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Future challenge? Managing a Virtual, Freelance Workforce

May 3, 2011

There are many challenges that organizations face in managing their workforce. Whether you’re automating processes to streamline productivity, tracking labor productivity and output, analyzing payroll and labor costs or mitigating compliance risk, next generation workforce management systems leverage integrated applications and processes to address many of today’s business issues.

While off-shoring and outsourcing initiatives have added complexity to these challenges, there are also challenges when contract employees, temporary workers and remote employees are added to the mix. And now, a new variable seems to be emerging that could evolve into yet another workforce management issue… The Micro Workforce.

Bloomberg BusinessWeek recently published a Special Report entitled The CEO Guide to The Micro Workforce. The articles highlight a new surge in companies hiring “virtual” freelance workers for small projects or tasks. Some may be very specialized, others more general. Contact centers have used this model for years, as IP phones and intelligent call routing enabled agents to login from home and work more flexible hours.

“Hundreds of thousands of professionals, including Web developers, software programmers, graphic designers, writers, customer service reps, and virtual assistants, offer services on oDesk. Each month, companies post about $65 million worth of jobs on the site, and the average job size is about $4,000, with an hourly rate of $8.64”

From a workforce management perspective, companies are benefiting from cutting costs by hiring these micro workers who are paid by task. But does this model create bigger challenges when it comes to tracking, analyzing and managing these labor costs? Unlike hourly workers, micro workers may or may not have their actual work time tracked. The may only be paid upon task or project completion. Does this become an operating expense? Part of COGS? Do these expenses impact a product P&L? In some cases, these may be treated with more of a professional project tracking approach.

While this approach has not yet evolved into a generally utilized strategy, there are currently multiple job “marketplaces” and portals for freelance labor to take advantage of.

Does your company leverage a micro workforce model? If so, is it working? Are the jobs performed offshore? How are projects tracked and how is labor productivity measured?

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