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December 7, 2018 | 5 Mins Read

Weighing Advantages and Obstacles of the Contingent Workforce Model

December 7, 2018 | 5 Mins Read

Weighing Advantages and Obstacles of the Contingent Workforce Model


By Sarah Nicastro, Creator, Future of Field Service

Few of my conversations with field service leaders over the past year haven’t touched on the immense struggle of recruiting and hiring field technicians. In all service verticals, but particularly those more mechanical in nature versus technical in nature, the lack of capable and willing labor is keeping people up at night. As such, some organizations are turning to a contingent workforce model to supplement their internal teams. Other companies that are introducing new service offerings are leveraging a contracted workforce as a way to push into new service areas.

When asked to summarize the biggest value proposition of leveraging a contingent workforce, Tom Paquin, Research Analyst, Service Management at Aberdeen says, “In a sentence: Contingent labor  helps firms mitigate labor shortages and quickly enter new service markets. For that to work, of course, it needs to be coupled with the appropriate technologies and systems of oversight.”

According to Aberdeen’s latest research, there has been a substantial leap in the use of contingent workers by service organizations over the last few years. “Our most recent study put the current share of overall contracted technicians at over 25 percent,” says Paquin. “We can track a few different reasons why this is happening. One major contributor is the fact that technician turnover continues to rise. Aberdeen’s recent study has shown an average turnover rate of 32 percent, and what comes along with it is a dramatic loss of technical know-how, on-the-job experience, and understanding of the industry landscape. Many firms are struggling to ramp up new technicians quickly enough, so the logical choice is to turn to independent entities who understand the space, and the challenges, though are not necessarily experts on the product.”

Paquin notes that an area of particular interest in contracted labor is among warranty services and OEMs. “These are often firms with no previous formal service organization who are looking for ways to build one. Contingent employees, when leveraged correctly, provide a fast-track to servitization. More warranty firms and OEMs are getting to the point where they realize that they need to either break into or start having greater oversight into service,” he says. “Thirty-seven percent of firms in those two categories have indicated that they’re looking to create new as-a-service options for customers this year. Which makes sense—rather than have an independent entity servicing a customer’s boiler, for example, you manage a contractor network and can then send that same person out. They’re certified by you, and you collect a little extra revenue. You go from having zero oversight into how your products are being serviced to owning the entire experience, with minimal ramp-up. What’s not to like? The hardest part is courting the contractor network.

 While the appeal of contingent workers to organizations that don’t already manage service in-house is obvious, the use of contracted labor can be a harder sell for organizations that have traditionally managed all service in-house. Some of this hesitancy may simply be fear of change, but Paquin points out certain scenarios in which caution is suggested. “Any organization with delicate proprietary technology would do best to ramp up their team in-house, as there are naturally challenges involved while working with contractors on specific, complex technologies,” he says. “Cable companies are the most obvious example, though a small few do have contracted labor. The question there is—do you want a contractor servicing your equipment, when your equipment requires extensive back-end access to your systems and you know that their next job might be down the street, servicing equipment for your competitor? Beyond that, any industry with strict environmental, health, and safety regulations have much higher barriers to entry for deploying a contingent workforce.”

How Can Technology Ease Contingent Labor Concerns?

For organizations that have historically handled all service in-house and are uncomfortable with the idea of contracted workers, researching technologies that enable greater visibility and control is recommended. “The big question is: How can you control the quality of your service engagements with people that you don’t directly employ?” says Paquin. “Addressing that problem is part of the reason contingent employee adoption is on the rise today. That control challenge is mitigated by the slew of field service management technologies designed to ‘connect the dots’ and provide a seamless relationship between the firm, internal techs, and contracted technicians. In fact, firms with higher-than-average percentages of contingent employees see much higher rates of year-over-year improvement in time from ticket to invoice, overall technician efficiency, and service contract renewals. Businesses move slowly, especially when they’re entrenched in a traditional engagement model, but when you’re ready to make the adjustment, there are a great deal of safety nets in place, and the ROI is tangible.

 So, what technologies play the biggest role in the successful utilization of contingent labor? “There are dozens and dozens of technologies that make the transition to a contingent workforce more effective, from unified parts management to augmented reality, but really there are three that loom largest: A robust, full-featured field service management solution, strong fleet management, and integration from third-party management utilities,” says Paquin. “If you’re considering contingent employees at all, you owe it to yourself to make sure that your field service technologies have the capabilities to support them, both in terms of built-in processes, as well as the ability to integrate effectively with other tools.”

Whether you’re an organization that is ready to embrace contracted labor or one that has a laundry list of concerns, it is important to recognize the evolving landscape of labor and to consider how continued changes will have to factor in to your labor strategy. “Set aside service for a moment and realize that, in any industry, more and more young people are going to work for themselves. Couple that with fewer technical programs and apprenticeships being offered and the sad truth remains: Today’s full-time technician shortages are not going to dissipate. Organizations are going to have to be more nimble with fewer employees, and contingent labor is proving itself to be an capable utility to help them do so,” concludes Paquin.