The Rise of Contingent Workers in Silicon Valley Requires a Change in Mindset

Rob Biederman

Silicon Valley behemoths, including Google, Amazon, Uber, and Facebook, have long employed thousands of contingent knowledge workers, who perform everything from product management to engineering. Not too long ago, Google announced that contract workers outnumbered full-time internal employees for the first time.

An estimated 19,000–39,000 contractors work directly with high-tech firms in Silicon Valley. On the Catalant platform, there are roughly 2,500 elite business experts within 50 miles of San Jose, CA. We see a ton of demand for folks with specialized skills and expertise in business strategy, project and product management, and strategy planning in IT, computer software, and management consulting.

The Silicon Valley contract workforce has a strong desire for flexibility: choosing how, when, where, and for whom they work. Of course, the rise of the gig economy is not exclusive to Silicon Valley. It’s well known that more than 57 million Americans are working as freelancers.

If this is the mode of working that best-in-class workers have chosen, then business leaders have no choice but to dramatically change how they go about accessing talent, and, consequently, rethink how they treat their employees. This is especially true for cutting-edge tech companies who need subject-matter experts to help drive innovation.

Change Has Consequences, Businesses Need an Agile Workforce

The need for agility — on a meta level — flows partially from changes in labor demographics and people’s evolving expectations of work. But business leaders are also under serious pressure to do more with less. Companies are in desperate need of new, innovative ways to operate with efficiency while locating specialized, in-demand skills — and do so in a very tight labor market.

Most companies of any scale today are facing unprecedented disruption. Confronted with unpredictable timelines and limited bandwidth, business leaders are facing mountains of backlogged work — and the stacks just keep growing.

Exacerbating this challenge is the increased uncertainty in business strategy: hiring leaders don’t necessarily know which skills will be in demand in the next few years. This makes it difficult to plan ahead and develop a candidate pipeline in tight hiring markets. This challenge is particularly acute for critical roles: a recent survey showed that critical roles frequently remain unfilled for more than 90 days. Organizations are suffering significant lost productivity due to these talent gaps.

The rise of the independent workforce has created new possibilities for accessing key skills outside of an organization’s four walls. Embracing the agile workforce is a critical differentiator for companies battling competitors for ever-shrinking profit pools, lean expectations, and growing demands for specialized skills.

Disruption Requires a Response

Most executives would agree that they need to respond to all of the changes. You can’t just sit back and watch your business crumble, can you? The truth is that C-Suite leaders who continue with the status quo will be quickly left behind.

Executives need to respond by changing the way they think about their entire workforce, including their contract workers. Those who embrace this future and develop an on-demand, project-based mindset in managing a contingent workforce are well positioned to innovate faster and adapt more smoothly and quickly to changing market conditions. And, more important, they gain access to talent with the most in-demand skills.

Smart business leaders know they need to work with agility. One survey shows that 84 percent of executives believe that great talent and enhanced capabilities sit outside their companies’ walls; another survey showed that business agility drivers are extremely important to 79 percent of senior leaders. But they’re also facing material challenges in training, planning, budgeting, and technology.

It makes sense that Silicon Valley-based businesses are reacting to all of these changes first, learning to operate with agility, and leveraging an agile workforce. After all, we’re talking about some of the most aggressive, forward-thinking executives, who stay on top of the most critical, evolving demands and expectations. They are acutely aware of the implications of not making changes now.

Catalant works with quite a few of these savvy northern California-based clients, some of whom participated in our recent Reimagining Work Summit, including GE’s Chief Innovation Officer and CEO of Business Innovations Sue Siegel. She joined us from California to opine on the need for companies to invest in transformational technologies to both access external talent and also better understand their internal talent.

Agile Requires the Right Mindset

Executives know they need to make a change, but some don’t necessarily have the correct mentality about leveraging flexible talent. When rethinking how they resource critical initiatives, business leaders need to consider how they treat their employees — both internally and externally.

External workers need to take part in a strong onboarding procedure and have a solid understanding of the company’s missions and values. Robust communication and thoughtful contract structures are key ingredients. Contract workers should feel like they are a part of the family. If they work remotely, they should be invited into the office every so often to meet everyone in person and participate in company events.

For companies concerned with utilizing external contingent workers, they should consider leveraging advanced technology to track their internal employees’ skills. If they gain better visibility into the skills and expertise they have in-house and still learn that they truly do not have an internal person with the right expertise for a project, then they can consider hiring a highly skilled independent professional to work on a project basis.

Faced with all the disruption and changing market demands, executives have no choice but to rethink the role of talent and how their teams get critical work done. Embracing the contingent workforce and transitioning to an agile operating model are key steps to success. The good news is that business leaders, for the first time, have advanced technologies at their disposal to help them face this news. They would be remiss not to take advantage of the opportunity to stay ahead of the curve and beat their competition.

Want to talk more about the agile workforce? Contact Catalant today.