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Ep. 1: Eric Osterhout, AI, Contract Labor, and the Workforce Trends That Matter in 2025

37m 22s

Ep. 1: Eric Osterhout, AI, Contract Labor, and the Workforce Trends That Matter in 2025

In this podcast episode, the host and guest Eric Osterhout discuss the evolving contingent labor landscape for 2025. They note a significant rise in contract labor, from 36% of the workforce in 2020 to a projected 45% in 2025, attributed to better spend tracking, growth in independent contractors, and technological advancements. Reflecting on historical shifts since the 1990s, the conversation highlights how both buyers and suppliers have adapted to centralized procurement models for efficiency and risk reduction. Looking ahead, the new presidential administration is anticipated to foster a pro-business environment, potentially boosting the economy and contingent labor demand after Q1 2025. Regulatory changes may clarify independent contractor classifications, and healthcare reforms could increase worker mobility. Industry-wise, energy and healthcare are expected to see growth, while tech may face some job cuts due to AI integration, though AI is viewed primarily as an enabler for efficiency rather than a mass job displacer. The discussion also touches on DEI, predicting a shift from standalone programs to more embedded, sustainable initiatives within corporate structures. Overall, the outlook for 2025 is optimistic, emphasizing smarter procurement and adaptive strategies in a dynamic market.

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What's up everyone. Thank you so much for joining us. This is one of our earlier episodes of leaders unfiltered, super excited to to hang out with our guests today and talk all things 2025 contract labor. We're the involvement of the contingent landscape is going and this person actually may be pretty recognizable to some of you. He is an indie recording artist. He's also an industry influencer. He's a three-time SIA game changer class of 2020-2022 and 2023. He's also a good friend of mine. You may know him as a CWM nerd. You also may know him as big E. Whatever the case is, please welcome our guest, Eric Osterhout. Yeah, thank you so much for having me today. I'm very excited about this and then I think this is going to be just a great conversation today. And that's what we're hoping. That's definitely the vibe that we want to play out in the leaders unfiltered podcasts. And really what we wanted to talk about today is 2025. And there's a lot of things that are happening right now within the market and especially through the onset of the last couple of years. Anyone that has been within this industry can tell you all about the layoffs that have happened. The downsizes in certain projects. Kind of a shaky economic situation that we've had across various different markets. But we ended up the year with a glimmer of hope, I think. And how are your indexes and contract labor stats out there show that there have been some positivity within the market. But one of the things that I thought would be interesting to just kind of kick off is in reading through a recent article and this was published by ASA. They mentioned that 36% of the workforce in 2020 was contract labor. They are predicting that this year that number is going to go up to 45%. So interesting and it's phenomenal growth that we've seen over just the last five years. So before we go in through, hey, where is this year going? I really want to pick your brain on where we have been. So can you talk to us about your perspective on the shifting landscape? That's kind of attributing towards this pretty strong growth over just five years. And if you want to take us back a little even further than that, you're welcome to before we kick things off into the year ahead. Awesome. That is a great topic. Just came up the other day and I was having a conversation with someone and I realized that in a way, I've been around this segment of the industry or segment of procurement in some form or another since the '90s, which would be around the time that centralized procurement of contingent labor and services and professional services and consultants really kind of hit the market. And I think I've seen a lot of change. I mean, I've seen the initial VMS products and how they've evolved. I've seen MMS manage service providers, MSPs and how they've moved forward and changed their offerings. And I've seen a lot of suppliers pivot when when I first experienced these types of programs. I was on the supplier side. And in those days, it was avoid the centralized procurement function like the plague and work your way around it. And I was an early adopter back then and I realized that, you know, this, I could read the T-Leaves. I've always been very good at looking at trending and seeing where things are going forward in the world. And I realized that I needed to learn to work within that structure. And now you fast forward almost 20 years. I've been in the industry 17 years on the buy side that most suppliers have realized that yes, we need to make partnerships and follow rules and work with procurement because that is the way it has to be. I mean, there's a whole yin and yang in our industry of of balance between the buyer side and the supplier side and in the middle where that happiness and that partnership lies. When you're talking about the growth of opportunity within the market, I think it's interesting. Part of me says that sometimes I think that what we're really seeing is also an uptick in percentages of external or contingent workers potentially could be the fact that we've gotten better at capturing that spend and being able to report on it, track it, etc. And then on the other side, I also think that companies are starting, they've been seeing the benefits over the last, I don't know, 20 years. Like I said, almost 20 years, 17 to be exact on the buy side for me, that there are efficiencies to be gained and there's risk to be reduced and by managing it effectively. In other words, I call it buying smarter, right? And when you buy smarter, that translates to the bottom line stockholder price, the stock holders get a better return on their shares that they hold. I think it's just the wave of the future and that's what's so dynamic about our industry. Yeah, and I think it's definitely the involvement of the Indypreneur, the amount of independent consultants, contractors, ICs, as we refer to them in our industry, has exponentially grown. So you've almost got this shift of better market capture, a wave of this growth happening within the workforce itself and definitely the globalization and how tech is enabling all of these systems and processes and different procurement departments everywhere to be able to enable hiring managers to tap into that. So thank you for that and thanks for that overview. I wanted to get into what we have going in, right? So just to kind of paint the landscape for everyone, we obviously know that there's a new presidential administration at play here. December figures saw more than higher growth than what was originally predicted for job openings, for salaries and wage increases, and also for fills. I think our unemployment rate went down and there's a lot of optimism that's happening right now within the market and I wanted to drill down into your brain on why you think that's happening. How is this going to be influencing contract labor and what are those anticipations of what is this presidential landscape going to look like in the four years that we have in front of us? Man, those are some great, great points. All right. Again, back to my history, 17 years plus in the industry, I've lived through several administration changes. Yeah. Some have been more pro-business than others and it does impact our markets and how, you know, what our opportunities are for contingent labor, external labor, what regulations, things like that to be able to affect the IC market and things of that nature. Regardless of what side of the political fence you sit on, most people who know me can guess I'm pretty conservative Texan and I'm proud of it. But what I'm going to say is whether you're on whatever side of the political spectrum you're on, when you have a pro-business administration in place, it's going to benefit us, not only as program leaders, but also as suppliers, right? I think that when the economy is good, all of us would have said I used to say back at one of my past employers that a rising tide lifts all boats and that's kind of what happens. Now, do I think there's going to be some differences? Yes. I think some things are going to be impacted and things are going to be a little bit different. But from a purely economic and opportunistic perspective, I think call me crazy, but I think after Q1, because I think Q1's going to still be a setting the stage kind of thing, I think after Q1, things are really going to go back gangbusters and you're right. I've been seeing since December more of my peers on LinkedIn are getting hired places and picking up new gigs. My independent consultant friends are picking up more work. Companies are very much so looking at how they can better leverage and buy smarter. I'll go back to that again. And there are certain, obviously, some governmental policies that are going to impact the way that we treat and look at workers going back to when Trump was under his administration right before Biden. There were impacts to unions and labor groups around the country. There were also different ways that was trying to get put into office on how to classify independent contractors. Some would argue that that was more employer-centric. Any thoughts around, you know, employment policies or how employers or even those and within procurement have to trickle down some of the impacted policies that could be changing out of us. All right. So one of my bold predictions is going to be this. And you're right. In the first Trump administration, there was a lot of pro-business type decisions. Well, those decisions, frankly, were beneficial to the IC community. I mean, they weren't forcing these workers to be considered as employees. And so you can say it was, it was pro-business in a way and also anti-business in a way because, you know, certain elements of the country on the coasts were really trying to do away with ICs. And I think they were trying to help people because obviously in any type of a situation like that, there are abuses. I mean, you see it every day when a company comes up and yeah, we've been misclassifying these workers and not paying them the way we should be. And we owe taxes, etc., etc. But I do think that with the new administration coming in, they're going to be rolling out sensible, especially sensible vetting criteria for what is an IC versus a W2. I mean, I think that's what we're going to see a lot of. I think in a way, the new administration has softened its stance on some things. I mean, face it, they were not the pro-union administration or candidate back the first go-around. That's always been a traditional stronghold of the other party. And now we're seeing that the unions are starting to be embraced by this new administration. And I think that will be good for everybody. It will be good for worker protections, but it'll also be good for business because it'll be fairly applied. And I think we're going to see a lot of that in other programs that they touch on and other regulations that flow down. That's my honest opinion right there. Well, I agree with you in terms of how the independent contractor landscape can roll out, hoping that it provides some transparency. There's a lot of gray and there has been for some time. I would say for most of my career within this space, it is a, there is no black and white in what we know on how to classify an independent contractor outside of some guidelines and some state statues that have influenced the markets. So we'll see where it ends up falling, but I do agree. I think that there's a semblance of what we saw during the prior administration kind of trickle back in through the next four years. And can I throw out one more thing too? I think we're going to see a massive, and it may not happen this year. I think it's going to happen in the later years of this administrative current administration that's coming in. I think we're going to see a massive overhaul of how healthcare is. And I know that sounds crazy because you don't immediately think healthcare when you're talking about contingent labor, but it does impact the markets. And I think if we could get a sensible approach to healthcare, you're going to see more organizations. They're going to have to become more competitive and treat their employees better. And the reason why I say this is, is many folks stay at a company, regardless of how unhappy they are or how they're being treated because they need the healthcare insurance because it's so prohibitively expensive and can be catastrophic to a family, especially from a cost perspective. So I have the feeling they're going to overhaul that as well. And that might make it a little more easy for workers to be portable and maybe look at more freelancer positions and do what they want to do. That's my bold prediction. And I think that's going to happen sometime in 26, perhaps, or 27, that there's going to be a focus on that. So bold predictions coming from Biggie, but you mentioned healthcare and especially on the consumer patient side. Are there any other industries that you're really feeling are going to get an uptake? And maybe even on the other side of the spectrum, a little bit more on the slower downtake, if you would side. For one thing, I think energy is going to get a tremendous boost. When the last administration took over, they killed off many, many energy related projects and also increased regulation. They cut drilling. So I think the energy industry is going to see a huge bit. And there's a lot of companies that support that industry, especially in our knit to the industry. A lot of support. Of course, you guys live from Houston, Texas, just to be clear, right? We're in the petrochemical USA. Yes. And obviously, I think where I would be a little concerned in maybe getting putting the cart ahead of the horse here on this conversation. But I do think tech companies, there are going to be some changes. Will there always be opportunities at tech companies to provide contingent labor and ICs and things like that? Absolutely. But I do think we're going to see some changes based on technological advances. Okay. Yes. So by changes, you mean potential job cuts or role eliminations or what do you mean by changes? A little bit of goals. Okay. That there's going to be some inevitable job cuts. I think there's also going to be an opportunity for folks to move into other roles within those companies. I mean, but I don't think it's going to be on a magnitude to really offset the losses. I think there are going to be some losses. But at the end of the day, we have seen in the industry technological advances that have predicted doom and gloom. I mean, I don't know. It wasn't that long ago that we were talking about even before AI. And what was that word you used earlier? Well, you know, it's it's definitely a perfect segue here. Because I think it's painting a good picture. By the time that this recording lands, it's going to be sometime in February. But we're we're we're doing this recording right now in January. And it is at the cusp of some major layoffs that meta has announced complete job role eliminations and departmental eliminations. So I think it's an interesting time because I also wanted to kind of pick your thoughts around SIA and and their bold predictions for 2025. Staffing industry analysts for those that are listening in is really the the resource pillar that a lot of the folks within the industry look at and and they basically coin it in one of the headers AI your new coworker. So love to get your thoughts and how that some of that assembling in through your your your tech prediction here. Your bold tech prediction for what is the industry as a whole and what some companies like meta are already seeming to hop on the horn and do with job cuts and eliminations. I love this. First off, I think SIA is amazing the data they put forth. And I think it helps drive a lot of strategy out there. Yes. Whether or not my next co-workers is going to be AI. I think that. Adjunctive AI. Agentive AI. Yeah, that's learning new words here. That's that's a word that I'm picking up on. Agentive AI is the word for 2025. That's a prediction. But I'm also going on the flip side because everyone runs around with their arms in the air circling and yelling and about the doom and gloom and these are terrible and everybody's going to lose their jobs. AI. Well, again, I go back to 17 years in the industry. I've seen a lot of maturity in the technology end of how contingent labor could be managed from a technology platform perspective all the way to making things better for facilitating and finding talent and bringing talent into an organization. And I've got to say there are still companies out there that don't even have a Gen 1 program or that don't even have a Gen 1 program that's really functional. And thank God for that because people like me, when they do get laid off from time to time, when I go back into my consulting role, there's still plenty of opportunities for me to go to work and help people. And so I say that, yes, at some point, AI, I mean AI, is an enabler. It's another tool that companies can use to become more efficient. I think that AI will be used and it will replace certain skill sets as we've talked about. But I go back to the fact that we've also been chasing statement of work as program leaders. We've also been chasing total talent management as program leaders for as long as I can remember in this side of the world. And so, I think, yes, is it the future? Yes, do I think it's happening tomorrow? And yes, do I think, yes, within reason, I think that some companies are going to early adopt and are going to adopt where it makes sense. But there's still a lot to be figured out. I mean, there's still legal ramifications around the use of AI and hiring, for example. So I looked positive and I think that there are still programs that need to learn to walk me before they can run. And I do think that there is a use for these tools and especially to be able to make program teams more lean and efficient from the buyer's act. But yeah, I don't think it's going to be an overnight process. That's my take on that. AI and aliens. Yes. Okay. You know, I think if I could give my my two cents here for the fellow compliance nerds, this is where we really find the value of that intalculable element of maintaining a folding compliance. We are certainly at the dawn of a new compliance era when it comes to AI and the way the data is procured. I mentioned something on a LinkedIn post a couple of weeks ago about this because there is so much that's going to go in through the testing, the adoption, the policy rollouts, you know, the impact on the day to day for the very users, the systems, how those enable the processes, but it is an exciting time. And I am more on the optimum side than the doom and gloom. And recent reports, I think, also indicate that because in the amount of roles that they are eliminating, highly administrative roles, repetitive roles, and somewhat quote unquote, monotonous roles are the ones that are more than likely going to be eliminated, but it's actually creating more jobs and opportunity from what early research is indicating when it comes to AI at least thus far. So I want to just kind of go in through a different direction here because we mentioned what are those industries that you think are going to do well. You talked about oil and gas and the energy sector. We also talked about tech. But to me, one of the greater elephants in the room for this year ahead, when I think about all the different trends that are happening, DE and I is definitely on that. And I think more recently, Amazon joins the list of mega companies like Metta, again, Walmart, Ford, John Deere, Toyota, that are actually looking to scale back. And in a recent email to their internal employees at Amazon, they said that they are winding down, quote unquote, "winding down outdated programs and materials relative to DE and I. I don't think that DE and I is going anywhere. I think that it has garnered a reputation over the last five years. I think it's an involvement just as anything else. And I'd like to get your take, sir, on what do you think that involvement is going to be?" Well, you and I have both been recognizing the industry as DEI leaders, influencers. And I've told this story before. My parents divorced when I was very young. And in fact, I'll share something a biggie, sharing here, probably sharing too much. My dad left my mom for my mom's best friend and took over her family and left us to pretty much fin for ourselves. So I was raised by wolves. So if I say, sir, somewhat off. What was in strong women, which and it can be the same thing on certain days? In a panel session, I was on at SI, you referenced, yeah, I talked about this journey. I didn't go to the greatest schools in the world. I was in a frapp boy. I mean, I've clawed my way up to where I'm at. And I've got a lot of scars and probably could use some therapy, which we'll check into that after we get off the podcast. But I think you're right. What I'm seeing and I'm a proponent of DEI is I think that there were a lot of companies that were using the DEI mantle. They were paying lip service to it. I know that's not popular. And I'm sure people out there will be nodding their heads, at least I hope they are or else I'm going to get some nasty emails on LinkedIn. But I think that there were a lot of companies that really were more focused on talking about it because I know that the people, the workers, the society, the investors are expecting sustainable solutions and sustainability and part of the ESG offerings have to do around people as well. The consumer, they demand that we treat people fairly. I think that's really where the DEI focus is going to shift to is about treating people fairly in access, right? At the end of the day, it should still be about who the best person is to do a job. But let's bring people of differing backgrounds to the table and differing points of view. I think that's really-- I think almost redefining differing. Right. Right. Redefining differing because we all are innately different. What does different mean and how does that actually leverage to the business strategy? Yeah. And one thing I've written about in some of you may have read. I hope you did when I posted it in things about institutional thought, right? I think we see a lot of companies at times that they promote people within an organization and people stick around so long that they forget how the rest of the world has evolved, right? And they don't understand that. Yeah. And that's exactly what's pointing to why I firmly believe that it's still going to be a priority. Sure, I'm actually posted something that it's still a priority for 2025 because of many of the reasons that you've mentioned, but at the end of the day, in the very essence, it can lend to a competitive advantage and better company culture. But I do think if I was to put a crystal ball on things for it for DE and I, I think that the next chapter of DEI with consideration to what we're seeing with Amazon and Meta and Walmart and Ford and John Deere and Toyota and I can continue to go on because there's many other companies that are scaling back. I think that it's a redefining of diversity and what that inclusivity means within the organization. And the reason why I say that is because quite frankly, it's, it's, you know, I'm a millennial Latina that came from lower income Houston. So as a DE and I champion, what I have seen is that it's, it almost has, and there's something very critical and important about nomenclature and how we're utilizing. And it almost has garnered a negative connotation to it in the last couple of months and year maybe. So that's where I think I think there's going to be a rebrand to help it more, to help it be more wholly accepted because at the end of the day, it drives positive business objectives. I totally agree. I could not agree more on that. Awesome. All right. So, you know, we've talked about agentive AI. We've talked about the presidential campaign and on what this new administration can do to impact our industry. I want to hear wholly about just your outlook right on 2025. So wrapping things up, it's a positive year so far seemingly. But where do you think contract labor is going to go? Given some of those predictions and studies that we know. I think that as I said, call me crazy. I think things are going to pick up second quarter. I think this is going to be a good year. I think 26 is actually going to be an even more impressive return year for suppliers. No doubt since COVID, it's almost like we've lived half a century in like five years. It's been Mr. Toad's wild ride. I mean, during COVID, there were so much. I mean, we went from where business dropped off and a lot of suppliers got impacted so hard during that and lessons learned from it could things have been done differently. Probably, I think we all were struggling to figure it out even the government at that time. And then in 22, when things started to pass and we're finally starting to get out of our houses again, business was coming back to normal. There was this huge hiring boom, right? And then 23, we started to see, oh, wow, maybe we kind of bounced back and over hired and now, especially in the tech industry, because we sound a lot of that. We had to have the tech industry really stepped up and were the heroes of COVID, in my opinion, being able to allow organizations like our supply chain organization at my last employer to be able to function and actually be more effective over that time period. We were almost three years working remote and we got more dunder in that time. So the tech stack or the tech folks were the real heroes in a lot of ways. And I think maybe they over hired a little bit. So I think we saw that shake out in, you know, 2023 and we saw a lot of jettisoning even from suppliers and many of them had to locate and find new jobs and it was tough and it's still tough. 2024 I think was an extension of that. The economy was not doing well under the administration that was in place, inflation was out of control. It was bad. It is still. It is. It's still not as favorable as it could be, but up darn to see, just even over the last like you sit to separate, I'm starting to see things, things move forward. And I really feel like that the next wave is going to be and I see a lot of folks talking about this. It's maybe it's not talked as much as it should be about talent, right? Right now we have a lot of talent out on the street. But what we're seeing is it's not a war for talent. I mean, there's still jobs out there. The problem is getting the talent to the right leaders and getting it through the the morass of horribly outdated and horribly implemented ATS systems. And this is where I think that with AI, we should be doing better with that, right? But what we're seeing is we're seeing on the candidate side, I think people that are in the industry are smart enough to utilize the AI and the companies that they're applying to are not necessarily as good at using the AI. And so they get inundated with thousands of resumes and they don't know what to do with it. And I think there's a fundamental problem with how they are utilizing their existing technology. The question is what will the pay speed to adopt it and how well it will be adopted? Okay. So overall, prediction for contingent labor in 2025 to sum it up, you think that it's going to be more about the talent, that there's going to be some eliminations in the adoption of AI overall, but enhancement to the worker experience and even the internal teams and their processes therein. Yeah, that's pretty much what I see. And I see that we're still going to see, you feel like, but let me ask you that's really short. Do you feel like this demand of contract labor will actually continue to increase? I absolutely do. It's been increasing, no doubt. And even what you said earlier with the SIA statistics of the increase from what 38 to 45 or something like that, I am supremely confident that this is going to happen because companies are again, they're slow to adopt ships that are that size hard to turn, right? I mean, it takes a little while. And I still think that there are a lot of companies that really don't even have any ideas what their actual head counts are from a external worker and a regular employee. So I think there's going to be a lot of opportunities for that. And I think that companies, even even the companies that were slow to adopt are starting to realize, like I think I told you earlier, I had a meeting with a company this week that was talking about their contingent labor program or lack thereof and how they manage it. And they really are looking for solutions because they realize that it is a huge amount of spend that non-employee workers are under. In other words, contingent labor programs are a sizeable chunk of spend. And if it's managed correctly, it could be a sizeable chunk of savings as well as mitigation for the company and in the way of reducing risk and also getting better talent faster. So again, I just can't help, let's say, that I probably should have my sunglasses on after Q2. I think it's going to be right out there. Woo! I am so excited for that, especially after the last couple of years. And it's all coming to the surface. So let's hope that that optimism stays and we can see it come and flourish throughout the years ahead because this isn't just about 2025. This truly is about the next several years ahead of us when it comes to contract labor. And I'm hoping that this is not one of those moments where we'll look back on this and we're wrong. I think that this is feeling good and we'll be right. So I'm right there with you. The last thing I wanted to ask you about, maybe the most controversial question of this whole podcast, at least that's what it feels like on LinkedIn to work from home or not work from home. That is the question. And I want to paint the picture here because so many of my colleagues and your peers within this space are going back to the office. However, many different institutions including Charm and including ASA still feel like the remote wave of work from home 100% of the time is here to stay and it will actually increase. Sir, you are pulling out the sunglasses. What is happening right now? I need to protect my identity. That's why I lived in a closed location far out in the country because I have some very controversial takes on this. And I've been a vocal proponent of remote work. And I have called out some of the industry dinosaurs running companies over the last few years. I mean, when Christopher Dwyer reaches out to me and says, "Hey, can I steal a quote from something you posted?" And first of all, I was extremely honored because Christopher Dwyer, I consider a legend in our niche. So I'm going to put on my sunglasses just to kind of protect my identity. If you're watching us on video, so you've got the sunglasses, although you can find him. Yeah, I guess I'm not. It's not that easy. That was awesome. Find a beer joint where I'm playing guitar sometimes with my original music or my cover songs. All right, so here's let's get real here. I'm going to get really down and dirty. I think that companies that are driving people back into the office are really missing the boat at getting the best talent because people are super, super talented and are confident in their abilities. They're not going to just, "Okay, I'm going to come in quietly. They're going to go now. I'm going to keep looking for what I want." I mean, I'm good enough at my stage in my career to do this. I'm more effective. And you're either going to get it or you're not. So you're seeing some roles being replaced at companies with subpar employees in my opinion. And so I don't want to hear a bunch of LinkedIn emails about that one either because I think you're going to zero some LinkedIn emails regardless of what happens at the end of today's episode, folks. Well, there's exceptions, obviously. Yeah, sometimes some people like being honest. All right, so let me ask you this then, because okay, I get it. When it comes to the best talent, you got to you got to be flexible. Right. What is your take on the green talent, on the entry talent, on the Gen Z years coming into the workforce that have never worked in an office and have lived with this cell phone their whole life? What do you think about that? Oh, I haven't even gotten to that yet. I believe that in if you're an entry level person or even if you're if you are experienced like me at my stage of my career, you still need to go in for a while because you have to figure out the environment. You have to talk to people. New employees should have to spend, you know, someone that's new to the industry doesn't know their job and even new to the company should have to spend a certain amount of time on site to be able to get to know everything and who does what and where to go over to get this and just to be able to understand the inner workings and the culture of the organization. I also am a firm believer in hybrid work because I think that kind of meets in the middle there and I also am I rail on this all the time. Four days in an office and Fridays out of the office does not make it a hybrid role. It just doesn't that's not hybrid. That's that's on site, especially when you're somebody like me that ends up spending 10 hours a day on site. Anyway, that's 40 hour a week, right? I'm by Thursday. So to me, that is kind of where I look at it and I'll go even further and that's why I had my sunglasses on because all right, everybody get close. I think this is a conspiracy. Yes, yes, I really do. Face it. Think how much money is invested in companies in real estate, okay? And then think of how many real estate folks like the big institutional investors own huge holdings in real estate companies, including commercial real estate. Yeah. And they all sit on these interlocking boards and directorships between these companies. So I do think that that does drive some of this upper management to go, yes, we need our people back on site all the time. I think companies, if they were really and many of them have become this way, your company included, I believe, realized that there is value that they can save that capital expense of office space and those other fixed expenses and somewhat not fixed expenses like, I don't know, coffee and everything else that goes into an office and paper and people and, you know, furnishings and all that stuff, they realize that they can pair that back to a smaller footprint and then people can come in when they absolutely need to be on site. I do think interviewing in person is a beautiful thing, especially when I was on the staffing side of the house. It sounds like the very essence of your response is, bro, it's got to be hybrid. It's got to be hybrid and in certain situations flexible, just like the absolute theme of how work is procured now. Flexible, which means it's never yes or no anymore. So it's, that's fine. Can I wrap one more thing into it that kind of jumps tails into this particular question and also into contingent labor and also labor in general. And that is we are seeing a grain of the workplace, particularly in skilled industrial and skilled technical positions, face it, people are retiring from the workforce. COVID drove a lot of people out of the workforce face it. They didn't want it, I got to quit saying face it. They did not want to adhere to having the COVID shot and many of them just say, you know what, I'm close to retirement, I'm going to retire. And so I think with the grain of the workplace, even if you take out that sector of why people retire, people are retiring. And we're not putting people back in. I mean, people are not being trained to do those jobs as fast, fast enough to replace the Exodus. And the same thing in many cases, in skilled other white collar occupations, the same thing is happening in people retiring and we're just not prepared. I mean, these companies, I can't tell you how many companies I've gone into and I talk to somebody and well, that contractor has been here 20 years and you can't move him out of this group or make him go to another company because you'll quit. And if he quits, he knows all my legacy systems and I'll be just, we can't do anything. It's just mission critical to us. And I'm like, first of all, you shouldn't have let somebody have that much control over you. It's a compliance. It's starting to have a great factor. It is. It's just a start off right there. But my quite being is that as people age and move out of the workplace, we need to have people ready to go. And to me, remote work makes sense in a lot of cases because you could extend a worker's career by five years. I mean, I know I, you know, I look pretty good for 80 years old. I use a lot of sunscreen. Yes. But the fact is, I do have back problems when I sit in traffic for a ton of time. And I think a lot of people even younger than my 80 year olds that I just do back problems. Back problems for sitting in traffic all day. Yeah, that was like, that was four, three to four hours of of our lives back in the day. That's a, that's a very big commitment. I actually, somebody shared a story with me the other day that sea level executive got recruited for a role. They're here in Houston in Chicago five days a week. They would have to uplift their lives and go to an office from suburbs, Chicago through downtown Chicago, because that's likely what's going to be affordable for them. And it was egregiously, no, hell, no, are you, are you loony like first questionable recruiter, but we had a chance to hit on where this market is going, where it's been, what the political administration could potentially do to influence those areas. Talked about DE&D. Talk about work from home. I think this was a wonderful, oh, and of course, let's not forget about our friend AI. Right. So definitely a wonderful recap. I can't thank you enough and think of somebody up to par like you to do this episode. So appreciate it. Biggie, and to all the listeners out there, definitely appreciate you guys joining in today. We'll see you guys on the next episode of leaders unfiltered. Thanks Eric. Thank you.

Podcast Summary

Key Points:

  1. The contingent labor market has grown significantly, with contract labor predicted to rise from 36% of the workforce in 2020 to 45% in 2025, driven by better spend capture, increased independent contractors, and technological enablement.
  2. A pro-business presidential administration is expected to boost the economy and contingent labor opportunities after Q1 2025, with potential regulatory changes favoring sensible independent contractor classification and possible healthcare reforms.
  3. Industry trends include growth in energy and healthcare sectors, cautious optimism about AI as an efficiency tool rather than a job replacement threat, and an evolution of DEI programs toward more integrated, sustainable approaches.

Summary:

In this podcast episode, the host and guest Eric Osterhout discuss the evolving contingent labor landscape for 2025. They note a significant rise in contract labor, from 36% of the workforce in 2020 to a projected 45% in 2025, attributed to better spend tracking, growth in independent contractors, and technological advancements. Reflecting on historical shifts since the 1990s, the conversation highlights how both buyers and suppliers have adapted to centralized procurement models for efficiency and risk reduction.

Looking ahead, the new presidential administration is anticipated to foster a pro-business environment, potentially boosting the economy and contingent labor demand after Q1 2025. Regulatory changes may clarify independent contractor classifications, and healthcare reforms could increase worker mobility. Industry-wise, energy and healthcare are expected to see growth, while tech may face some job cuts due to AI integration, though AI is viewed primarily as an enabler for efficiency rather than a mass job displacer. The discussion also touches on DEI, predicting a shift from standalone programs to more embedded, sustainable initiatives within corporate structures. Overall, the outlook for 2025 is optimistic, emphasizing smarter procurement and adaptive strategies in a dynamic market.

FAQs

According to an ASA article, contract labor is predicted to increase from 36% of the workforce in 2020 to 45% in 2025, showing significant growth over five years.

Centralized procurement for contingent labor began in the 1990s, with initial resistance from suppliers. Over time, suppliers have adapted to work within procurement structures, recognizing the need for partnerships and compliance.

A pro-business administration typically benefits contract labor by fostering economic growth, increasing opportunities for contingent workers, and potentially implementing sensible regulations for independent contractors.

Healthcare reform may make it easier for workers to pursue freelance or contract roles by reducing dependency on employer-provided insurance, increasing workforce mobility and flexibility.

The energy sector, particularly oil and gas, is anticipated to experience significant growth in contract labor due to reduced regulations and increased project approvals.

AI is seen as an enabler that will replace some administrative roles but also create new opportunities. It will help make program teams more efficient, though adoption may be gradual due to legal and compliance considerations.

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