How SoWs Build Organizational Agility in Uncertain Times
The traditional work standard of “9 to 5” in an office setting is becoming a thing of the past due to the rise of the gig economy, which has seen exponential global growth since the beginning of the pandemic. Today, more than 150 million workers are engaged as gig workers – or independent contractors – in North America and Western Europe, with expectations of this number to double by 2023.1
For organizations managing this expanding contingent workforce, a Statement of Work (SoW) is a vital framework to help provide value, shift risks and control costs. Here’s how a SoW works and why it’s crucial to help businesses thrive in a post-COVID-19 world:
Access Skills, Pay for Tangible Outcomes
Over the past year, the global economy has seen the biggest digital transformation and reallocation of skills since World War II, shifting from aviation and hospitality to driving, retail, healthcare, IT and cybersecurity at an unprecedented scale.2 As companies bring in gig workers with specialized skills, more are using Statements of Work (SoW), binding legal contracts that outline work to be completed in the form of deliverables and milestones, with clearly set timelines and their respective payment schedules and parameters.
In a growing hybrid workplace, accessing the skills you need instantly while driving compliance and cost savings and mitigating risk is vital. SoWs allow organizations to focus on paying for tangible outcomes, removing the spotlight on an individual’s skillsets. That means skills can be accessed quickly with more flexibility, which increases overall efficiency and reduces costs. With these benefits, it’s no surprise that companies have increased spending annually with the US investing at least 60% of its budget on contingent labor and other countries increasing service procurement spend at a slower pace. 3
“The ‘job for life’ is dead. You don’t hire for people anymore; you hire for services and outcomes and a Statement of Work provides that flexibility and that agility,” says Kayleigh Kuptz, co-founder and COO at Deployed, a UK-based Statement of Work authoring platform. According to Kuptz, companies that develop and implement SoWs can identify exactly what work needs to be done and look for who can do the work most efficiently. This makes more sense as needs shift from permanent staff members with job descriptions to flexible, service-based, output-based work.
Emphasize Collaboration, Not Location
Gone are the days when companies focus on one individual to deliver work. It’s now the age of collaboration in which a variety of specialized experts work together to help bridge the gap between the skills you have and the ones you are lacking. Equally as important, the growth of the remote workplace has removed physical location as a barrier to finding the best talent. But with workers often spread among multiple regions with different managers and budget categories, there’s potential for confusion and disorganization. SoWs can help teams work together seamlessly to avoid scope creep, improve communication and ensure accountability every step of the way.
“Success in leadership and business begins with clarity,” says David Dye, a leadership and employee engagement consultant at Trailblaze Inc., a consulting firm in Denver. He notes that the clear roles, outcomes, and expectations outlined in SoWs help everyone avoid misunderstanding and ensure that everyone knows what to expect from the employer, as well as what is expected from them.4
Reduce Risk, Avoid Compliance Issues
When the pandemic turned the world upside down in early 2020, it also turned nearly every business – large and small – on its head. However, many organizations were able to get creative and adapt quicker than others. Financial services company Achiko, was in the midst of expanding into buy now, pay later services on its mobile payment app when COVID-19 hit and disrupted the market and international travel. That’s when the company pivoted its technology to launch Teman Sehat, an app which offers incentives for people to get tested for COVID-19 and lets them make payments and keep records to test results used for workplace check-ins.5 The adoption of telehealth has exploded from 11 percent of consumers using it in 2019 to 46 percent in April 2020.6
Companies that have successfully made these massive shifts depended significantly on their ability to quickly access new teams with specialized capabilities. Having an SoW in place enabled them to not only focus on the outcome but also to minimize the risk of misclassifications of employees and to avoid mistakes with benefit plan eligibility and compensation.
An SoW also helps reduce large overhead costs and exposure to non-compliance with employment laws or tax regulations. For example, SoW’s can help HR and procurement professionals more effectively manage the private sector rollout of IR35, the UK’s anti-avoidance tax legislation designed to tax 'disguised' employment at a rate similar to employment, As the law adds further requirements to assess the status of any contingent labor hired, a clearly defined SoW can ensure that the responsibility for determining IR35 status and ensuring the appropriate amount of tax is deducted lies with the outsourced agency vs end-hirers.7
Choose the Right MSP
Today, one in four SoW projects completed by suppliers are not completed on time or on budget.8 This usually happens when projects are not well-defined or when there’s limited visibility of SoW activity in the organization and limited data surrounding cost savings. That’s why it’s important to work with a managed service provider like TAPFIN that understands how to optimize buying channels, manage project scopes and provide actionable insights and drive quality through advanced reporting during the entire SoW process.
Refer to this Transform Talent podcast and contact SOW@TAPFIN.com to learn how Talent Solutions’ TAPFIN’s SoW management can bring value and results to your organization.
3 Everest Group – Tackling the Global Pandemic: Contingent Workforce Management (CWM) State of the Market Report 201
8 SAP Fieldglass: “Services procurement Insights 2019: The Big Reveal’