Imagine a future where businesses will have no employees and will operate like the movie industry where a talented group of people come together, make a great movie and then move on. Contingent labor is everything in this future. In this episode of Industry Insights by SAP, Josephine Monberg sits down with Arun Srinivasan, General Manager of SAP Fieldglass and talks about what companies should do to get ready for this.
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Hey, all listeners. And welcome to this episode of our podcast today. We’re going to talk about something that I find super interesting because I think it’s something that’s been very impacted by COVID and I know we have talked so much about COVID, but it’s still impacting the world at large and it’s still impacting businesses. And what we’re going to be talking about is temporary work or as we also call it contingent labor. You might think, great, that doesn’t sound that interesting, but this is going to be a fun conversation. So keep listening and I have the perfect person to talk about this with me and I’m joined by our own Arun Srinivasan and he is the General Manager at SAP Fieldglass. But Arun, I won’t talk more now cause I want you to just introduce yourself to everyone. So can you tell us a little bit about yourself and what you do at SAP?
Hi Josephine. Thank you. Hello to all your listeners. I am the general manager for the SAP Fieldglass business and this business is focused on providing contingent labor solutions to our customers and I’m based in Chicago, Illinois.
Cool. And we won’t talk too much about Fieldglass right now, but we’ll get into it because it’s obviously a technology that can really help in managing contingent labor. But before we even talk about that, let’s just talk about contingent labor, because I think a lot of people that hear it up front, they think about like, you know, a teenager that’s mowing a lawn or scooping ice cream, but in this conversation, I mean it’s much broader than that. So when we talk, you and I talk about work or continuing labor, what should our listeners think of?
Good question. That’s a great starting point. And so when you think about contingent workers, we first actually think about the business or the organization that’s trying to get work done. And if you go back in time, let’s say 15, 20 years back, and then an organization wanted to get some work done. Let’s say a company was getting formed. They would hire people. They would bring in pay roll workers, employees in different departments, whether they are it’s in finance or HR or marketing or technology, whatever it may be. Then over a period of time, they realize, okay, there are some core functions that I want to focus on. And the rest of the functions I want to bring in external workers in different forms, consultants, contractors, independent contractors, and so on. So when we think about contingent workers, we think about all the non payroll workers, all the workers who are doing work for an organization, but they’re not actually on the payroll of the organization. So they may be remote. They may be onsite, but they are not employees of the organization. So that’s the broader definition we use when you think about continuing workers,
Right? And it’s obviously a really critical part of the labor, especially in, in today’s world. And I alluded to this in the introduction when I said that we’d still talk about COVID because the crisis has affected the staffing industry. Right. I think that’s unavoidable. But how do you kind of see COVID what’s the impact been on, on contingent labor?
So broadly continuing labor and industries associated with continually were happy and impacted just like the rest of the economy. And they’re also, you’re seeing variations across the world in different countries. We’ve also seen some what I would say some contrarian move to. So based on some geopolitical happenings, what we have seen is a surge in demand in certain areas, certain industries. So for example, if you look at the pharma sector, you look at logistics, you look at healthcare. Retail is a great example where we’ve seen a surge in demand and to fulfill that demand, we’ve seen contingent workers come in and fill that gap, that gap, that exists today to meet the needs of businesses.
Hmm. And it’s, I mean, it’s interesting, you bring that up because I’ve done a ton of interviews with different industry leaders and it’s this right? You see the same thing in those industries of how they’ve been dramatically changed. Some of them have had more demand and some of them have had less, but obviously workers play a crucial role in that. And I assume in that case that it’s also to have a platform that allows you to have flexibility in terms of who you hire. It’s a little bit of a leading question, but can you just comment a little bit about like the flexibility that you need in today’s world?
Sure, and so you do need that flexibility and before you even actually get to that point, you need to understand that work gets done by a mixture of employees and other external workers. And so when you think about your workforce, you gotta be thinking about all the workers, your employees and your external workers put together. And so from that perspective, when you think about, you know, how do I get work done? You need the flexibility to say based on the constraints that you may have. So it could be location-based constraints. It could be cost-based constraint. Sometimes it’s just volume. I need this, this many workers based on those constraints, you can find the right mix of employees and XL workers to bring in, to get work done.
Hmm. And again, you just mentioned the, the supply of the workers, right. Because in some industries that kind of skyrocketed, I assume, and we just talked about to you know, technology and the role it plays in all of that, but in more kind of more concretely, how do you think technology can help even out the supply and demand?
Sure. So that’s, that’s again, a deep topic in terms of thinking about demand and supply. When an organization has demand it’s demand, which is basically expressed in the form of, I want to get this word done for which I’m looking for these skills or these workers. And, and in addition to that, there may be some location requirements. Do I need this location or here are other requirements around certification and background and so on. And so from a technology perspective, it starts with first being able to in a structured way, define your supply chain. So your supply of staffing workers, independent contractors, consultants, services, providers, et cetera, to define that in a structure way and organize that in a platform. Once you do that, then you can express your needs saying, okay, here’s what I need. So that’s, and then that gets broadcast out to the various providers based on the rules that you define. And then they find the right, the right, the technology helps find the right match. And then you have a choice to shortlist, select, et cetera. You make your selection and then work starts. And then all of that, you also have a broader visibility through analytics, through predictive analytics, through just basic reporting to understand what’s happening, where, who do I have in my workforce, what skills they bring, where are they located and so on.
Hmm. And why do you think that’s so important to have a technology platform that enables businesses to do that? I mean, obviously the need to manage them, but why is it more critical now than it would have been? I don’t know, let’s say 10, 15 years ago.
So it’s interesting that you asked that because even in the context of COVID with that need has been emphasized even more. So if you make something, some practical example. So in the, in the context of the pandemic there’s been while we have had a broader economic downturn, there’s also been surge in demand in certain industries. Like I mentioned earlier, retail pharma some parts of technology, logistics and so on. But there’s a gap because the supply has not been able to keep up because some additional constraints that go with interviews. So for example, the, the ability to travel has been restricted quite a lot. So if you have a plant, let’s say that manufacturers, chips does the potato chips and you need to run extra shifts. Suddenly you don’t have workers who can cross States or across even County lines to come in and work.
So travel has introduced some constraints. And in other cases, maybe it’s the willingness of the worker. It could be a remote work where there’s the willingness of the worker to do certain kinds of work. So why is technology more important now is first, it goes from a cost perspective, you need the flexibility to bring in the right kind of workers to get work done without making longterm cost commitment. Secondly, in just finding the right talent, you want to spread, you want to cast the widest net possible to find the right talent to get, to get your job done. So those are some exact, some reasons why technology is even more important today. And lastly, what I would mention it, we have a point of comparison to what happened in 2008. It’s really interesting. There’s the famous business week cover in our industry. It‘s referred to a lot in which came out in 2010 and it talked about the permanent temporary workforce. And essentially a lot of the discussions that are happening today happened the coming out of the, the last great recession. And there are indicators today, which show that there’s going to be increased engagement of external workers in various forms. And for that having technology is more important because you want clear visibility, you want to control your costs, and you also want to be compliant with local labor laws and other guidelines.
Yep. And actually, let’s talk a little bit more about what you just touched on, which is, you know, this a group of people which I’d call like highly skilled external talent, which I think is growing that’s. I think that’s what you just alluded to. So how do you see that pool of people? Because again and again, we talked about this really quickly in the beginning, but kind of the whole thing about the gig economy and a lot of the younger generation wanting more flexibility. And that’s not just you know, people that need fast gig, but that can be some one who’s very talented, but who doesn’t want to be necessarily, you know, working for a company permanently. So yeah. Talk a little bit more about that, that pool of people.
That’s a very interesting topic. It goes like you said, this is you know, this is that, that the workers themselves have a desire to be engaged with a business or with the company in a certain form. And over a period of time, the definition of the, of what employment is, or the relationship between court and court, the employer and the employee is changing. And there is a segment of the population that’s emerging that chooses to engage in a different form. So they don’t, they’re not necessarily looking for lifetime employment, like you said. And so what we’re seeing is really there are four factors. So one is that organization on a company it’s the least work done to run their business. They need work done, and it could be any kind of work. It could be technology related at work.
It could be work in a warehouse or our front office and so on. So, so that’s the first factor. The second factor are the workers themselves. And like we just talked about it’s their workers come in all forms. Some of them desire and engagement where it’s project based, let’s say, so they are not looking for longterm commitment. So they’re not looking to be engaged for let’s say five years or even longer, but they’re just looking for what we call as quote unquote gigs or shorter term engagement. Then the third piece though, is with, when you engage in that form, there are some things that need to be put in place to protect the rights of the workers. And the broadly I would call the, the wellbeing of the workers and these protections have existed in other farms with employees, with union workers, et cetera, where Peter of time, these protections have come in place and most, most countries in the world.
And we need to make sure those same protections or similar protections exist for these new, this new emerging class of workers. And to do that, the third piece of the list, the legislation piece needs to progress too. And you seen that, we’re seeing that specifically in some countries in Western Europe, we are seeing that emerging in Japan, where that needs to be broadly adopted. And then the fourth piece is technology related. So while there’s demand on one side, there are workers, including the gig workers and the other side they’re guidelines or legislation to control all this when you still need technology to make the match possible. And to make sure that, you know, the oil is truly flat and you can the supply and demand can be mashed from all over all corners of the world. So that’s really what’s happening in the space. And the, the definition of gig itself has evolved. It used to be, like you said, upfront, it’s about somebody mowing your lawn or scoping some ice cream. It has been, I guess taken over by broader industry. And now it refers to any engagement where typically an independent consultant or independent contractor is engaging in work.
Right. And it’s only growing more and more at one thing, as you look at platforms like, you know, Uber or where tons of people can get employed very quickly, but it’s also like we just talked about the more skill, like people that are very skilled and have education and so on. And, and just, let’s talk a little bit more about the future now, right? Cause we all love to try to predict what’s going to happen, which I mean is always impossible. Just look at what’s going on now with COVID, who would’ve ever thought that, that we would have been in this, in this situation. But if you, when you talk to customers and you talk about kind of their technology demands and what they need in order to manage their contingent labor, obviously I’m sure you discuss what’s going to happen in the future. What, what do you tell them? How should they prepare and be able to better manage their contingent labor, which I think will be growing
Great question. And I like to challenge the, the customers and other folks in the industry. I talked to by saying that the company of the future will have no employees, right. And then people usually say, what are you talking about? Are you crazy? And so, but it’s, it’s just a thought provoking statement. And, but really it’s intended to make the big businesses think about the total workforce. So yes, you have employees, but you also have other forms, other kinds of workers who are coming to help your business be competitively, different produce goods, deliver services, and so on. And so, so when we think about the future, we think that businesses more and more will think and operate like the movie industry where a talented group of people come together and make a great movie and then move on.
Some of them may be employees. Some of them may be quote unquote, external workers. They may be the stars of the show. And similarly businesses when, especially in the context of project, large, meaningful projects, they are going to think more and more about the total workforce and say, how can I get the best group of people together to deliver the outcome they seek to deliver and, and really technology. And some of the other factors I referred to earlier are just enablers there to get this work done in the most effective way, in a way where the business itself feels that I can deliver a competitive differentiation at the, at the right cost using this technique. So that’s what I feel. And we feel that that’s how businesses would think in the coming years.
I love it. I love it. I love the whole comparison to movie, cause that also just makes it way more glamorous, right. Technology becoming like a movie production. Perfect. and what you just talked about now, to me, sounds like this needs to be elevated to become a sea level issue or conversation. If we want to put it, frame it more positively. So why do you think C levels? I mean, you kind of answered the question, but going even deeper, why is it it’s something they need to think about now and really engage with?
So in the simplest sense, it’s because it’s a great source of competitive differentiation, but thinking about your expanded workforce and how they can come to help you be different in the market, help lower your cost, help increase your revenue, I’ll produce better products and deliver better services. Is the reason why you want to think about why, why the C level is increasingly, I would say thinking about it, it’s still not sort of a mainstream topic at the average global 2000 company. Now in order for it to be a mainstream topic, it’s also true that the business and environment as supported by legislation needs to progress further so that the workers so seek different kinds of engagements are protected. The businesses are also protected from a tax perspective and some other liabilities that, that are, are irrelevant in this space. So all those things need to progress also, but really it is a sea level at Warren’s to be a sea level topic today, mainly because of the op it’s ability to provide competitive differentiation.
And then of course also, if this is what we’re going to be working like in the future, if you don’t have a technology platform that can help you manage it, you’re basically, I mean, I would say, yeah, it’s probably not going to perform that. Well,
Absolutely. And that’s a given. So we have customers, for example, in the pharma industry and in the context of the pandemic, they had to run their plants at full capacity. And they realized that because they were using a solution like ours, they had clear line of sight into who is working. They are not all employees. And so they were able to, and what skills they had. So they were able to build a, sort of like a skills pyramid to say, okay, go run this plant for these three shifts. I need these different skills, this, and some of these skills are coming from my employees and this is how I reach out to them. So all these skills are coming from my Excel workforce. This is how I reach out to them. And then they could do their planning to keep their plants running efficiently.
But that’s also kind of amazing, right? Because in that way, it becomes a very specialized skill based and outcome based way of working, because the way it is right now, people get hired for a job. And they assume that that person will be good at that job forever, but you evolve. Right. And I know of course we have development plans in place as well to help us evolve with the job. But in this case, you really just match people with a job that might make more sense for that person at that given time. And then you really see what people produce because it becomes more project based as well in that case is what I’m hearing too. So I’m excited about that.
Yeah. It is an exciting topic and really challenges the thinking. It just because you were saying, just because that’s how it was done or that’s, you know, that was the status quo. And that doesn’t mean, let’s say you’re starting a new year. We were doing exactly the same thing. So it’s, it’s similar to concepts like zero based budgeting or zero-based processes to say, Nope, let’s start from scratch and say, what’s the outcome you’re trying to deliver for that outcome? How best do we do this? Now? Like I said earlier in doing that, we also need to make sure that the workers needs are taken care of not just their pay, but also some basic things like healthcare and longterm benefits, like retirement benefits, where it applies, needs to be taken care of, to in whatever form that they’re being engaged.
So you really turn the whole thing upside down in that way. And you look at what the outcome is, and then you hire people to do that work. This has been such a fun conversation. I really enjoy talking to you. And I said in the beginning, when I mentioned contingent workforce, that you might think, Oh, not the most sexy or interesting topic in the world, but I actually really thought it was really, really cool and fun to hear about. So are in, thank you so much for joining the podcast. I really hope that you’ve had a good time too. And I know if you want to say goodbye to all of our listeners, any final words,
It’s a really interesting topic for me and for us, it’s clearly linked tightly to the future of work, enjoyed talking to you, Josephine and a big hello and a big hi to all of your listeners.
Thank you. And again, thanks guys for listening. I really hope you enjoyed it and tune in to listen to the next episode that’s coming up. I’m sure we’re going to talk about something fun and engaging and interesting again. Bye everyone.