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Defining the B2B On-Demand and Outsourced Talent Market

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Catalyst believes that Outsourcing the Office presents a compelling market opportunity and welcomes discussion with growth-stage business services outsourcing companies.

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Defining the B2B On-Demand and Outsourced Talent Market

  1. 1. The B2B on-demand and outsourced talent market: Outsourcing the Office June 2017 Briehan Burke, Mia Hegazy & Susan Bihler
  2. 2. 2 Workforce Evolution: Traditional Jobs to Outsourced Talent Source: Freelancing in America: 2016. (1) Millennials at Work: Reshaping the Workplace (2011, PWC). Consumers expect to get what they want with ease and speed, changing fundamentals of business and creating rising demand for flexible workers -Mindset increasingly translated to the business world as well Traditional jobs are increasingly difficult to find Typical employee benefits (i.e., health insurance and retirement plans) diminishing Millennials are the largest generation in the workforce; tech-savvy and have different expectations for work than previous generations -Most valued: training & development; flexible hours; cash bonuses(1) Increased connectivity makes remote work more plausible Online platforms / marketplaces create new work opportunities (and challenges) and provide consumers and businesses access to a broader scope of products and services Rise of the Freelancer The definition of “traditional” employment has expanded to include “freelance” work: Traditional – income earned solely through steady work with a single employer Freelance (Outsourced Talent) – supplemental, temporary, project-based or contract-based work
  3. 3. 3 Supply Side (Labor) Market Characteristics Market Size and Categories Category Workforce Size Characteristics Independent Contractors ▪ ~19mm people; 35% of freelancers Freelance, temporary or supplemental work, project-to-project basis Diversified Workers ▪ ~15mm people; 28% of freelancers Multiple sources of income; mixed between traditional and freelance Moonlighters ▪ ~14mm people; 25% of freelancers Professionals with a primary job who ‘moonlight’ doing freelance Freelance Business Owners ▪ ~4mm people; 6% of freelancers 1+ employees, consider themselves both a freelancer and business owner Temporary Workers ▪ ~4mm people; 6% of freelancers Temporary employment status with single employer, client, job, or contract project Source: Freelancing in America: 2016. Intentionally Freelancing -Majority picked freelancing out of choice rather than necessity -Almost half saw increased demand for their services in the past year Highly Satisfied -Feel more positively about their work than non- freelancers -More likely to feel respected, engaged, empowered, and excited to start each day Finding Jobs Online -73% agree that technology made it easier to find work -54% obtained a job online (vs. 42% in 2014); more turning to online sources to find jobs (i.e., social media, freelance marketplaces, sharing economy sites) -Majority have found a job online in less than three days -Two thirds say the portion of their work found online has increased this year Prioritizing Skills -53% have done training in the last 6 months in an effort to strengthen skills -Half of clients desire specialized and hard to find skills in freelancers Attracted to Alternative Benefits -Primary motivation for freelancing: -Full-time: flexibility & freedom -Part-time: possibility of earning additional income -Health insurance and student loan forgiveness highly desired benefits Portrait of Outsourced Talent
  4. 4. 4 Demand Side (Business) Market Characteristics Why Might a Company Outsource? Cost Efficiency Core Competency Exposure Drive down costs and increase profit margins • Reduce labor costs compared to hiring, training, and retaining a full time employee • Only engage freelance employees when necessary • Allows for balancing in- house staff and overhead expenses Example: Unilever outsourced development for its ERP system and saved millions on operational activities Exposure to new ideas and talent, particularly in non-core competencies • Boost innovation and creativity • Access to expert and specialized providers • Increase skill level if local talent pool lacking • Improve access to intellectual capital Example: P&G outsourced non-core R&D function; boosted innovation productivity and stayed ahead of the product curve in rapidly changing markets Get work done faster and more efficiently • Leverage external teams to overcome resource constraints • Shorten time to hire and initiate task • Enhance service quality with specialist resources • Speed implementation • Reduce internal key person risk • Systems optimization Example: Array Biopharma outsourced database administration operations to Datavail and improved the quality of their database administration and coverage, while saving 25-50% of costs Outsource non-core competencies to improve work product and enable focus on core business functions • Outsource non-core or weak areas to specialized professionals • Focus on core allows for improved operations Example: Acer chose to focus on branding and marketing and outsource remaining operations (e.g., manufacturing), leading to faster-growing sales and gains in market share
  5. 5. 5 HighSkill Outsourced Talent Market Landscape Outsourced Delivery On-Demand Delivery Business Services – Outsourcing the Office Health RetailEducation* Care* Pets* Personal* Transport.* Tasks* Food / Drink*In-Home* LowSkill Note: this landscape is intended to be a representative sampling and is not an exhaustive list. Red box denotes Catalyst interest areas. *Typically B2C business models. Please direct inquiries to briehan@catalyst.com.
  6. 6. 6 Outsourcing the Office Applications • Fill specific skill / resource gap in a function, industry or geography on an interim or project basis • For startups: provides access to seasoned C-level talent they otherwise could not yet afford • General consulting services across functional areas • Often used for strategy, due diligence, operations, transformation and project management • Customer service, tech and sales support drives customer retention through communication channels (email, voice, real-time chat, SMS, etc.) • Quality service valued as CX expectations rise • Accounting, tax preparation, legal assistance • SMBs historically outsourced niche financial functions; today, both SMBs and enterprise businesses are outsourcing core accounting / finance functions • Content creation, demand generation, lead qualification, sales of customer segments or product/service lines • Allows companies to grow sales and marketing faster than current internal resources permit • Non-core tasks such as administration and support, data entry, or research • Among the first to be outsourced and present opportunities for cost reduction and labor arbitrage • Payroll, benefits admin., staffing, recruiting and education / training • Improve compliance and increase access to external expertise; SMBs also outsource HR to provide employees with better benefits (i.e., through a PEO) • Discrete tasks (i.e., trademark registration) and other more complex legal review • Businesses (especially SMBs) often lack their own internal legal resources and benefit from external expertise • Basic internal IT support, software development, or mission-critical managed services for infrastructure • IT and development skills account for 55% of top 20 fastest-growing skills in Upwork’s Skills Index (Q3 2016) Sales & Marketing C-Level Finance Technology Back OfficeLegal HR Customer Service General
  7. 7. 7 Outsourcing the Office Sales & Marketing C-Level Finance Technology Back OfficeLegal Note: this landscape is intended to be a representative sampling and is not an exhaustive list. Please direct inquiries to briehan@catalyst.com. HR Customer Service General Gigster
  8. 8. Please send any inquires to briehan@catalyst.com www.catalyst.com
  • AbhishekShankar8

    May. 28, 2020
  • BriehanBurke

    Jun. 28, 2017
  • MiaHegazy

    Jun. 27, 2017

Catalyst believes that Outsourcing the Office presents a compelling market opportunity and welcomes discussion with growth-stage business services outsourcing companies.

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