The Stack Archive

How to prepare your business for a project-based world

Wed 12 Apr 2017 | Ray Grainger

Project-based economy

Ray Grainger, CEO and Founder of Mavenlink, discusses the prospect of a project-based economy and what businesses can do to prepare…

During the last decade, the workforce has shifted dramatically. Companies are required to act more quickly while being more nimble than ever before, and this will only accelerate over the next ten years.

To compete, high-performing businesses are creating a more liquid workforce by strategically leveraging external service providers and contractors in increasingly large numbers. It’s a model that maximizes flexibility and speed while optimizing costs, which are hallmarks of success today and in the future.

Data also reinforces this new reality. In the 2017 Talent Trends[1] study, nearly 30% of companies fill roles with freelancers and short-term contract employees, and that number is predicted to rise to 40% by 2020. This trend will continue to accelerate because there is a tremendous appetite for this new model, and technology is only making it easier to find, engage and work with these talent networks.

It is an absolute must that firms tap into expertise they don’t have in the form of external resources in order to get projects done. Sometimes this is a freelancer, and that is a growing segment of the workforce. This segment can be referred to as Multi-Affiliated, or MAPs, because today it’s common to be affiliated with multiple organizations as opposed to working for a single entity. In addition, there is also expected to be an explosion in businesses leveraging small specialty services firms which adds to the freelancer or gig economy story.

External providers allow a business to better engage the right skills and resources at the right moment

Project-based complexities

In the 2017 State of the Services Economy report, 58% of services firms stated that they are majority project-based work, and 89% said project-based work is trending up. The data also revealed that contract engagement lengths are shortening, and today 69% of engagements are less than a year in length.

So what makes today’s project-based environment so unique, and challenging, is that not only are there many more projects happening, they are also shorter. The assemblage of people required to get project work done is a lot more complex. In response, companies are leveraging more and more external providers to supplement their full-time employees.

In the same report, 89% of firms stated that contractors were critical to getting their work done, and 96% are actively seeking new contractor relationships. These external providers allow a business to better engage the right skills and resources at the right moment, while reducing large investments of time and costs associated with recruiting, training, and managing resources and careers for company personnel. Organizations, therefore, can stay lean and focus on their core business while leveraging highly specialized expertise that clients may need.

The organizations that are most successful at leveraging these talent networks will emerge as the winners. Those that want to succeed in the future need to be great at managing teams and talent across geographic and business boundaries.

Impact on revenues

In 2016 alone, the service provider industry generated $3 trillion in total global services revenue, roughly 4-5% of global GDP. The industry is growing at twice the rate of GDP, and is expected to continue to accelerate.

Given the distributed nature of work today, and the fact that individuals now have tools to connect with other talented individuals from all over the world, this trend actually has the ability to significantly raise GDP in other parts of the world and this will create a more employed workforce.

Preparing for change

Managers need to be experts at assembling and managing remote and distributed teams

The ability for firms to ‘scale at will’ has a lot of upside for small businesses who can now compete with much larger businesses. They can tap into the best skills whenever and wherever they need them in a much more rapid way. It used to be that the bigger the firm, the more specialists they had on hand. Today, it’s more about how you can create a team of multi-affiliated professionals that occupy your bench.  

In the near future, you might argue that having a large, dedicated employee base with specialist skills is actually a downside — it’s much more complex to manage these resources efficiently and to keep them optimally billable as the skills needs change more rapidly than ever before.

Business managers also need to prepare to be more adept at working with people that they have never met. They will need to be able to build trusted relationships much more rapidly, with the confidence that these projects will have successful outcomes without taking years to build trust. This requires a new set of skills, where managers need to be experts at assembling and managing remote and distributed teams, vetting top talent across the Services Supply Chain.  

[1] You can download a full copy of the 2017 Talent Trends report here.

Experts featured:

Ray Grainger

CEO and Founder | Mavenlink


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