The fast advancement of digital technologies has changed the way we work and live drastically. We have witnessed not only the emergence of SaaS solutions for managing daily business activities but also the increase in the number of on-demand service platforms for both our work and life. Examples of popular on-demand service platforms are Netflix for entertainment, Uber or Grab for transportation or Airbnb for accommodation, etc. On-demand platforms and apps have come into every aspect of our life, from consumer goods shopping, food delivery, and transportation, to entertainment, handy tasks, and healthcare. In the business world, we also see the emergence of digital platforms in the field of talent sourcing, recruitment, and education. The emergence of these platforms and apps has changed the way employers and employees connect and the sourcing of contractors’ services [1]. In this article, we will discuss the benefits and challenges of digital talent platforms and suggest solutions for talent management in the digital age.

Benefits of Digital Talent Platforms For Businesses

Digital talent platforms offer a larger talent pool for businesses to quickly fill the skill shortage

The top benefit of digital talent platforms for businesses is widening their talent pool and filling their skill shortage as soon as they arise. This is because digital talent platforms in general help companies discover candidates that are not actively hunting for jobs [1]. Meanwhile, on-demand talent marketplaces, in particular, will be beneficiary for companies to seek talent for jobs that are project-based or highly specialized. This is because it is not financially wise for companies to hire full-time employees for such positions. Besides, for these employees, if companies offer them a full-time job,  it would be a hard decision for them to make. Since they have to consider leaving their comfort if they are self-employed or leaving their current job for unforeseen risks in the new environment if they are employed. Meanwhile, asking for a service package or a time-based or result-based job is a much easier and quicker decision for them to make. None would refuse such an offer for extra experience and income.

Utilizing digital talent platforms helps reduce the overall labour costs

Figure 1: Incremental Impact of Online Talent Platforms

Another benefit that digital talent platforms bring to businesses is reducing employee-related costs. McKinsey’s study found that by deploying digital talent platforms, businesses can reduce employee-related costs by 7% [1] (see Figure 1).  Specifically, thanks to the ability to source talent and fill the skill gap quicker and more effectively without hastily making poor hiring decisions for the fear of losing talent, businesses can refine their recruitment process. As a result, they can reduce recruitment, turnover, and re-hiring costs.  Besides, if companies utilize on-demand talent platforms, they can even find talent from all over the world to fill their skill gap at an affordable cost, thanks to the differences in pay levels among countries and no relocation costs for hiring immigrants. (See also Gig Economy – A talent sourcing solution for digitalization and labour shortage for more details) 

Utilizing digital talent platforms helps enhance productivity

With digital talent platforms, firms can deploy employees more effectively [1] by putting the right talent in the right position in a shorter time. This is not only viable in normal conditions but also in changing business conditions. If the companies’ business goals or strategy change to adapt to the changing business environment, by utilizing on-demand talent marketplaces, they will be able to flexibly change their workforce planning and immediately hire other employees to fit their new plan.  Besides, according to McKinsey’s research [1], companies that utilize the advantage of digital talent platforms could enjoy a 9% increase in output, and an average increase of 275 points in profit margins (see Figure 1).  

See more: Digital HR – A concept changes the future of Human Resources industry 

Benefits of Digital Talent Platforms For Employees

Digital Talent platforms create independence in work control

The first advantage of digital talent platforms for employees is the independence in controlling their work. Specifically, with on-demand talent platforms, they will have the ownership to decide the tasks and assignments that best fit their interest and talent [6]. As a result, they will have higher productivity and better satisfaction with their job. MBO Partners study revealed that 79% of full-time independent workers felt satisfied and happier working on their own than on a traditional job [2]. 

Digital Talent platforms create flexibility and a better work-life balance

Another explicit benefit that digital talent platforms bring to employees is flexibility and a better work-life balance. It is undeniable that on-demand talent marketplace platforms will empower employees to decide their own schedules. They will decide when to start and when to finish the work. None controls their daily working hours as long as they meet the deadline commitment with their clients. They can also take time off from the work anytime they want so that they can spend time for themselves or for their families. Simply put, they are their own boss who controls their own schedule and work-life balance. This is proved by the fact that at least 70% of freelancers became independent workers by their own choice for greater flexibility [5].

Digital Talent platforms create more employment opportunities for higher income

By posting profiles on digital talent platforms like Indeed or Glassdoor, employees are exposed to more employers for more employment opportunities. Besides, employees can join on-demand talent marketplaces like Kounselly for the primary source of income or for extra income. And by being exposed to more employers, there are more employment opportunities for them either way. Their jobs or service to offer are also more diverse to attract more employers. For example, if an employee has marketing expertise, he or she can offer a marketing plan and strategy as one service and implement and manage a communication campaign as another. As a result, they will have higher earnings, especially for those with high-demand skills.

Figure 2. Number of Full-time Independents earning US$100,000+

and percentage in the workforce

According to MBO Partners, the average earnings for a US full-time freelancer is US$69,000 annually, which is US$10,000 higher than the average median household income [2]. It also reveals that the number of high-earning full-time independent workers (i.e. those who make over US$100,000 annually) is increasing and making up 20% of the US workforce [2] (see Figure 2).

Digital talent platforms create a more transparent job market

As analyzed by McKinsey [1], digital talent platforms have made the job market become more transparent. This is because, with platforms such as Glassdoor, employees can obtain the market salary for each position. Thus, they can compare, know their worth and check if they are paid fairly or if their received offers are competitive or not. They can also learn about current and former employees’ reviews of the company. Hence, companies that do not manage their work well will have a bad employer branding reputation and will be disadvantaged in attracting talent.

Challenges For Businesses From Digital Talent Platforms

Digital Talent platforms make it more competitive to acquire and retain talent

High performers are easier to be discovered by competitors and recruiters through digital talent platforms [1]. Therefore, it would be more difficult for firms to attract and retain their talent. The fight for talent will be fiercer and more challenging for all firms, especially those without a good employer brand.

Digital talent platforms contribute to the decline in the workforce for full-time jobs

Figure 3. Percentage of full-time independent workers feeling their jobs more secured

The number of employees who are available for full-time jobs is declining. This is not only because of the lower labour force participation but also the increasing number of employees choosing freelance jobs. A study in 2018 found that becoming independent contractors continues to be an attractive option for many professionals, especially those with high-demand skills [2]. A study by Upwork in 2020 found that more white-collar occupations and workers join the gig economy [3]. In the US alone, roughly 36% of the workforce are full-time freelancers [3], with 44% considering freelancing jobs as their main source of income [4]. The percentage of full-time freelancers in the US workforce is even estimated to increase to 50% by 2027 and less than 25% of freelancers want to quit for a full-time job [4].

The reason some people prefer full-time jobs over freelance ones is because of job security. However, this is not true anymore. A study found that there are more and more freelancers confident about their job security, with 53% of freelancers in 2018 compared with 32% in 2011 [4] (see Figure 3). These figures indicate that there will be more and more workers choosing to become independent freelancers and fewer workers willing to work full-time.

Total Workforce Strategy – A solution for talent management in the digital age

Recognizing the benefits as well as challenges that digital talent platforms bring to businesses, it is suggested that companies should consider a more holistic approach to sourcing and managing talent. The culture of hiring only full-time workers is not a norm anymore. Instead, companies should utilize all types of digital talent platforms as well as all types of workers to enjoy the best flexibility and efficiency in sourcing and managing talent for the company’s benefit. With a holistic approach to talent management and a total workforce strategy, companies can not only improve their productivity, and reduce their costs but also increase their adaptability to the constant changes in the business environment.

Summary

Digital talent platforms bring both benefits and challenges to businesses. Therefore, the traditional culture of hiring only full-time employees is not applicable anymore. And it is advised that companies should leverage the benefits that digital technology brings to them and embrace a total workforce strategy to lead the change.

See more: Strategies to managing Gen Z