If you’ve been reading this blog for a while, or if you’re even remotely familiar with what we do as a business*, you’ll be aware that we’re always keeping an eye on industry trends or shifts that are happening in today’s workplace with particular focus on contingent workers.
Historically, and anecdotally, the industry most associated with contingent workers is tech. Yet increasingly, we’re seeing more & more industries taking advantage of the benefits contingent workers can present. Industries like energy & resources, consulting, FMCG, and critically, finance.
And its finance that seem to have experienced the biggest shift of late. That’s true here in Australia, but also in other regions across the globe like the US, the UK and Asia. Some of the latest data out of the US (from PwC), put the finance industry at around 30-40% contingent workforce composition.
The benefits of engaging contingent workers are very real for financial organisations:
- access to niche skills for project work or milestone deliverables
- the ability to upscale & downscale based on seasonality or shifts in demand
- the ability to reduce headcount & permanent costs
- access to highly specific technical knowledge & experience
- increase the speed with which projects are delivered
- abbility to attract & satisfy Millennials’ needs for innovation, diversity & flexibility in their working life, stemming the outflow of these workers from the financial services industry, and better managing talent succession
- ability to maintain BAU whilst achieving significant project advancement (like new technology implementation, for example)
Having said all this, the risks of engaging contingent workers is very real. Risks that are frequently legislative, but also internal & operational (where the latter weighs heavily into affecting the former). And for the finance industry, it’s particularly poignant. Some of these risks include:
- the fact that most organisations in the finance industry have miniscule visibility of their contingent workforce
- without adequate knowledge or scrutiny of their contingent worker base, they’re entrusting critical IP, secure information & knowledge, into the hands of the unknown
- legal and regulatory headaches abound with little or poor governance of external worker engagement & management
- costs blow out: a poor handle on numbers, output, ROI, or real contingent workforce data leads to unnecessary labour costs
- productivity risks: operational and output limitations when there’s a poor management structure in place for external talent
The reason the industry is so hell bent on engaging contingent workers is pretty clear:
- there’s a declining pool of permanent talent in key skills sought by the finance industry, such as finance-industry-specific-skills in IT, project management & key areas of knowledge (for example, commercial underwriting)
- financial institutions have always tried to do more with less. With budgetary aims of containing fixed costs, they’re increasingly turning to contingent workers to further achieve these goals
- the concept of ‘offshoring’ is a great option for a limited scope of outputs in financial services, such as call centre, admin, and research. Hence, avoiding headcount with contingent labour is a great alternative for onshore deliverables
- financial services worker preferences are leaning more to flexibility, lifestyle, and ‘choice’ in one’s career. This means attracting the right permanent talent is increasingly difficult
- the ability to scale up & down based on business demand. The often expensive cost of very specialist skills, can be mitigated with contingent workers – who are ‘cheaper’ given their non-permanent status
- big financial institutions are sourcing talent short-term, that have traditionally, been difficult to land
And so what are the numbers? This is where things get interesting.
Recently Accenture estimated that between 20% & 33% of US workers were contingent. Oxford Economics, in their Workforce 2020 survey, found that 83% of executives said they’re increasing usage of contingent workers, on an ongoing basis. It’s no surprise then that the estimation of contingent outstripping permanent workers, is on the cards. And finance is sitting at the top of the pile (along with retail) at 81% of organisations enlisting the services of contingents. Today.
There’s also key macro trends where shifts in labour patterns are happening, for the banking & financial services industry:
- technology is having a massive impact. Automation is driving efficiency, and reducing task-based roles across:
- retail & business banking
- investment banking
- operations & IT
- multiple head office functions
- branch banking is rapidly declining in the rise of online banking (how frequently do you venture into a bank these days?)
- Millennials**, the industry’s future workers, and the ‘entitled generation’ are rejecting traditional banking careers in search of:
- better pay
- better career opportunities
- greater flexibility
- more entrepreneurial opportunities
- more tech-driven opportunities
EY recently came out with some eye-popping stats on the ‘banker of the future’, showing massive shifts that need to be made BY THE INDUSTRY if they’re going to be able to weather the changing face of the workforce. These changes include:
- far greater diversity of thought & approach to talent: banks with a higher percentage of women on the board are outperforming their male-dominated counterparts
- a more innovative approach to delivering profitable outcomes via the engagement of talent, technology and robotics
- demonstration of a better understanding of the next generation of workers
- acceptance, embrace & adaptability to technology
- driving a more collaborative workforce, not silos
- walking the talk. Recently, in the US, only two banks were ranked in the top 50 most attractive global employers for IT & engineering grads
So in summary… if the industry can embrace change it will be well set to take advantage of the shifts in labour trends, the rise in workforce need for flexibility, diversity & opportunity, whilst all the while maintaining customer focus (and satisfaction), profitability and growth. That’s no mean feat.
*we manage the non-permanent workers for some of Australia & New Zealand’s biggest corporates.
**Millennials are expected to constitute 72% of the global workforce by 2025.
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