handsNearly four million college and university graduates are entering a new world of work. Some might say it is a job seeker’s market. The Bureau of Labor Statistics reported unemployment at 3.9 percent in April.

Maybe this is true for those with the right skills, but the definition of a job is changing, as a story I recently heard illustrates. A colleague’s son graduated several years ago. He has yet to take an in-house position with a company. He has carved out a niche as an independent contractor and is making a good living while choosing the experiences he wants.

Today, this is common. Many graduates do not want a “job for life.” They want experiences, flexibility, and the opportunity to chart their careers. Employers know and embrace this new reality. As revealed in the recent survey report from SAP Fieldglass in collaboration with Oxford Economics, “External Workforce Insights 2018: The Forces Reshaping How Work Gets Done,” business executives regularly tap non-payroll workers and service providers to meet business requirements and strategic goals. That external workforce accounts for roughly 44 percent of large and mid-sized business workforce spending.

This is a growing trend. Nearly all 800 senior executives (91 percent) at large and mid-sized companies who participated in the survey anticipate tapping the external workforce to source skills they believe will be in short supply in three years. Workers who gain training in artificial intelligence, machine learning, blockchain, automation, cloud, and the internet of things will have skills that many executives believe will still be hard to come by in three years.

That just begins to give you a glimpse of what one might arguably refer to as one of the most important business stories of our times. The world of work is being reimagined, giving rise to a multichannel workforce of freelancers, contingent workers, independent contractors, and service providers. What is more, this external workforce is now essential to operations and increasingly critical to business strategy.

Nearly two out of three of the surveyed executives who sit across procurement, information technology, human resources, and finance say their business’s ability to operate at capacity and meet market demands is tied to their external workforce. Nearly half could not conduct business as usual without their external workforce.

The external workforce functions at the core of enterprises. These workers fill field services roles and corporate staff positions across departments. They plug gaps in other areas like data-driven decision-making, design thinking, new product development, user experience, risk management, and intellectual property protection.

It is no longer merely a cost play, although cost remains important. More than two-thirds of the executives surveyed say their external workforce is crucial to developing or improving their products and services; 66 percent say they need their external workforce to increase speed to market; and 64 percent point to the operational agility that is so important for businesses to succeed in today’s fast-paced, digital world.

The challenge for many companies is gaining visibility into this workforce. It is an abyss for many.

The reason: Many companies do not have the management processes and controls they need to manage their non-payroll workers and service providers. Consistent with the survey findings, executives I speak with often admit with frustration that they do not know the true size of their company’s external workforce — or they guess a number that ultimately proves to be a fraction of its real size.

From my experience, this can be a significant management issue. I met with an executive at a global company prior to installing a cloud software solution for managing their external workforce. She told me they had about 7,000 people. Upon adopting the solution, the company discovered its external workforce was more than twice that size.

The company’s lack of visibility meant individuals had access to its data, systems, networks, and IP — a lot of confidential information — without a central record or processes to understand who accessed what.

The business case for gaining visibility and more actively managing the external workforce is clear as new grads, many of whom will join the external workforce, enter the job market. Leading companies will set the pace, putting the policies, processes, and solutions in place to expediently hire and manage their external workforces for today’s digital world. In doing so, these pacesetters will give their top executives the visibility they need to extract the strategic value companies today expect from these workers.

Sara Sullivan is a vice president at SAP Fieldglass.

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