One of the newest methods for managing independent contractors is by using a freelancer management system, an online platform that enables companies to manage and track independent contractors. Such platforms can offer new solutions and opportunities, but they can come with challenges and compatibility issues. They also continue to evolve.

Freelancer management platforms are part of the online staffing space, and Staffing Industry Analysts estimates spend in the space could grow to as much as $46.5 billion by 2020. And looking solely at the FMS, the segment has seen a lot of activity as of late: FMS provider Work Market announced in January it raised $20 million in growth capital and reported in February it signed a partnership agreement with vendor management system provider IQNavigator. Elance-oDesk, another FMS provider, announced a $30 million round of funding in November.

Recently, SIA asked Marc Carlson, director, business services – contingent workforce, at Johnson & Johnson, for his thoughts on FMS.

Do you see managing freelancers, also known as nonemployees, as growing in importance for contingent workforce programs in general?

Yes. I see freelancer platforms as a means to serve our business partners (i.e., end-user hiring managers) in areas that are presently underserved by our existing programs, such as niche consulting and unsourced SOW based engagements. These platforms offer a unique opportunity to drive RFx volume through the contingent labor program and develop specialized talent pools. Prior to using these platforms, we were slow to build a critical mass of ICs/suppliers in the program to effectively RFx across our need-spectrum in a way that provides our business partners with competitive talent and pricing choices. That said, we have not found any freelancer platform that can satisfy our entire need — not even close; we are only able to tap into a few targeted talent categories.

How easily do you think a freelancer management system will be able to fit into a contingent workforce management program?

The delivery model of the freelancer platform fits snugly into our Single Storefront design. However, there are many nuances of the MSP/Staffing industry that have evolved over time which are not yet compatible with the freelancer platform providers simply due to the maturity curve. This has created a few opportunities for us to think differently about the interplay between talent level, risk allocation and cost. In some cases, these opportunities are about choosing the lesser of two evils but we are also finding ways to “make the pie bigger” with innovative solutions on the program side that arose from solving freelancer management system challenges.

A complicating factor is that the freelancer platform market is much less competitive than the MSP/staffing industry which can put pressure on the value proposition, efficiency, and innovation. As the space becomes more competitive and large corporate clients centralize an increasing amount of spend in these programs, this dynamic will ease and potentially could shake up market positions.

What challenges do you think would happen when bringing such a system on board?

We have worked through easily surmountable challenges like integrating technologies, creating effective business process handoffs with our MSP, operational scalability, and change management. Tougher to solve challenges are fee structure, risk allocation, data security and data privacy. I can’t mention these challenges without emphasizing the opportunities. The primary opportunity is providing our managers with access to a new talent source in a smooth and efficient way. In addition, we are developing opportunities in the areas of supplier diversity, supply base optimization, compliance and cost containment, while delighting our business partners — all things that J&J’s Procurement organization is playing for!