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Home > The Rise of the Indirect Workforce
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Recently, Netherlands-based online food ordering and delivery service Just Eat made a decision that will change the status of its UK workforce. It will move from permanently employing its 1,700 couriers and 170 operational staff to implementing a self-employed or contractor model. Why? Because it believes it is at a competetive disadvantage compared to its rivals Deliveroo and Uber that already pursue take the ‘gig worker’ approach, says Roger Clements.
The ‘gig economy’ grew in the UK from 4.7 million in 2019 to an estimated 7.25 million based on UK Government figures. To a certain extent this has been fuelled by online delivery businesses like Just Eat, but also by virtual noticeboards Fiverr, Upwork and TaskRabbit. Or are these gig-based disruptors simply part of a wider trend reflecting the shift of businesses away from permanent staff towards an ‘indirect workforce’.
Since October 2022, the monthly Report on Jobs survey by the Recruitment and Employment Confederation (REC) and KPMG has shown permanent placements falling as temporary rise. Although senior labour market economist at the CIPD, Jon Boys, believes it’s too early to call this a trend, what’s intriguing is that he did point out that it goes against the norm, saying: “Under the current economic conditions, where demand for staff is high but availability is low, we tend to see more permanent placements.”
If this cannot be confirmed as an official trend, quite yet at least, there’s no denying there’s an undercurrent suggesting the rise of the indirect workforce could be approaching. And it’s something workers themselves foresee. Although PwC’s Workforce of the Future Study found that globally, job security and long-term service are the most important to people, with 30 percent valuing it overanything else, nearly a quarter also wanted flexibility and being in control of the work they do and when. When it comes to relationships between workers and employers, 60 percent of people globally agree that “few people will have stable, long-term employment in the future”. Meanwhile, 47 percent believe we’ll be free agents.
So, what would a shift towards an indirect workforce mean for businesses? Should they rethink their approach to permanent versus temporary? First, it would provide more flexibility and agility, which as we’ve found recently can prove vital in times of sudden change or volatility, both of which increasingly seem to be a sign of the current times. Changing workforce composition towards a 50:50 permanent/temporary split would also enable building a talent base around essential tasks that need doing at a specific time – and ensuring they are carried out as successfully as possible.
Shifting from focusing their recruitment strategy on permanent staff would also allow employers to develop an ecosystem of talent. Creating a workforce network in this way enables connecting with people whose skills and experience add critical value to the business at key moments without the need for them to work with the company all the time. Employers could potentially tap into a global talent pool, widening choice and increasing the chance of getting people best suited to the job in hand and who are more likely to be the right fit.
But what would this new indirect workforce mean in terms of loyalty, productivity and performance. How would that compare to a largely permanent employee base? In terms of how temporary talent would perform, they would have been chosen for their expertise in specific skills so should carry out the tasks they are brought in to do more effectively than a wider more generalist permanent team. What’s more, the freelance mentality of only being as good as your last job should help guarantee commitment and dedication to the cause.
One area that would demand a shift in thinking is compliance. Currently, organisations are quite rightly being increasingly rigorous in carrying out background checks on permanent candidates. However, there’s a tendency to devolve the clearance and pre-employment screening of their temporary staff to suppliers. In the new world of the indirect workforce, this would have to change, or companies would be hugely ramping up the risk of facing claims against them that could result in crippling legal action, among other issues.
The move to hybrid working is significantly changing the workforce in terms of employees’ relationships with each other. The pull of the office as a source of camaraderie and belonging is being eroded. This is making people more self-contained, self-motivated and self-reliant. All of this makes the step to being a temporary employee easier, while the flexibility, control and variety it offers increases the attraction. Could the signs pointing to the future growth of the indirect workforce be any stronger?