Global players such as Upwork, Freelancer.com, Fiverr and Toptal and regional players like Workana in LATAM and several (Flexingit, ThinkNobleHouse) in India are becoming common vehicles for organisations to tap into an international freelancer talent pool.
The appeal of the solution is apparent. You can potentially find a vast array of skilled and possibly scarce talent at a lower rate than when using an alternative like consultancy, creative agency or SI , because you have direct contact with the freelancer and/or avail of wage arbitrage. So you can engage with a freelancer in a low cost country and have great skills for a competitive price
Many organisations adopt an agile mindset and look to bring in skills to their project “squads”. This increases the appeal of outsourcing certain work packages to skilled freelancers. If HR and Procurement are not looking at these sourcing channels, then hiring managers certainly are.
However, leaving hiring managers to try and navigate sourcing does not always end well. Facilitating hiring managers with some guidance and governance in their sourcing can improve their effectiveness.
Global/regional freelance platforms and compliance
The biggest challenge for companies and in particular enterprise organisations is how to use these platforms while maintaining general compliance to policies and in particular adhering to employment and tax regulations.
Questions that often arise when engaging a freelancer via a platform are:
- What liability for the work product and intellectual property does the platform hold? Probably very little, as they see themselves as a platform facilitating the introduction and connection, nothing more. (An argument that Uber is making and not always winning in the taxi business. See recent ruling in the UK).
- If the freelancer is remote, how do I know who is actually doing the work? Who is our company actually paying?
- And how do I safely pay across borders? What employment taxes may or may not apply? A hiring manager seldom thinks of this, because “surely that is the responsibility of the platform provider?”
- How do they fit? What’s the process within my current MSP and VMS solution? Some of the key players in this space do not want to be part of the MSP solution. They do not want to engage with the VMS believing their USP is the direct engagement between manager and platform.
So while this seems to be a growing trend and we’ve all heard and read the stories of the growth of the “gig economy”, it’s for these reasons that many organisations have not yet cracked this particular sourcing channel. In fact there are not many Contingent Worker programmes that have FMS strategies in place.
Which FMS provider to choose?
The other thing to be aware of is that there is no “one FMS” provider. Some players in this space provide a technical platform, like Uber, to let hiring managers and talent connect directly. This tends to work very well for well-defined pieces of work, such as design or creative tasks. Once a freelancer is chosen and the work delivered to an acceptable level, payment follows. These engagements tend to be short in duration, are mostly off site and lower in value.
Freelance platform or recruitment agency?
However, this is not as common as you may think. Several of the well known platforms are less about the technology and a direct relationship with talent, than competing with high end consultancies, (i.e. Accenture, McKinsey, etc.) Companies in this space will have senior consultants that they have pre-vetted in a talent pool. They manage the engagement between hiring managers and the talent via account managers. Very similar to a recruitment agency, they sometimes provide a shortlist of the best candidates. They also have longer assignments, of higher value and often on site at the client’s premises. Again, much more like a recruitment agency or consultancy.
FMS and (international) payrolling?
Another factor to bear in mind is that because a lot of these platforms are engaging across multiple countries and regions they are often making cross border payments (for good or bad!). In enterprise organisations you often find that these platforms become easy options for managers to “payroll” candidates, when a hiring manager has found a freelancer and simply wants a way to get them paid. If the organisation is already an onboarded vendor then usually it’s simply a case of raising a PO.
It would also be wrong also to assume that FMS players charge less for their services. The talent they provide may be very reasonable. However, their margins are comparable to high end recruitment companies even veering into consultancy margins. And some will charge both the client and the candidate. Some tend to move to a more subscription based fee.
Integrate FMS into your strategic sourcing ambition
For all these reasons playing the global FMS field is not one you want to leave to chance. It’s important to think through how it fits in your overall strategic sourcing ambitions (what’s the candidate experience like, coming via these platforms?), how you harness this channel and balance out the ease of use it can provide with some governance. There are several ways to do this. It doesn’t have to simply sit under your MSP provider and might depend on how advanced you are in the role the Talent Advisors/HR play in partnering with the business.
Collect data on usage
What you absolutely do want is the data on usage, to either support the use of this channel and grow, or show the business alternatives that better fit within the overall strategy and company policies. This data needs to fit into your other external workforce data, to build a complete picture and enable informed decisions.
It would appear that in a world where we are less constrained by the requirement to be “somewhere”, that being able to engage with talent that could be “anywhere” is going to grow. But there are some powerful forces on opposing sides of this debate. Brexit, EU regulations, labour legislation and tax versus technology, gig economy and liberalism. With such mega trends and uncertainty at the same time, it is good to ensure you have a foot in both camps.
About the author
Simon Redman is an associate partner of TalentIn. An experienced external workforce consultant with particular expertise in including SOW spend within MSP programmes, how to include Freelance Management System providers into your external workforce sourcing mix and building an organisations Direct Sourcing capability.
TalentIn has extensive national and international experience in developing and improving strategies for the recruitment of your permanent and temporary staff. We know how these programmes can be designed and implemented successfully. We advise, but can also provide practical support. Are you interested? Please contact us for an appointment without obligation via www.talentin.eu, firstname.lastname@example.org or +31 10 307 54 22