Future of the Workforce
IN COLLABORATION WITH:Deloitte
Novartis’s workforce includes 110,000 employees and 50,000 contractors and temporary workers. Cisco has 83,000 full-time employees and 50,000-plus contingent workers of various types.1 Both companies rely substantially on a workforce ecosystem that includes many kinds of external contributors, including tens of thousands of individual contractors, to achieve their business outcomes. They are not alone.
Our global executive surveys show that a majority of companies — of all sizes — rely significantly on external contributors to build and grow their businesses.2 These contributors might include long- and short-term contractors, professional services companies, gig workers, crowdsourced contributors, app developers that complement a company’s product or service, and even certain technologies. Organizations vary in terms of how much, or whether, to include external workers in definitions of “their” workforce.
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As organizations deepen their dependence on external workers, many executives are struggling to determine the extent to which they should integrate both the management of employees and external contributors and the systems and processes they use as they engage workers with different employment arrangements. Our ongoing research highlights a variety of possible approaches, emphasizing greater or lesser degrees of integration.
Many executives are struggling to determine the extent to which they should integrate the management of employees and external contributors.
A common challenge afflicts most approaches: entrenched organizational behaviors. Companies that are starting to take a more deliberate approach to managing their employees and contract workers together often find that the functions responsible for employees and contract workers are siloed and have different, uncoordinated approaches. Allocating work among employees and external contributors can be a challenge as well. Leaders may struggle with determining which tasks to insource or outsource and where to look for needed skills. What’s more, workforce planning becomes a far more complicated task when the percentage of external contributors in the overall workforce increases, forcing shifts in organizational dynamics, especially among HR, finance, procurement, and business unit leaders.
1. “Cisco 2022 Annual Report: Reimagining the Future of Connectivity,” PDF file (San Jose, California: Cisco, October 2022), www.cisco.com.
2. See E.J. Altman, D. Kiron, R. Jones, et al., “Orchestrating Workforce Ecosystems: Strategically Managing Work Across and Beyond Organizational Boundaries,” MIT Sloan Management Review, May 17, 2022, https://sloanreview.mit.edu; and E.J. Altman, J. Schwartz, D. Kiron, et al., “Workforce Ecosystems: A New Strategic Approach to the Future of Work,” MIT Sloan Management Review, April 13, 2021, https://sloanreview.mit.edu.
3. “List of Cisco’s 238 Acquisitions, including Replex and Epsagon,” Crunchbase, accessed March 1, 2023, www.crunchbase.com.
4. In our research on workforce ecosystems, we also include complementor companies (like app developers or accessory providers) in the mix; Cisco does not include them in its view of a contingent workforce. In workforce ecosystems, we also include technologies that work together to augment humans’ work, such as robots and chatbots; Cisco also draws the line there. Still, although our definitions differ slightly in scope, by studying how Cisco is addressing the integration of its contingent workers, who represent upward of 80% of its overall worker head count, we can gain valuable insights to inform how leaders can approach management within workforce ecosystems.
i. E.J. Altman, D. Kiron, J. Schwartz, et al., “Workforce Ecosystems: Reaching Strategic Goals With People, Partners, and Technologies” (Cambridge, Massachusetts: MIT Press, 2023).