On-demand disconnect: C-suite sees promise, senior management sees risk

Over the past five years, on-demand talent platforms and the broader “talent economy” have moved from the periphery to the core of the business world. The Harvard Business School reports that almost all Fortune 500 firms now utilize on-demand talent platforms. Many of the most promising and powerful applications center on field services. For service organizations, on-demand talent platforms unlock a real-time connection between service demand and a dynamic, flexible supply of talent with the right skills, in the right place, at the right time.

But there’s a growing disconnect: While nearly 90% of top-level business leaders believe that on-demand talent platforms will shape their future competitive advantage, that confidence drops to less than 40% among senior management.

It’s not hard to see why. Where service leaders see promise, leaders in Legal, HR, IT, and Procurement look at on-demand talent and see risk: risk around service quality, risk around worker misclassification and indemnification, IT and security risk, and financial risk presented by administrative costs.

The risk equation is changing

In many companies, common misperceptions about how to engage on-demand talent have obstructed the full embrace of the on-demand work model. Organizations have often struggled because they’ve engaged on-demand talent on an ad hoc basis—without strategic, organized support from other stakeholders within the business. But leading service organizations are breaking through these misperceptions and recognizing how they can effectively de-risk an on-demand talent model. A big part of this de-risking is powered by new platforms that deliver features purpose-built to address key risks and concerns, giving service organizations greater visibility and control. Just as importantly, leading service organizations are changing their approach to on-demand talent, building out comprehensive strategies that make on-demand talent platforms a core element of their field service delivery models. Leveraging the capabilities of modern on-demand platforms, they’re gaining confident control over service quality and service cost—and these business benefits are changing the risk equation on the on-demand workforce.

Field service transformation demands labor transformation

The incredible digitization of the modern world has brought a parallel surge in demand for field services to support new devices and the infrastructure that connects and powers them. Service organizations are transforming their field service offerings—making them broader, deeper, and more agile in order to capture growth opportunities. But they need to achieve this growth without sacrificing margins—particularly challenging in the face of inflation and a looming recession.

Achieving this high-growth + high-margins balancing act demands a transformation in labor strategy. Companies know that the employee model can’t keep up—hiring full-time workers is slow and creates a workforce that’s inflexible, leading to high costs of underutilization. Service organizations increasingly turn to third parties (subcontractors) to quickly patch coverage gaps and deliver greater flexibility and cost-efficiency over the employee model. But the third-party model presents its own flaws.

Losing control: Uncovering the real risks of the third-party model

Key stakeholders often view the third-party model as “signing away risk” typically associated with fulltime workers: The third party owns the worker, the outcome, and all the legal, HR, and quality risks that come with it. But signing away these risks also means signing away control over two key factors: quality and cost.

Quality risks: The contract may say the third party is responsible for quality outcomes, but it’s the primary service organization that bears responsibility in the end customer’s eyes. And with the third-party model, service organizations ultimately have little oversight or control over who goes on site to represent their brand. Third parties have implicit incentives to avoid quality issues, and many are committed to service quality. But the reality is third parties have their own margin pressures, and service organizations cannot be sure that service quality is always their top priority.

Cost risks: Moving from employees to third parties provides cost efficiencies, but those come at the expense of cost transparency and control. With the third-party model, the service
organization has no visibility into the true cost of service delivery. That means it’s impossible to know if rising service costs are due to the overall rising cost of labor or if the third party is cutting deeper into your profit margins.

Third parties subcontract, too

The challenging labor market is pushing third parties to turn to regional and specialty subs to patch their own coverage gaps and tighten their own operational costs. In fact, third parties increasingly source labor from on-demand talent platforms—the same platforms which service organizations have been hesitant to embrace. These layers of subcontracting and labor sourcing move your service organization further away from control over service quality—and inevitably lead to margin stacking, which eats further into your service revenues.

How service organizations are de-risking on-demand talent

Utilization of on-demand talent is surging because it enables service organizations to build a dynamic, flexible, just-in-time labor supply. Key stakeholders in Legal, HR, IT, and Procurement understand that potential, but it’s overshadowed by looming questions around risk. And for that reason, some of the most innovative and forward thinking service organizations are re-thinking
the risk equation around on-demand talent, and are leveraging on-demand talent platforms that provide purpose-built technology and supplemental services to directly mitigate risk.

Perceived risk: Service quality

As mentioned earlier, in the end customer’s eyes, the primary service organization always owns responsibility for service quality. One major misconception around on-demand talent is that brands don’t have enough control over service quality—that service organizations have little control over who is going onsite and how they’re carrying out field service work. But savvy service organizations are leveraging leading on-demand talent platforms to directly address this service quality risk.

De-risk strategies

Thoroughly vet your on-demand talent: Leading platforms give service organizations full visibility into who they choose to represent their brand. Intuitive interfaces simplify the process of finding and vetting on-demand talent. Candidates can be filtered by quality score, experience, location, skillset, ratings, certifications, and even recent background checks and drug tests.

Build your trusted talent pools: Service organizations can easily set up certified or approved talent pools to streamline the dispatch process and ensure work orders are assigned to only qualified and vetted workers.

Define what good looks like: As they build their trusted talent pools, service organizations can proactively provide information that helps ensure technicians will be successful on site. Many of the most successful service organizations provide videos that introduce technicians to their brand, as well as tips and best practices on how to dress, communicate and present themselves as brand representatives while on-site. This helps to give the service organizations greater control over consistent service quality.

Monitor outcomes in real time: On-demand talent platforms give service organizations direct visibility to service outcomes, as well. Service quality can be monitored in real time, and managers can more immediately identify and address any issues. Successful service organizations are applying the same service quality measurements they currently use to monitor field service work done by employees and third parties—from checkpoints throughout the project, to customer satisfaction surveys at completion. This uniform approach to service quality monitoring is enabling them to drive consistency—no matter who is doing the field service work—as well as get a more reliable picture of how quality varies depending on the source of talent (in-house, third-party or on-demand).

Engage supplemental service partners: Leading platforms go one step further, supplementing their technology with connections to qualified service partners that can provide talent and work management services for organizations that are short on headcount. Service organizations can leverage these talent management partners to vet workers, build approved talent pools, and monitor ongoing performance.

Perceived risk: Worker misclassification

HR and Legal have valid concerns around misclassifying or overusing on-demand workers. But leading platforms now provide purpose-built features and services that make it much easier and more reliable to leverage on-demand workers while mitigating misclassification or other employment compliance issues.

De-risk strategies

Follow work order best practices: Service organizations can take simple steps when creating work orders to help avoid misclassification of independent contractors. For example, do not post 40+ hour/week assignments with set hours, or long-term assignments lasting consecutive weeks or more.

Service organizations should never require providers to work exclusively with their brand. And service organizations should avoid providing comprehensive training and tools to independent contractors.

Enable real-time visibility and automated alerts: On-demand talent platforms provide robust reporting to give complete, real-time visibility over worker utilization. AI-powered compliance alerts go further, helping to identify potential classification issues before they become a compliance violation.

Use controls to set hard limits on utilization: On-demand talent platforms allow service organizations to set engagement controls and work order qualifications to put hard limits on worker
utilization and avoid misclassification or overuse.

Give technicians flexible control: Leading talent platforms also facilitate a more balanced relationship between the service organization and the on-demand talent, reducing the risk of
misclassification. For example, some platforms allow technicians to make counteroffers on work orders, as well as giving technicians flexibility in scheduling (versus requiring them to start the job at a certain time).

Perceived risk: Liability

When on-demand talent comes up in professional contexts, Legal and HR rightly raise concerns around liability: Who is responsible if a technician is injured on site, or if a technician (inadvertently or negligently) damages the client’s property? With the third-party model, this liability falls to the third party. With the on-demand talent model, these stakeholders rightly recognize that the primary service organization does assume these liabilities. But on-demand talent platforms are using innovative workflows to get ahead of worker liability issues before they become problems.

De-risk strategies

Utilize pre-built work order templates: Leading platforms provide work order templates that are built around the best practices that set an on-site IT job up for success. These templates help service organizations more clearly define the requirements and expectations for a job.

Use task lists to ensure service completion: One of the most innovative features is the ability to create a discrete list of tasks within a work order. These tasks can include checking in (via call, text, email, etc.) upon arrival and/or departure and submitting photos to verify elements of the job have been completed correctly. This helps guide a mutually successful outcome for the worker, the service organization, and the end customer.

Tech-enabled dispute mediation: Some on-demand talent platforms provide built-in workflows for dispute mediation and issue resolution. These workflows can provide a channel for resolving liability matters before they become larger problems, as well as creating a comprehensive digital audit trail of all actions and communications.

Lean on work management service partners: Once again, leading platforms can connect service organizations to trusted service partners that can provide work management services. This can include creating/uploading work orders, reviewing and approving work orders, as well as dealing with on-site issues and mitigating overall worker liability risks.

Add insurance protection: All leading on-demand talent platforms can provide comprehensive insurance coverage to protect against worker liability risks.

Perceived risk: IT & security concerns

IT, Security, and Legal teams are trained to be scrutinous of any outsider—whether it’s a vendor, a consultant, or an on-demand field service technician. They want to keep data private and systems and networks secure. The traditional approach has kept third-party labor as isolated as possible from internal systems, networks, and information. But to fully realize the potential of today’s on-demand talent platforms, service organizations need to be able to seamlessly integrate their internal work order and service delivery data with these platforms. The good news is that leading on demand talent platforms are cloud-based applications. They don’t require the installation of an endpoint agent or direct connectivity to your network—significantly mitigating cybersecurity risks and limiting data exposure. But even this cloud-based integration presents a number of questions and concerns around how to ensure that the sharing of information—from the service organization, through the platform, to the independent contractors—remains secure.

De-risk strategies

Hold on-demand talent platforms to rigorous standards: IT and security professionals know the enterprise is only as secure as its weakest link—including all partner platforms and applications. Service organizations should seek out on-demand talent platforms that secure sensitive data through leading encryption practices for data storage and transmission. They should look for platforms that are built to meet rigorous security standards—and vendors that can reliably deliver SOC 2 Type 1 or SOC 2 Type 2 reports attesting to security controls in place. And they should evaluate the vendor’s internal processes around ensuring continuous security patching and updates, guaranteeing uptime through redundancies, and providing continuous employee cybersecurity training.

Add cybersecurity liability insurance: In addition to the more physical liabilities of an independent contractor going on site, IT and security leaders may also be concerned about the digital/ cybersecurity liabilities: What if an independent contractor gains unauthorized access to the client’s IT infrastructure? Fortunately, leading on-demand talent platforms carry cybersecurity liability insurance to protect against this risk.

Leverage security tools to contextualize risk rather than block it outright: The pandemic forced nearly every company to rapidly enable new ways of working, and forced IT and security teams to manage the broader risk landscape of a distributed workforce. One of the ways this was accomplished is a move toward security technology that provides a context-driven evaluation of risk, rather than rigidly blocking everything. Leading on-demand talent platforms enable service organizations to take this same approach—allowing them to evaluate multiple factors to appropriately assess risk and make context based security decisions when it comes to on-demand field service work.

Recognize the perimeter-less enterprise: The reality is that the traditional notion of the secure perimeter (both physical and digital) is all but gone in the modern enterprise. Almost every company is now enabling remote and hybrid workforces to connect from anywhere and work with cloud-based productivity and collaboration tools that zing data between endpoint devices, internal networks, and cloud locations. In this regard, service organizations also need to change how they view the risk of an on-demand field service tech connecting to an internal system or network.

Perceived risk: Administrative costs

Service leaders are immediately skeptical of on-demand talent for one main reason: Moving from the third-party model to an on-demand model pushes more of the admin cost of that work back onto the business—from costs of hiring to costs of onboarding to project management costs. And the risk is those higher admin costs will eat into margins and delay ROI. But modern on-demand talent platforms are built around making administration easy and efficient.

De-risk strategies

Leverage technology to accelerate vetting: Modern on-demand talent platforms can dramatically accelerate the process of vetting field service technicians and building a pool of qualified, on-demand service talent. Intuitive search and filter capabilities enable you to evaluate by quality score, experience, location, skillset, ratings, certifications, and even recent background checks and drug tests.

Use integration and automation to streamline work order management: These platforms also provide pre-built work order templates infused with best practices which help streamline the process of creating a work order and set the job up for success. Purpose-built workflows for assigning and managing work orders further simplify work order management. Additionally, most platforms integrate with existing field service management (FSM) systems, reducing the need for duplicate data entry.

Utilize work management services: Leading on-demand talent platforms can provide a full range of supplemental service partners that give service organizations a trusted option to partially or fully outsource the administrative tasks and costs around utilizing an on-demand field service workforce. Expert service partners can handle talent management (vetting candidates and building talent pools), work order dispatch, management and issue resolution, and can even provide additional risk management services to further offload administrative burdens related to third-party labor.

On-demand talent must become a core strategy

Everyone is familiar with the technology adoption curve. From computers to the internet to mobile devices to cloud computing and more, most businesses rightly start out skeptical and hesitant. But as the technologies surrounding these transformational innovations mature, the urgency around adoption increases. On-demand talent is at a critical inflection point on this curve—poised to become an essential element of service delivery strategies. “To compete in the years ahead,” a Harvard Business Review report concludes, companies will have to “embrace the full potential of digital talent platforms.” Doing that, the HBR report says, “will require rewiring policies and processing and redefining working norms.”

Re-thinking the risk and responsibility equation for on-demand talent

A big part of that rewiring and redefining of norms centers on risk. Modern on-demand talent platforms go a long way in mitigating the most salient risks of on-demand talent. There’s also no denying that leveraging the on-demand model inherently means that the primary service organization assumes more of the risk related to field service work. But the tradeoff is significant cost savings and control over service quality.

Almost every business has already begun changing their risk tolerance in the name of flexibility and agility in their core, full-time workforce. The new normal of remote and hybrid workforces powered by cloud-based productivity and collaboration tools presents a much broader set of risks. Organizations are recognizing that they must find ways to monitor, mitigate, and manage those risks in order to compete and win.

Service organizations must also recognize that on-demand talent is essential to enabling more agile, efficient service strategies. To compete and win, re-thinking their internal calculus on labor risk and responsibilities is needed, and leading service organizations are already on this path. They’re taking control over service quality and cost transparency, rather than signing it away into a subcontractor’s black box. They’re seeking out on-demand tech platforms that can help them mitigate risks and minimize admin burdens. And they’re reframing the costs of taking on greater risk and responsibility as a future-ready investment: They’re building the internal infrastructure—people and processes—today to support the ongoing agility, flexibility, quality, and efficiency in tomorrow’s field service workforce.