Get ready to start hearing the term “talent cloud” everywhere!
Why? Because the workforce is changing, and while most companies are not adapting to the new reality, some few, forward-thinking ones are, and they are gaining significant competitive advantage.
Do you want to know what their secret is? They’ve built a talent cloud as an extension to their employee workforce.
In this article, we’ll explain what the term talent cloud actually means, the benefits of this approach, and how you can build a talent cloud for your team or company.
Wake up! The workforce is changing
There’s a perfect storm now in regards to companies’ workforces; a rare combination of different trends that together are changing the workforce significantly. Here are main factors that are causing the shift:
- The tech revolution: The pace of technology change is significantly faster than the ability of the education system to train people with the skills necessary to manage the technology itself. New skills like cybersecurity research, AI expertise, product-led growth knowledge, and even digital marketers with up to date skills are desperately needed, and there just aren’t enough of them in the global market. This is known as the tech skills gap, and it’s why we’re seeing rising salaries and crazy benefits, but at the same time – very high employee turnover. Another impact of the extreme pace of development in the tech world is that technology is becoming increasingly distributed, people are becoming experts over far smaller niches. This means that for any one area, your business is likely to need more people to support, consult and drive growth.
- A new generation in the workforce: The world’s first digitally-native generation, the Millennials is the largest segment of the workforce.. This generation is tech-savvy, open to change, socially aware, and very ambitious. However, they still “played by the rules” of the old game until COVID-19. However, by 2025, Gen-Z workers will make up 27% of the workforce. This generation values their freedom and wants a higher level of control over their lives. The prediction is that Gen Z will refuse to play according to the current rules of the workforce. These guys don’t want to be employees, held by the rules of someone else’s business. This generation is the main reason Deloitte, Gartner and others predict that by 2027, more than 50% of the tech workforce will be freelancers.
- The freelance economy: Which brings us to the final trend that’s coming together to change the workforce – the growing gig economy. 1 out of 3 Americans are working as a freelancer in some capacity today. This percentage will rise from a third to a half by the end of 2025, mainly driven by Gen Z. They don’t want to devote years to climbing the corporate ladder, and want more freedom over how and where they work, under what terms, and how they are compensated for their time.
Unfortunately, too many companies are ignoring these huge shifts and are continuing to build the same workforce in the same manner as they have been doing for decades.
And what are the results? Hiring talented employees has become one of the biggest challenges for hiring managers across all departments in tech companies.
To meet the growing challenge of hiring, companies are spending more time and money on HR effort, from employee branding, to headhunting and turning their own employees into LinkedIn recruiters.
But there’s a better solution, and it comes in the form of a ‘talent cloud’.
What is a Talent Cloud?
Building a talent cloud allows you to harness the amazing freelance talent available on the market and overcome most challenges that come when working with freelancers..
After all, we all know that it can be challenging to find the right freelancer. Even when you do find the right talent, it takes time for them to get to know your company, your style, and adjust to your quirks.
Another issue is that the moment you need a freelancer, you need them now. Therefore you don’t have the time to search for the perfect freelancer or onboard them properly.
All of these challenges can be addressed with a talent cloud workforce strategy.
In essence, it suggests that teams should continuously build a pool of freelancers who have experience in a wide range of skills, exactly those required by your business. It doesn’t matter how often you use these freelancers, but you maintain a long-term business relationship with them.
Once your team has developed this pool of freelancers, AKA your talent cloud, it is able to start up an engagement with one of these freelancers very quickly when needed, since they have an existing relationship. The freelancer is already an approved vendor, they have signed the required legal documents, their fees are known to you, they understand your style/guidelines and already have access to your systems.
While of course your talent cloud won’t be all of your workforce, most consulting firms suggest it will be about 60% of companies’ workforce by 2026. In 2020, it should account for 40% of the workforce in marketing teams and around 25%-30% in product, R&D and F&A departments.
Our customers report that it took them about 3-6 months to build an efficient talent cloud, meaning to have enough optional freelancers from every skill (it should even include skills that you only need once a quarter). Once they achieved it, their team’s productivity was boosted significantly as team members stopped overthinking what is the best way to get things done – and just eceuted the projects quickly with trusted partners.
Why is a Talent Cloud the Future of the Workforce?
COVID-19 was a strong reminder that the reality of our world can change quickly and that businesses that are able to adapt quickly to the new world can win big. Shipping, e-commerce and education companies that were able to adjust their business quickly won incredible market share.
Especially as technology continues to become increasingly distributed, talent clouds can make you agile, as it will stop you from thinking who in your team is the best person for the job, and help you to find talent in a wider range of skills and from a far deeper pool. It will enable you to find the best person available for the task at hand anywhere in the world, and make him or her a part of your team.
So what should your first steps be?
#1 Map the required skills and identify what you’re currently missing in-house. What roles, skills and talents would you like to have as part of your talent cloud?
#2 Reach out to freelancers with the identified skills with a small task – something fairly quick. Consider this a trial. Try to avoid putting them on a critical project or anything too big.
#3 Start building a talent directory for your team, department or even the company to fill in. Add the freelancers with whom you had positive and negative experiences, alongside the relevant information.
#4 Don’t forget to continue approaching new freelancers until you have more than 2 for every skill, since you cannot control your freelancers’ availability. After all, they are not your employees!
The talent cloud approach requires you to think about your organization and your workforce in a new way, but when done right – it can help you to leverage the shift towards a gig economy rather than suffer from it, and strengthen your organizational structure to be safe from disruption.