Talent-as-a-Service (TaaS) might be a new term for many talent management professionals. I’ve been thinking a lot about this subject for the last few weeks in preparation for a closing keynote speech at a regional ASTD event. My talk was titled "Social Media Adoption, the Water Wheel and Talent-as-a-Service."  The basic premise of the talk was pretty simple and can be neatly summarized in a single sentence: "just as Software-as-a-Service models have transformed the corporate IT practices, TaaS models are poised to transform talent and HR practices," but the implications are pretty broad. 

Why Talent as a Service?
Fundamentally, TaaS is premised on the same challenges and opportunities as SaaS:

• In many cases, organizations can more readily find and source the capabilities they need by tapping external resources.
• It’s often cheaper and more efficient to buy external capabilities than build and invest in them internally.
• Building secondary but critical capabilities can defocus an organization from it’s strategic and differentiated intellectual property.
• Capabilities that are leveraged on-demand via contract rather than "owned" internally can be rapidly spun up or spun down, depending on organizational need.
• Once an organization develops the necessary process flows and maturity to support "as a service" models, it becomes far easier to tap an ever wider pool of capabilities.

In SaaS models, the capabilities companies seek are software, storage, and computing power. In TaaS models, the capabilities are skills, competencies and knowledge. If you re-read the above challenges and opportunities and think "skills, competencies, and knowledge," you’ll notice that we’ve just written the business case for contingency. And it’s a business case that is resonating with both employers and employees.

Proof Points and Driving Forces
Contingency already represents a significant portion of the overall employment mix.  According to a variety of analysis, contingency accounts for up to 30% of the overall workforce.

• Contingency is expected to increase significantly in response to the recession.  According to a survey by Staffing Industry Analysts, Inc, three-quarters of companies with more than 1000 employees will increase their current contingent workforce by 25% and one third of these companies will grow their contingent workforce by 50% of more.  Small Business Labs listed "The Shift to Contingent Workers Turns Employees into Entrepreneurs" as their number one trend. 
• Boomers will significantly add to the ranks of consultants.  According to the 2006 Merrill Lynch New Retirement Study, 83% of Boomers intend to continue working after retirement. One quarter of those list "consultant" as their preferred profession post retirement.  And this desire for contingent work is not the sole province of Boomers.
• Millenials are expected to be significant contributors to a contingent workforce.  With the advent of the recession, many have been forced into contingency and into developing their own businesses. Given their high levels of education, internet and social networking skills, and desire for greater work / life balance than previous generations, consultancy and contingency are a natural fit for many Millenials.
• Advances in technology now make it possible to staff talent from anywhere and even to connect talent to specific challenges.  Innocentive for example matches Seekers with Solvers — effectively brokering a market for project work around specific challenges.  Cisco has tapped into global talent through innovation competitions held inside and outside the company.  More routinely, email, social networking tools, virtual conferencing, video conferencing, file sharing tools, and ubiquitous mobile technologies make virtual work possible from an ever-increasing range of geographies.
• Health care reform may fuel an even faster rise in contingency.  For many full-time employees who wish to work contingently, concerns about healthcare costs and coverage limit their willingness to strike out on their own. 

What does it mean?
The confluence of these various drivers and trends is fueling a transformation in the way talent is discovered, staffed, and managed.  Companies are realizing significant benefits through TaaS — greater agility, decreased costs, deeper and broader access to specialized skills and talent, and increased focus on key organizational competencies and differentiating IP.  And as a result, organizations are significantly reshaping their workforce to include an ever-higher percentage of contingent workers.  Microsoft for example now has nearly as many contingent workers as full-time employees — 70,000 to 96,000.

For workers, particularly Boomers and talented Gen X and Millenials, consultancy is on the rise and is increasingly viewed as a desired employment condition.  It provides greater autonomy, increased self-direction, and the ability to directly map skills and expertise to desired role and to particular challenges.  Given the prevalence of social, internet and mobile technologies, it also enables workers to live where they choose and to work when they choose without sacrificing their networks, their productivity, or their reputations.

While the rise of contingency is generally a good thing for both employers and the contingent workers themselves, there are a number of key challenges and issues to consider:

• While most contingent research and surveys to date have focused on external contingency, you must also pay attention to internal contingency.  Unfortunately, in most companies, it’s still much easier to find external expertise and talent than it is to find internal talent.  In your pursuit of a higher contingent mix, be sure to examine your own internal marketplace.  Have you invested in Talent Intelligence?  Is it easy for managers to discover and partner with internal experts?  Do you encourage and enable internal talent mobility?
• A key aspect of consultancy will increasingly be geographic distance.  Tapping into global talent pools and retired Boomers who want to live in the Sunbelt necessarily means greater comfort with virtual teams and virtual work.  Talent professionals can support this effort through training, investment in infrastructure, and policy and procedures that support virtual work and virtual workers.
• As contingent workers comes to represent an ever larger percentage of the workforce, organizations will need to pay more attention to culture and training and development.  Hiring consultants not just for their skills but for organizational culture fit will be increasingly important.  Attention should also be paid to the assimilation of contingent workers into existing culture through participation in workplace events, communications, and shared success.
• Hiring consultants who "know" the business and it’s challenges will be another key aspect of staffing.  Given this, it’s likely that many engagements will be longer-term or recurring, which suggests that training and development strategies may be critical in driving optimum performance.
• Performance evaluation still matters.  Will you evaluate your contingent workforce the same way you evaluate your direct employees?  Minimally, you need to track the characteristics, backgrounds and work histories of top performing consultants so you can make similar contracting decisions in the future.  In other words, you need Talent Intelligence for your contingent workforce as well. 

Summary
Talent-as-a-Service is here to stay and shows every sign of growing significantly in the next few years.  At the same time, we are likely to see significant competition for key talent, not just within specific geographies but on a global scale.  For best-in-class companies that already have robust and sophisticated talent management practices and a clear understanding of the talent they already have, this is an unprecedented opportunity.  For the first time in history, organizations can tap into a global pool of talent to find the best and brightest for any role and any situation.

Organizations that are comparatively less sophisticated with regard to talent mobility, Talent Intelligence, and holistic talent management practices, are going to be at a significant disadvantage.  Rather than leveraging a global talent pool, they will instead be paying premium prices for local talent who can offer their services on a global scale.  And they will necessarily miss out on the talent and capabilities outside their core geographies and hiring models.

Just as SaaS transformed our corporate IT practices, TaaS will transform our talent practices.  First movers and more mature organizations will derive the most value from this transition.  Laggards and less mature organizations will suffer from lower quality and more expensive direct and contingent labor.  Your ability to capitalize on this emerging trend therefore depends largely on the investments that you make today, not just in software solutions, but related policies, procedures, and workforce planning initiatives.

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