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Outsourcing to increase globally over coming years, reveals new report
Businesses are entering a new era in the way they are resourced and organised. The 'open workforce' has arrived, and it has dramatic implications for every aspect of business - particularly in terms of outsourcing, according to a new report from the Association of International Certified Professional Accountants and the Chartered Institute of Management Accountants.
Based on a programme of in-depth interviews and a survey of over 1,100 senior executives from around the world, the report reveals than one in four respondents reported that contractors, outsourced service providers, temporary staff and freelancers make up greater than half of their organisation's total workforce today and that the shift in resourcing from employees to external resources is set to accelerate over the next five years.
Outlining the emergence of the open workforce, the report investigates the new structures and principles that tomorrow's market leaders will use to govern the open organisation of the future.
The US and Canada were first to embrace the open workforce, but companies in every region are beginning to move in this direction. Companies in Asia Pacific predict they will move rapidly over the next five years to increase their use of external talent.
The report says that high-performing companies are using the open workforce to deliver competitive advantage and that there is a strong correlation between companies that identify themselves as outperforming their peers, and those that have been quick to embrace the opportunities created by the open workforce. High performers are both more likely to be using external talent, and also more likely to have the tools, strategies and frameworks in place to leverage these complex structures more effectively.
External talent makes up more than half the workforce for over a quarter of organisations need to rethink how decisions get made.
It is clear from the report that today's complex and highly distributed organisations need a new framework to govern decision-making. In particular, they are finding it difficult to strike the right balance between control and empowerment, with 62% of respondents indicating that their organisations are either struggling to get the balance right or feel that they have got it wrong.
Performance management has become harder yet more critical.
Companies urgently need new tools to help them manage performance across today's networks of employees and collaborators. That gets harder when you rely on people who don't formally report to you. Nearly a third of respondents indicated that their companies lacked a clear line of sight over the cost and performance of their external talent. Organisations need a new approach to performance management to ensure that they are mobilising all their resources effectively.
New risks need to be managed, warns the report, saying that the open workforce exposes companies to risks that few have fully understood. In the survey, companies show concern over information leaks, whether because of cyber security issues or intellectual property theft. Less obvious - but equally challenging - are the reputational risks that arise when vital tasks are performed by people and partner organisations that do not necessarily share the organisation's values or targets for quality.
The report reveals that corporate structures will be transformed and that the companies of the future will be increasingly open, agile, innovative, collaborative, automated and digitised. It warns that this new breed of company will require leadership that can unite a dynamically shifting, loosely affiliated network of talent around a coherent corporate vision and set of values.
"The opportunity is huge," say the report writers. "The open workforce allows companies to reduce costs but it also unlocks a whole range of opportunities. With open innovation strategies, we see companies increasingly collaborating with suppliers, customers and other business partners to deliver new products and services. The open workforce can also give companies much greater agility, so they can redeploy resources and augment their capabilities with unprecedented speed."
The report is available for download at:
27th November 2014