in the niche capabilities needed. Our contingent workforce is part of our strategic component of making sure that we deliver great projects to our clients. This is why we need a contingent workforce program globally.
Gardner: And is the use of IT skills and workers a leader in this field? Is there something about IT specifically that lends itself to a contingent workforce?
IT contingency makes progress
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| Hettwer |
Hettwer: Yes. First of all, from the skills perspective, we are an IT consulting company and therefore this is our major skill set that we purchase from the market. But, again, the variety is huge and therefore we need to make sure that we address all of the different sources to make sure that we have the right capabilities and capacity ready.
Gardner: And how long has this been going on? How long have you been working to perfect and improve the use of such a contingent workforce?
Hettwer: Quite a long time. We began in 2016. At first, we knew our spend of contingent workforce but we didn’t have a clue really about the numbers -- the headcount or the tenure of engagements.
We didn’t know what kind of external capabilities we had acquired from the market, including the roles and skills. We didn’t even know anything about the fulfillment rate or how long it took to source the right capabilities. We didn’t know if we had missed some opportunities to deliver the right projects to our clients.
On the other side, we were not able to understand what we had paid for the individual roles, skills, and levels per country, and whether this was a good price compared to the market. We didn’t know if that helped drive competitive bids toward our clients or not. Given this environment, we decided we needed to change. This is why we then began our global program.
Gardner: Of course, human resources (HR) organizations have had systems of record and processes to manage ongoing, full-time workforces. But when things are project-based and ad hoc, like you are describing, they are often funded from a variety of different budgets and from different elements within the organization.
Keeping track of that is very daunting. Why do you view this less as a HR task and more of a procurement task? How does that help to bring a unified view of all of these different worker spends?
Hettwer: You raise a good point. There is always the question of who owns the contingent workforce. Is it procurement, HR, or maybe the business unit itself? Or is it maybe another function in the company?
It was important that HR had a big focus on our own employees, with our employer brand, and to make sure that we attract the right talent from the market to deliver to our clients with our brand and across our portfolio.
From our perspective, it was important that HR had a big focus on our own employees, with our employer brand, and to make sure that we attract the right talent from the market to deliver to our clients with our brand and across our portfolio.
Contingent workforce for us was a bit of a minor labor component. We are talking about 6 to 7 percent of the complete population of our delivery capacity globally. Therefore we mostly wanted to address cost and risk. Procurement took the lead and came back with the right problem statement, delivered a solution and created the right business case to get executive approval for the global program. That’s how it evolved. We began this program and now procurement owns it.
But again, it’s a good question. It could also be through a different function. But at Capgemini we evolved it and own it right now.
Gardner: Andreas, it strikes me that you are a better organization in terms of fulfilling your mission and supporting your customers when you can find labor best where it exists rather than where you wish it were. How flexible can you be with a contingent workforce? Is this literally an addressable market that extends all over the world? Has the COVID-19 pandemic opened people’s eyes to the potential for more remote and flexible workforces?
Hettwer: Yes, absolutely. First of all, the contingent workforce has increased in the market. If you look at different research -- and even from the Capgemini Research Institute -- you see that the number of contingent workforce participants has increased over the last few years, starting with North America but also in Europe, and even now in Asia-Pacific and in India.
We needed to address this accordingly with some kind of innovation. We therefore developed a global program to make sure that we gain the best contractors in the market and that we use them recurrently.
Looking to the COVID-19 pandemic, we have seen dramatic changes. Suddenly, more clients are open to remote work. Our own organization has been open to remote work. We at Capgemini were able in a few weeks to have more than 95 percent of our own population working remotely. That helped us to really change this work environment and to have more contractors working remotely. So this is something that we need to address further in the future.
Gardner: Yes, COVID-19 has been a motivator and an eye-opener as organizations go more digital, with the ability to use workers regardless of their location. That will become more prominent, I expect.
Andreas, when we use contingent workforces, what are the benefits? What has it done for you at Capgemini?
Remote work benefits
Hettwer: From our perspective, we have four major categories of benefits. The first one is business impact improvement. It’s about fulfillment, making sure that we have the right talent on board and that we can fulfill the needs of our clients. We can therefore make sure that the clients are happy and that our projects will be delivered on time with the right quality.
The second aspect is cost-optimization. It’s always a very challenging market, and we need to be very competitive. Whenever you need contractors, be it for niche or core capabilities to be embedded in our projects, we need to make sure we do it correctly, with the right pricing, so it’s a win-win situation. When we are competitive in using the right contingent workforce at the right price, then it’s also possible to deliver the best pricing for our client. So cost-optimization was a second big aspect here.
Third -- and not a negligible issue -- is risk mitigation. More and more labor laws are coming up right now. And there are many tax-related topics, too. So whenever we can gain more visibility, we can better control our contingent workforce. We can also be sure that risk associated with the use of that labor can be mitigated across markets.
And then the fourth benefit is process efficiency. Bringing in contractors, or services from our suppliers, needs to be seamless -- from getting the right capabilities in, to invoicing, approval, and all what’s necessary. And that must be very efficient, because in an organization like ours, which is global in roughly 50 countries worldwide, we need to have proper, seamless processes end-to-end. Otherwise it’s an administrative burden that you can’t afford.
Gardner: And how about the issue of speed and agility? Oftentimes when it’s a full-time position, it can take months, if not longer, to go through the process of defining the role, hiring, vetting, and onboarding. Is there something about contingent labor that increases the speed and agility when you are satisfying your customers on a project-basis?
Suppliers increase speed-to-hire
Hettwer: Yes, absolutely. And I think this is also the beauty of contractors. You really have the chance to reach out to the market to identify the right contractors on time. And this is also why contractors from time to time come in, because it’s much easier and quicker to get them in, up to the moment until we recruit maybe somebody permanently.
And, for sure, we do this through a preferred supplier base, and this is part of the service-level agreements (SLAs) that we negotiate with our preferred supplier base. This is the speed, quality, and the pricing aspect.
We also invested in our Freelancer Gateway by Capgemini. That means we are addressing contractors directly. We have created the possibility for contractors to check the opportunities that we have on the contingent workforce side and apply accordingly.
But we also invested last year in our Freelancer Gateway by Capgemini. That means we are addressing contractors directly. We have created the possibility for contractors to check the opportunities that we have on the contingent workforce side and to apply accordingly to be part of our extended workforce.
This is very beneficial because more contractors don’t want to go through an external third-party; they want to reach out to us directly. And for us it’s a benefit because we can create an external workforce. We want to build a recurring workforce so that we have a relationship with the contractor market and to make sure that the right people work for us regularly.
Gardner: Now, we mentioned that procurement is the force through which you are operating here, and you have been in procurement for many years. Tell us about your procurement background and why you think the procurement legacy and approach to managing processes and costs lends itself to a contingent workforce management.
Total workforce management
Hettwer: I joined Capgemini in 2004, quite a long time ago. Before I had been a consultant for different companies. And, to be honest, during the initial years it was an immature market. The contingent workforce had not really been addressed during this time. We really started from scratch.
Now, in 2020, things have changed completely. We have technologies. We have managed service providers. We have really mature organizations that can help. The technology has evolved dramatically.
For example, for our Freelancer Gateway, we use technology from partners like SAP Fieldglass. We use artificial intelligence (AI) and automation to make this attractive process as easy as possible. The technology can help so much right now; it helps dramatically.
And as HR is on one side focusing on the permanent labor, we are focusing on the contracting side, but we are merging our capabilities through our Capgemini brand. This is exactly where we want to go, and this leads us to total workforce management.
Gardner: How has the SAP portfolio, in particular Fieldglass, helped you get a more repeatable and understandable process and move toward total workforce management?
Hettwer: When we began in 2016, we needed the right technology to support this because we couldn’t do everything manually. We need to have the right solution. And during this time, for sure, we did proper request for proposals (RFPs) and checked the market. SAP Fieldglass convinced us because, first of all, the technology had the right functions about what we wanted. It’s really also an end-to-end solution.
Secondly, we wanted a solution that has a global footprint. If you just come, for example, from North America, you don’t understand how Europe works -- or vice versa. It’s quite difficult. So we said we needed a global footprint with references in the different key regions. This was also why SAP Fieldglass was chosen because of this global footprint and the experience that they had. This really helped us in deploying our global program.
Thirdly, SAP Fieldglass was a strong provider with the right development capabilities because we wanted to be able to evolve. We didn’t want to have just one solution. We knew the technology would evolve and our program would evolve as well. Therefore, we needed to have a partner who can go with this program with us over several years. It’s not just a 12-month exercise, this is really something that needs to evolve.
And lastly, we needed somebody who could help us integrate a cloud-based solution into our IT systems landscape. It’s difficult when you have some cloud solutions and some on-premises solutions, you need to connect them accordingly. And that has worked. These were the reasons we selected SAP Fieldglass and since then we have worked very tightly together, and it works great.
Gardner: It seems like Capgemini is in a great position to be a leader in this field and to innovate because of your emphasis on IT, your understanding of systems, the need for flexibility, and your global footprint. You are an early adopter, but also a bellwether of where things can go with contingent workforce management.
How you have further innovated your Freelancer Gateway and trusted contractor programs?
Replace face-to-face trust
Hettwer: Like many others, we began with the contingent workforce functionality of SAP Fieldglass. This was the main purpose first of all -- to get this done.
Then we moved to the next topic, which was delivery-based services, but this is more specific to areas where you have bigger spend areas to control. So you have to create governance.
But then we came to the direct-sourcing piece with our Freelancer Gateway to make sure that we use AI and automation to attract contractors directly and make sure that we have the best recurring extended workforce.
As I said, the pandemic was also an accelerator for this, and the use of remote contracting. And this is quite difficult because, remember, when you try to get contractors in, you need to do some interviewing. At a certain moment, people who seem to be good contractors and consultants who want to work for us would come on-site and we would get to know each other and then relationships start.
When you do these things remotely only, you never have a personal interaction with people, it's just video conferences. At a certain moment people need to have access to systems. Otherwise there is uncertainty about their capabilities and the security levels.
But when you do these things remotely only, you never have a personal interaction with people, it’s just video conferences. At a certain moment people need to have access to systems. If you don’t know these people, other than from the interview and the video conferences, there is uncertainty about their capabilities and the security levels.
This is why we needed to do something different, rather than just identifying and validating the contractors and then letting them work remotely. It’s about bringing in a level of trust that we have the proper qualifications and proper experience with people before they can work remotely for us.
And this is exactly something that we are figuring out right now. We are not completely done yet, but this is something that’s on the agenda as part of the “New Normal.”
Gardner: Andreas, when you have that digital, remote relationship rather than a more tactile, human relationship, you have to go on metrics and key performance indicators (KPIs). You need data that’s verifiable and repeatable. And in doing so you develop a greater understanding of your workers, your contingent workers, and the work itself.
Is there something about going to a data-driven, digital-type of engagement that will pay dividends when it comes to the greater understanding through data-driven and metrics-driven definitions of your process?
Hettwer: Yes. I think it’s a combination of both, right? On the one side you need to have the technology and the right data. But when we started thinking about the new right taxonomy -- to understand and identify certain roles and skills -- it’s very difficult. We created a rate card structure to make this happen, to begin to talk to each other and understand the roles and skills across North America or in China or maybe in India. But we know that there is a bandwidth of skills that can be categorized over there.
So, we needed to have certain technology to help us identify the capabilities of individuals, and on the other side, matching this with the job postings, with the needs that we have.
The technology helps us to make these kinds of matches, and all of this data will drive to even more AI to get proper and quicker matching so that the quality of this matching process will increase. And this is also why, for example, we are focusing on recurrently used contractors because it forms loyalty that will lead to a win-win situation between the external market and our clients. This is exactly where we want to go.
Gardner: And I certainly understand that building those taxonomies and creating the way in which you would measure the quality of the relationship for both parties is an ongoing process. But so far, just using the contingent workforce management and SAP Fieldglass to this point, tell us a little bit about what you have gotten.
Are there metrics of success, or key indicators that you can point to that demonstrate a return on investment or a rationale for why this makes sense?
Measures of success
Hettwer: Yes. First of all, we needed to have the spend coverage of 85 percent in a reasonable time. It took us some time to get there, but we are right now at the 85 percent. We recently went live in India with fully integrated solutions, and now we are at this level there, too.
For sure, there are different countries still where we have not full coverage yet, but we do it with a light version of the solution so we at least have the chance to identify individual external workforces.
A second measure that is very important for us is the fulfillment rate. We are now at 80 percent of fulfillment rate on eligible demand. “Eligible” means there is always some kind of demand in the contractor environment that cannot be filled because it’s not needed anymore or it’s maybe that some things change and that means our own people can take care of this one.
So this is why we always say “eligible” demand is something that really needs to be fulfilled and here we are at 80 percent. And I think this is quite good, and we are further ahead of where we were some time ago.
Another metric is the quality of job postings and aging, because if you have a job posting for contingent workforce that is in your system for 12 months, it just dilutes the KPIs and nobody is working on it anymore anyway.
We are right now at a level of below 30 days. That means whenever something is not filled within 30 days, it needs to be rechecked as to whether or not it is still needed, which means we always have proper demand so we can perform better toward our business goals.
Also quite important is time to fill positions; we have decreased this significantly. Currently we are on below 10 days from the job posting until the creation of the work order. So that means whenever there is really high demand for contracting site, we are able to fill this within 10 days. And, as you mentioned earlier, this is much quicker than recruiting people from the external market.
For sure, this will change with the “New Normal” because we have the possibility of a global remote workforce. There will be changes in what we need externally and what needs to be delivered from the internal side, and this is something that will evolve over the next weeks and months.
Gardner: And, of course, a very important measure of success these days is the perception of the customer -- the customer experience. Have you gotten any feedback as to how well your support of contingent labor works from your customers’ vantage point?
Hettwer: Yes, exactly. For sure, everything is client-driven for us. This is most important and there are some environments where you are not allowed to go with an external workforce. Others think more about the delivery-based environment and there we need to make sure that the right teams are available to deliver what we have promised.
There is always the question about if the contingent workforce needs to be engaged, and how can you ensure you select the right people, that you have the right suppliers in place, and that you are able to deliver what you are promising.
When we came up with our approach and showcased the suppliers -- the client base was very impressed. We even go out to our clients’ site, explain what we do, and how we do it. We even have clients thinking about how to adopt this contingent workforce management approach internally. So I think this is the best thing, if clients ask us to do similar things for themselves.
Gardner: Of course, those clients would let you know pretty quickly if things weren’t working out and so you have the ability to be reactive and agile as you adjust. It’s a feedback loop.
Before we end, Andreas, let’s look to the future. We mentioned the idea of establishing trust and understanding, the relationship and the qualitative and quantitative value of work, but it seems to me that what we are talking about as contingent workforce expands is really a redefinition of a corporation or a business. The barriers of that business become fuzzy, even permeable.
Do you see the nature of business changing as we look to less of a walled garden and more of an expanding universe of skills?
The future is not fuzzy
Hettwer: Yes, I would say so. As I said, we call it global resourcing or global capabilities, and this is exactly where it will lead. It’s not that everything can be done remotely, but it will increase, and this will give us opportunities -- not only Capgemini – but also more from our contractor side. And this is exactly the right thing to address right now because only when we have the right people in place -- when we have the right contractors in place -- then we can do these kinds of things.
There will always be some deviation, right? As you see, more and more tax regulation will come, more and more labor laws will come in the different countries. And this needs to be addressed. There is a difference between external services and internal services, and this needs to be addressed.
I think it will not be as fuzzy as it looks initially so that you can’t differentiate anymore between an employee and a temporary contractor. It will always be a differentiation there from my perspective because of all these kind of tax, legal, and statutory requirements. But you can do things in a more homogeneous and more aligned way -- and this is exactly what it will lead to.
Gardner: What advice would you share with others who are interested in increasing the amount of contingent workforce utilization and management?
Hettwer: There is so much to learn that I could talk for hours. But the first thing that I have is whenever you want to start some kind of contingent workforce program, think about the pain points in your company.
Is it compliance risk? Is it a cost issue? Is it a fulfillment issue? What are the pain points that you have in your organization and start from there, create, then solutions, and then finally a business case. Because without a business case that is not approved by the senior business you will never succeed. So that is my first recommendation.
Whenever you want to start some kind of contingent workforce program, think about the pain points in your company. Start from there then create solutions and finally a business case. Without as business case approved by the senior management you will never succeed.
The second one is getting clarity from the executive level about who owns such a program. This links very much to the questions that you had earlier; is it procurement, is it HR, is it somebody from the business? But there needs to be an owner, because otherwise you start a program and then you immediately start fighting about who owns it, right?
The third aspect is, if you want to go in such a global program, what about the governance? You need to have the right stakeholders in place. First of all, to get their buy in, and secondly, it’s about crowd intelligence. You are never the one who has the knowledge about everything. So if you get the right people on board from the different countries, from the different functions, then you will have all the intelligence that you need to create a program.
Then, you need to make sure that you have proper steering committees in place, because there will always be discussions and escalations, so make sure that you don’t get only the approval from the executive committee but also that you have regular decision points where these kinds of things will be discussed and decisions will be taken.
And last, but not least, prioritize. You will never be in the position to have a global program and make sure that in 12 months you have covered the globe; this will not happen. So, prioritize, make sure you start where you have the biggest pain points, you start there because initial success creates demand for deployment and will lead to its acceleration. So get success as quickly as possible in areas where really success is needed, talk about this one and that will help you really to accelerate.
Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: SAP.
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