SIA research tells us that statement-of-work spend for both projects and services outpaces that of staff augmentation. This has been a topic of discussion for years, and conversations have shifted from “Why should we include SOW within a structured staff augmentation program?” to “How do we do this?”
Programs have had limited success in bringing this category of spend within a structured contingent workforce program that is set up to deliver staff augmentation services. According to our 2021 buyer surveys, we see the following response when asked about contingent workforce strategies and the inclusion of SOW within a structured contingent workforce program:
|In place today||Likely to be seriously explored in two years||Not planning to do it||Don’t know|
The contingent workforce comprises two primary and one secondary category of worker:
- Staff augmentation workers (time-and-material under the supervision and control of the end customer)
- SOW workers (individuals assigned to outsource projects and services by the SOW solutions provider)
- Independent contractors (a subcategory that may be engaged as either staff augmentation or as an outsourced statement of work under certain circumstances)
Those responses in 2021 are much as they were five years prior, if not a little worse, as 57% of programs said they had SOW management in place and 37% indicated plans to include it in our 2016 survey.
Limited adoption. I believe the key reason SOW adoption is limited is a general lack of understanding of what SOW is and, most importantly, what it is not. My personal estimation is that less than 7% of organizations have SOW properly governed within a structured contingent workforce program today.
What’s in a name? One way to avoid misunderstanding is to stop referring to it as SOW within your organization. A statement of work is a document outlining contractual deliverables. Rather, I propose referring to the category of spend as the “outsourcing” of projects or services. Why? The word “outsourcing” conjures the basic concept that we are interested in here — what is being delivered and when, rather than who is delivering and how (which is the basis of staff augmentation, speaking to named resource and supervision and control).
Understanding the outsourcing of projects and services is far too complex an issue for a single CWS 3.0 article; however, here are some of the key areas of complexity to consider at the outset:
1. Scope of service. When bringing outsourcing into your current contingent workforce program, consider which of the following tasks are to be in scope:
- Scoping, designing and building the documented statement/scope of work itself
- Negotiation of the award of contract
- Contractually engaging and onboarding the solution provider
- Monitoring the deliverables
- Reporting on all aspects of the outsourcing
- Managing issue resolution and change orders
- Closing off the outsource for either project or service
- Optimizing the solution provider for potential future engagement
2. Segmenting the types of outsourcing according to (not all outsourcing needs to be in scope):
- Type of engagement (partial to fully outsourced)
- Level of spend
- Complexity of the supply chain
- Oversight of the deliverables
- Complexity of program process management
- Geography in business unit coverage
- Level of supply chain partner integration
- Technology used to track and monitor
These points and subsections are, in themselves, extremely complex. They are simply the beginning of a basic understanding of outsourcing. It is only when we can understand and speak the language of our internal and external stakeholders that we will be able to effectively transition this category of spend (or elements of it) into a structured contingent workforce program.
At some point in the future, the percentage of respondents saying they have SOW in place will likely not change much (with a greater understanding of the category it might even reduce significantly!), but, a higher proportion of this will be genuine outsourcing.