The coronavirus pandemic has challenged businesses around the world like never before. Organizational agility been tested, and for many businesses, the types of talent that they require to meet their needs seems to change on a daily basis. To innovate and adapt quickly and efficiently to these constantly evolving challenges, employers should consider implementing statement-of-work (SOW) solutions into their organizations, which can offer flexibility as businesses adjust to the new normal of work.
A statement of work is a service agreement containing binding conditions for a contingent workforce’s contribution to a specific project. The talent that fills SOW roles are typically highly skilled professionals that are hired for a specific project and a set amount of time. Even before the pandemic, SOW solutions were becoming popular among businesses who worked with managed service providers (MSPs), or third-party talent providers.
Bringing workers into an organization with a clearly defined timeline and set of deliverables gives employers the flexibility of hiring talent only when it is needed, rather than paying a yearly salary to a full-time employee. With the economic impact of the coronavirus, these costs savings are more important than ever for the businesses that have remained operational throughout the crisis. SOW contracts can provide a diverse and flexible pool of talent to employers at a time when their budgets and future projects are highly unpredictable.
Businesses looking to restructure their talent strategies due to the limitations and challenges caused by Covid-19 should consider using SOW contracts for the benefits they provide, such as:
- Agility. Being able to react to business challenges that arise demands an agile workforce that can be rapidly deployed in a compliant, effective way, which SOW contracts offer. A comprehensive SOW contract and staffing plan empowers organizations with the right skills to deliver new solutions, products and services rapidly. For example, Dyson was able to shift to producing ventilators at the beginning of the pandemic by accessing talent with unique skills and capabilities through an SOW agreement. Once the organization was done responding to the urgent need for this short-term project that required specialized talent, its SOW contractors transitioned out of the business and Dyson reverted to its original capacity.
- Compliance costs. The pandemic has driven organizations to rethink their approach to risk. In a buoyant economy, businesses typically take a more liberal approach to risk, a luxury that can no longer be afforded, especially when it comes to hiring talent. By engaging a human talent partner to help your business find the right SOW contractors, employers can shift the risks that comes with hiring to a third party and protect themselves from unwanted legal implications. Outsourcing this talent allows businesses to focus on what they do best and removes the potential compliance risks that could set a business back, particularly during uncertain periods.
- Tangible outcomes. In this unstable economy, preserving and predicting cash flow is imperative for organizations. SOW agreements contain concrete deliverables and milestone-based payment schedules to make forecasting easier, which adds an element of control to a company’s spending and project goals. SOW contracts also allow businesses to access data on individual projects, such as progress reports, performance metrics and cost control mechanisms in order to hold all parties accountable for completing their agreed upon tasks. This means that employers can be in full control of the delivery process and have a transparent and predictable cost for each project the company undertakes.
- Scalability. Covid-19 has changed the demand for certain types of skills and SOW solutions allow organizations to access the specialist skills and technology they need to grow, refocus or change direction rapidly, without incurring any time or cost penalties. SOW contractors can be used for both small project teams and for complex, global organizations. Depending on the economic conditions and market demand following the pandemic, organizations using SOW workers can scale up and down with minimal disruption to their business.
- Cost control. Covid-19 has forced businesses to look seriously at cost control. Because SOW spend comprises 80%of the total contingent workforce spend on average, reviewing how this spend category is managed represents an enormous opportunity to reduce costs and increase compliance. In fact, working with a third party to manage the SOW process can add up to double-digit savings in year one for many organizations.
While SOW solutions were considered by some to be a ‘nice to have’ prior to the pandemic, the coronavirus has significantly shifted the needs of organizations across the globe. Having access to talent that is agile and cost-effective is what will enable many companies to stay fiscally sound during these unprecedented times. SOW contractors are likely to represent a large share of the labor force in the future, and businesses that recognize this now will be better prepared for the months and years ahead.