Direct Source and Engage Highly Skilled Independent Talent with Controlled Cost and Risk

Copyright © 2014 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 1

Direct Source and Engage Highly Skilled Independent Talent with Controlled Cost and Risk

July 30, 2015

Today’s Speakers

Dennis Kanegaye Chief Client Officer MBO Partners

Dustin Talley Director of Solution Design MBO Partners

Andrew Karpie Research Analyst: Services and Labor Procurement Spend Matters

Jason Busch Founder & Managing Director Spend Matters

Who We Are and What We Do

Parent Company – Azul Partners •  Founded 2004, headquarter in Chicago •  Spend Matters (www.spendmatters.com),

MetalMiner (www.metalminer.com) •  A blend of media and analyst insight

focusing on procurement • Our sites are collectively called

Spend Matters Network™ •  150+ new articles published weekly

across the sites • Over 130,000 unique visitors/month • Our combined traffic makes us one of the

largest B2B web publishers in the US • Diverse audience: procurement, supply

chain, manufacturers, service companies, retailers...

MBO Partners Background

•  Compliance, engagement, and payment solutions for internally sourced ICs

•  First and largest “Independent Contractor Engagement Specialist”

•  Strong F500 relationships with 98% enterprise client retention

4

KEY CREDENTIALS

•  Largest “Agency of Record” service provider*

•  Most experienced* •  Shortest on-boarding

time* •  Highest % of F500

accounts* •  GSA schedule since 2003

* Source: Staffing Industry Analysts, “2014 Payrolling and IC Evaluation / Compliance Landscape Report”

Industry Trends: It’s the Era of “Going Direct”

5

BANKING SHOPPING ENTERTAINMENT

TRAVEL MUSIC

All product and company logos are property of their respective owners.

SOCIETAL TRENDS Unprecedented independent

workforce growth

REGULATORY TRENDS Increase in compliance laws

and enforcement

BUSINESS TRENDS Accelerating use of independent talent

TECHNOLOGY TRENDS Direct sourcing through

virtual talent pools

Trends Point to a “Perfect Storm”

Est. 40 million independent workers in 2019

Source: MBO Partners “2015 State of Independence” report

U.S. Independent Workforce: Last Five Years

7

$

U.S. Independent Workforce: Other Key Metrics

Gen Y 28%

Gen X 29%

Boomers 30%

Seniors 14%

INDEPENDENT WORKERS BY AGE, 2014

Source: MBO Partners “2015 State of Independence” and “2014 State of Independence” reports

Macro Industry Trends

•  External talent –  Half or more of workforce for over 1/4 of organizations –  Contractors, outsourced service providers, temp staff, freelancers

•  Shift from employees to external resources set to accelerate over next five years (1)

•  “Independent contractor usage within enterprises will continue to grow exponentially as companies adapt to the changing workforce, and enjoy the benefits of a variable labor” (2)

“Jump ahead to the year 2020. Half the people you rely on don't actually work for you and that's a good thing—if you're ready.” (3)

(1) Source: Chartered Global Management Accountants (CGMA), ‘New Ways of Working ’ 2014 (2) Forbes, “What The Rise Of The Freelance Economy Really Means For Businesses.” 2014 (3) Source: Deloitte, “The Open Talent Economy,” 2013 9

10

Accelerating Use of Independent Talent

US GDP in 2014 Source: MBO Partners “State of Independence in America” report, October 2014

Independents Contribute to the Economy

11

Global GDP in 2025 2.7 Source: McKinsey Global Institute “Connecting talent with opportunity in the digital age” report, June 2015

Digital Platforms Make “Going Direct” Possible

•  Platforms have been entering the world of work

MSP

VMS

Tier 1

Tier 1

Tier 1

Tier 2

Tier 2

Tier 2

Large Enterprises

Small Businesses

Supply Base

Existing Contingent Workforce Supply Chain

10 Years Ago

CW Supply Chain for Enterprises: Enabler or Constraint?

Tier 1

Tier 1

Tier 1

Tier 2

Tier 2

Tier 2

Large Enterprises

Small Businesses


5 Years Ago

Work Intermediation Platform/Ecosystem

Supply Base

MSP

VMS

Emergence of Digitized Work Intermediation Platforms

VMS

Tier 1

Tier 1

Tier 1

Tier 2

Tier 2

Tier 2

Large Enterprises

Small Businesses


2-3 Years Ago

Supply Base

MSP

Increasing Digital Channels to Independent Workers

VMS

Tier 1

Tier 1

Tier 1

Tier 2

Tier 2

Tier 2

Large Enterprises

Small Businesses


1-2 Years Ago

Supply Base

MSP

FMS

FMS-types of solutions tend to be different in many ways including origin, focus, sourcing, compliance, etc.

Emergence of Freelancer Management Systems (FMS)

Recent Regulatory Activity

17

New Hampshire and Massachusetts

sign MOU

Memorandum of Understanding with 11 states,

IRS, DOL

2012 federal budget includes $23M for

“Misclassification

Initiative”

California Senate Bill 459 goes into effect

Solicitor of Labor indicates that misclassified labor is

one of agency’s top priorities

DOL FLSA suits reach all-time high in 2012

Payroll Fraud Prevention Act of 2013

introduced in U.S. Senate

Iowa signs MOU

New York signs MOU

IRS re-starts Questionable Employment Tax Practices

program

Affordable Care Act goes into effect

Payroll Fraud Prevention Act of 2014 introduced in Congress

Executive order adds compliance requirements for federal contractors

Alabama signs MOU

Wyoming signs MOU

Florida signs MOU

Louisiana signs MOU

Wisconsin signs MOU

California AB-1897 passed

2016 Fed Budget focuses on IC

misclassification in “fissured workplace”

NY JETF Audit: 12,000 audits 133K misclassified workers

Rhode Island signs MOU

Kentucky signs MOU (22nd state)

DOL offers new classification

guidance

SOW and STAFF AUG EMPLOYEE / EMPLOYER

RELATIONSHIP

IRS

DO

L

FR

EE

LA

NC

ER

S

SM

AL

L S

VC

.

PR

OV

IDE

RS

COMMON-LAW TEST ECONOMIC REALITIES TEST

A-B-C TEST

The Compliance Tug-of-War

“Managed Talent Network” with embedded compliance and engagement solution

MSPs / staffing firms

Engagement Risk

Current State: Managers sourcing and engaging contractors

Freelancer marketplaces

Low High

Serv

ice C

ompl

exity

High

(P

rojec

ts)

Low

(Tas

ks)

IC / SSP Sourcing and Engagement Landscape

20

Safe, cost-effective solutions that make it easy to

source, curate, and engage

independent talent

“Next Practice”: Managed Talent Network

21

65% of companies cite the creation

of a visible talent pool as the largest

contractor workforce-related issue.

Source: PageUp People Survey, 2014

The Need for Virtual Talent Pools

22

Sourcing Supported by Full-Service Model

ACCOUNT MGMT. • Reporting •  Education

• Continuous improvement

CLIENT SOURCING NEED

•  Self-identify • Negotiate

•  Select

ASSESS •  Technology-

enabled • High-touch •  VAST

ENGAGE & PAY • MBO Exec • MBO Sub

• MBO Staff

SUPPORT • Dedicated

support • Relationship-

driven

MBO CONNECT™

Talent Pool Sources

24

Talent Market Network

Active contractors

Provider community

Recruiting efforts

Existing payrollers

Marketplaces/ networks

Small vendors

Full-time alumni

Solution: Share the upcoming project with your talent pool in an RFI format.

Challenge: A Business Unit has a large upcoming need but is not ready for specific candidates to apply. But pre-project awareness within the talent community may enable applicants to be ready when the project nears.

The BU can vet interested workers earlier by positioning their proposed solution and value. Workers can be placed on a “virtual bench” and assigned to project teams when the project

commences.

VALUE:

Use Case: Large Upcoming Project

25

Challenge: Reporting shows a high level of contractor “re-use” across departments and managers, with most billing at the initial recruiting mark-ups. The client lacks ability to schedule and engage alumni workers at a reasonable cost.

Solution: Create groups by skillset in the talent pool. Invite these contractors to join your talent pool for future opportunities.

By strictly enforcing/modifying talent ownership clauses in supplier contracts, managers can compare previously engaged talent from all suppliers and re-engage

the best at lower payroll markups.

Use Case: Talent Ownership

26

VALUE:

Use Case: Dynamic Rates

27

Compare all talent quality and rate information to retain the best resources for the job. Use this information as leverage in driving down market rates of

preferred resources by up to 20%.

VALUE:

Challenge: The client has engaged 10+ contractors of the same discipline / expertise on different projects across the organization. This self-sourced talent is rarely shared with other managers, so the client does no know if it is consistently engaging the best talent at the best price.

Solution: Create groups of existing talent according to area of expertise. Broadcast opportunities to these groups and request “best and final pricing” from interested workers.

Sourcing + Engagement: Advantages

28

INCREASE TALENT QUALITY CONTROL USAGE EMPOWER USERS

CUT COSTS ENGAGE ICs SAFELY

Copyright © 2014 Azul Partners Inc. All rights reserved. Not for distribution. | www.spendmatters.com - spendmatters.co.uk - www.agmetalminer.com 30

Thank You!

Dennis Kanegaye [email protected]

Dustin Talley [email protected]

Andrew Karpie [email protected]

Jason Busch [email protected]

For contract workers Provides a pipeline of relevant project opportunities and creates a steady stream of assignments from their “clients of choice.”

For organizations Provides the ability, through independent talent access and engagement, to fast-track critical projects and initiatives not otherwise achievable without just-in-time access to resources.

Talent Pool Growth: Value for Both Sides

31

Direct Source and Engage Highly Skilled Independent Talent with Controlled Cost and Risk

Business

Transcript of Direct Source and Engage Highly Skilled Independent Talent with Controlled Cost and Risk