Technology has made it easier than ever for employees to work remotely. This article has gathered comments from experts and CEOs about why more and more companies are using contract workers.

Technology has made working remotely easier than ever. And many companies are taking advantage of this — not just by having workers telecommute, but by outsourcing certain jobs to contract workers. The movement towards contract work — think platforms like Amazon Mechanical Turk, ClickWorkers, CrowdFlower — is part of a larger trend away from regular employment and towards piecing together tasks.

Gartner analyst Diane Morello has been working with companies for years to help them keep up with workforce trends. The movement towards contract work “reminds me of when my immigrant grandparents came to work in New York City and did piece work,” she said.

While the technology is certainly there, she thinks that the success of piecework hinges on the “basics of organisational and institutional competence.”

“It’s about whether or not companies can make this work,” said Morello. “That’s the bigger challenge out there.”
Morello thinks that companies need to catch up with the idea that they need to outsource work. She speaks to 10-12,000 companies around the world, employing about 250,000 people. Among all those companies, she sees “a very small fraction understanding that they can start to break down work into increasingly smaller components and break it apart to some kind of massively parallel processing mode,” she said. “They can have bits and pieces done and then reassemble that onsite.”

There is a trend rapidly moving towards the selling off and outsourcing of utility services.

Most companies she talks to still think of this as outsourcing. “They’re not really advancing their models and thinking around how work is getting done, or more important how technology in this digital technology platform enables them to reach hundreds of people to get work done in smaller chunks in a faster way,” stated Craig Ashmole, founding Director of London based IT Consulting CCServe. “Having spent many years working across the Outsource market and more recently helping business transition elements of their business into better chunks of doing the work, It’s refreshing to see these trends start to move.”

The big difference, is that it’s a shift towards work as a transaction versus a relationship. Not only do business want work done in small pieces, but I see “a consuming audience who wants to do that. Businesses are going back to their core roots by commoditising non-essential utility services.”

“The businesses we talk to who are struggling to find the right talent and the right people say they want the relationship,” he said. “But when you delve into it, what they’re looking for are people who can bring their skills to deliver rapid transition and this comes from experienced Interim management.”

Business owners agree.

“I absolutely see larger companies outsourcing things that are non-core,” said David Chang, entrepreneur-in-residence at Harvard Business School, and previous co-founder of SnapMyLife.

Chang used Trip Advisor as an example, where “the sheer volume of work” created a huge demand for contract work. “At TripAdvisor, we had classifiers who helped with that,” said Chang.

He also sees a distinction between core and non-core functions as important. In core tasks, “the company wants to build up a competency or muscle around a key area,” said Chang. “For Apple, hardware/software is core, so they don’t outsource it,” he said, “while at Microsoft, they happily let others deal with hardware (e.g. Dell, HP).”

It’s all part of meeting a huge demand to complete tasks.

“There are thousands and thousands of companies that are all feverishly looking around for people to do work in the context of information and technology and web design and the like,” said Morello. “This is a channel to get some work done.”

Businesses, Morello believes, will “splinter into two different directions. One will be those businesses that have extraordinary cultures, core sets of values, and taken advantage of all the aspects and ways that they can piece together someone’s expertise in the work,” she said.

The other group “will continue to work with a single pipeline that tends to go through HR. It’s probably not going to operate at the speed that the modern business community is operating at.”

Digital technology, she said, will “blow the employment model apart. It will send people in one direction where there are a lot of users of digital technology to find the expertise they need anywhere on the planet.”

There’s a risk, Morello said, for not taking this seriously.
“You are either leaders or you are laggers,” she said. “Nobody can be in the middle.”

The 4 big takeaways

1. Platforms like Amazon Mechanical Turk, CrowdFlower, and ClickWorkers take advantage of a remote labour force to get tasks completed.
2. Outsourcing small tasks is part of a bigger trend that shifts business models from “relationship” to “transaction,” according to Gartner analyst.
3. Separating core and non-core work is essential to managing flow of work—and many companies are becoming more efficient by farming out non-core tasks.
4. Business conglomerates are transitioning their utility services to Outsource firms (for efficiency and cost reductions) and keeping their core business in-house.