Standfirst – Igor Putrenko, CEO of Servicebit explains how smart blockchain-based contracts could revolutionize the IT staffing sector, increasing efficiency for businesses and the workforce in an increasingly decentralized work environment.
The idea of a job for life no longer exists. Most of the people that the father of the management that Peter Drucker considers "knowledge workers" will pass through a form of transition or professional transformation several times during their working life. This is especially true for IT workers who will spend a lifetime learning new skills hands and then adapting them to face ever-changing challenges.
At the same time, companies must become more flexible and agile than ever, both to meet the needs of digital transformation and those of a changing workforce that requires more flexibility in the workplace for both personal and professional reasons.
"The workplace is constantly evolving and at a much greater pace than we've ever seen before," says Peter O & # 39; Donnell, CEO of Unum UK employee benefits provider in his published Future Workforce report. recent.
"The next 10 or 15 years will probably see these advances pick up even more speed, turning the face of business – both internally and externally," he adds.
The challenge of a decentralized workforce
The PwC statistics (Workforce of the Future, 2018) and SAP (2017) show that in 2000, about 20% of workers in large companies in developed countries were external (eg contractors, employees, etc.). However, by 2020 this figure should rise to 60% with only 40% directly employed.
In the IT sector the figures are even higher, with the external workforce now getting around 70% of IT budgets from global companies. Because many companies are often more cost-efficient, they also hire specialized IT contractors for certain jobs compared to internal teams.
In today's volatile market, where staff reduction and budget flexibility are the keys to staying competitive and defending themselves from "digital breaks", external workers are often preferred to employees. However, finding external IT talent, especially in such a competitive market, is not always easy.
Their procurement through employment agencies or social networks can be both slow and expensive. It also requires high administrative levels to process all necessary documents, including contracts, purchase orders, timesheets and invoices.
As a consequence, income for outside workers is often lower than it could be with revenues of 15-25% for additional intermediaries and agencies (for example, it is not unusual for a recruitment company to subcontract payments to their contractors to a 39; other umbrella company to manage invoices and payments).
Payments can also be delayed from 60 to 90 days, partly due to long and complicated approval processes.
But how can you reduce this frictional & # 39; so that suppliers can be matched easily and economically to companies that require their services, just as AirBnB has reduced the friction between those who want to rent their property with those looking for an accessible place to stay in their travels?
One solution is through an online market platform. Many of these exist. For example, for relatively cheap one-off concerts – especially around design and marketing – there is Fiverr.com (Originally all jobs were priced at $ 5) while for long-term freelancing projects there are platforms like oDesk is Pontoon.
In addition to these, there are specialist platforms aimed at IT professionals including Toptal is IT- Suppliers. Are you looking for a specialized developer to work on your digital transformation project? IT providers have a million to choose from in different geographical areas and with different skills and budgets.
Digital supply chain
However, while market platforms certainly contribute to reducing the friction between the supplier and the corporate customer, they are only part of the solution. It is only with the introduction of the Blockchain technology that the "digital supply chain" will be truly revolutionized.
A sequence of blocks, or a distributed ledger, in which each participant has a complete copy of the data, Blockchain allows companies to have greater visibility of their supply chain compared to the traditional Electronic Data Interchange (EDI) – the common standard for business communications from the years & 70s.
With Blockchain you can monitor every single phase of the delivery without the need for manual checks, thus massively improving efficiency and saving companies luck in the process.
As Robert Handfield, Ph.D., told the University of 2017: "Blockchain is in my mind one of those areas that supply chain professionals need to watch closely, which will make a huge difference – more than IoT , serialization, sensors or any other emerging technology. Hold on tight! "
At the base of the blockchain revolution are the smart contracts: essentially pieces of code, or small computer programs, which are located above a blockchain and that perform an action (such as a payment) when certain conditions are met.
For example, buying a home could be used to automatically transfer ownership of a property to the new owner once the full payment is made, thus reducing human intervention in the form of expensive lawyers!
As the Harvard Business Review wrote in his article "The Truth About Blockchain", January / February 2017: "Intermediaries such as lawyers, brokers and bankers may no longer be needed." Individuals, organizations, machines and algorithms would interact freely and interact with each other. one with the other with little friction.This is the immense potential of the blockchain ".
Validation of the candidate
One of the biggest challenges for employers and recruitment agencies in the IT sector is constantly finding new contractors to work on short- and medium-term projects – a problem that is about to worsen with an increasingly decentralized workforce.
For the employer this means constantly checking and validating the references of a potential candidate while for the contractor it means the time taken to update their CV and send the applications. Smart contracts promise to make this boring process a thing of the past. An intelligent contract can store personal information, such as previous experience, qualifications, skills, etc. And since this information is on blockchain, it can not be tampered with.
Furthermore, it is possible to speed up the onboarding process – time that could be spent working on the project – because tax obligations and labor agreements can be integrated into an intelligent contract as a natural thing.
Neither the benefits are limited to the employer. There are also advantages to the contractor. For example, the remuneration could be incorporated into the smart contract so that whenever a milestone is reached, the payment is automatically activated instead of having to potentially wait months for payment.
Servicebit is a company designed to implement a service for the IT recruitment sector that uses blockchain technology. However, other uses of technology are also emerging.
Search of the last year from CompTIA found that 16% of companies had purchased blockchain-enabled tools, while 22% were developing tools using blockchain and another 24% said they were exploring technology.
The UN is currently using blockchain through 16 agencies, including the World Food Program to help refugees buy food with just one eye scan and the Office for the Coordination of Humanitarian Affairs to improve donor funding, to ensure and monitor supply chains and data protection.
Also Microsoft and Accenture recently announced a partnership to use blockchain technology to provide a legal form of identification for 1.1 billion people worldwide as part of the ID2020 global public-private partnership.
While it is easy to liquidate the blockchain due to the clamor surrounding the cryptocurrency, there is no doubt that secure peer-to-peer technology will have a profound impact not only on simplifying the digital supply chain in the IT industry but on many different industries in the next few years.