In this article, we explore trends in the field of human capital. It focuses on concepts of “alternative workforce” and remote work which are now frequently debated due to the current pandemic event, despite these being recurring themes over the years for companies looking to boost their operational efficiency. We also explore how organizations can measure the impact of such an event in terms of ESG and human capital.
What is the alternative workforce?
Alternative workforce is commonly divided into three groups: freelancers and independent workers (individuals who extend the core employee workforce and are paid by a unit of time, such as per hour or day), gig workers (individuals who are paid by the task to complete a specific piece of work), and crowd workers (individuals who compete to participate in a project and are paid only if they are among the top participants in a competition)[1]. These types of workers were initially applicable mostly to the IT sector but can be nowadays seen across a variety of industries, including financial services. Over the past years, there has been a significant growth in the alternative workforce. In 2016, the global market size of outsourced services, which is a proxy for the alternative workforce market, was USD 76.9 billion and in 2019 it reached USD 92.5 billion, which represents a CAGR of 6.4%. Moving forward, we expect the alternative workforce to continue to remain important as the majority of businesses, including those focused on financial services, feel positive about their outsourcing partners and financial services executives outsource a part of their services[2].
Increasingly, companies are starting to rely on outsourcing services that require more technical knowledge and a higher level of skills, which in turn create a greater impact on their performance metrics. Consequently, the global knowledge process outsourcing market size, which is a subset of the broader outsourcing market for more specialized and analytical type of work, is projected to grow from USD 28.94 billion in 2016 to USD 124.29 billion by 2025[3], which represents a CAGR of 17.6%.
Remote work trend – here to stay?
Working remotely has been a trend that COVID-19 has largely accelerated, leaving no choice and forcing digitalisation. It is too early to say what are the exact impacts on businesses, but it is clear that the trend is here to stay. According to Matt Mullenweg[4], Chief Executive Officer of WordPress and Tumblr and owner of Automattic, the culture that allows work flexibility is long overdue and “this might be a chance for a great reset in terms of how we work”.
Remote work trend has been growing steadily before COVID-19 outbreak
Measuring the impact of COVID-19 on organisations
There is no doubt that the COVID-19 is having a huge effect on businesses and the workforce. Organisations are already counting innumerable losses not only in terms of profits, but also in terms of human capital, and many are forced to lay-off employees and pause their expansion plans. While it is easy to quantify the financial losses incurred, it is more complicated to track the social impact of the pandemic on organisations. Even if it cannot protect the workforce, it can help better understand the situation and prepare for future critical situations. While overall impact or ESG (Environmental, Social and Governance criteria) measurement in companies is still in its development phase, there are various solutions and free tools proposed by impact measurement platform in the context of global solidarity specifically for tracking and understand the implications of COVID-19.
Socialsuite, an Australia-based impact measurement company, has made their surveying tool available for companies to measure the social impact of COVID-19, whereas Truvalue Labs, US-based ESG Data provider, has made their ESG dataset available for free.
Such data can later serve as a basis for a better crisis preparation, re-examination of business needs and the evaluation of employee wellbeing.
Sample Dashbord of the free COVID-19 Social Impact Assessment by Socialsuite
Final Thoughts
The dissemination of technology experienced in the past two decades has allowed individuals to effortlessly access enormous amounts of information, and to share it almost instantly. This has rendered physical distance a non-problem in a professional context and, in turn, allowed companies to have access to the best resources, whether these are in the office next door, or a thousand miles away.
Many enterprises, previously sceptical of the alternative workforce concept, were now forced to adopt new ways of conducting their business and creative ways have been conceived to mitigate the previously perceived issues of working remotely.
LGG Advisors and Odysseus Partners, with operational teams based in Portugal and France, respectively, support effective remote-based work solutions. For close to 3 years, both have been offering remotely a variety of services in finance and risk management to several companies in the financial services industry globally.
[1] Leading the social enterprise: Reinvent with a human focus, Deloitte, 2019
[2] https://fortunly.com/statistics/outsourcing-statistics#gref
[3] https://www.grandviewresearch.com/press-release/global-knowledge-process-outsourcing-kpo-market
[4] https://ma.tt/2020/03/coronavirus-remote-work/
[5] Veza Digital