The balance of the workforce is changing. Remote working, talent scarcity and evolving attitudes to jobs and careers are driving the increasing use of contractors, freelancers and fractional workers. However, the practicalities of managing this changing workforce are significant, including everything from building a culture to ensuring everyone gets paid on time.
So how should employers approach this, what role can technology play, and how can they turn the challenges into opportunities? My guest this week is Richard Prime, Co-Founder and CEO of Sonovate. Richard has some fascinating insights to share on the state of the market and how fintech innovations are creating opportunities for employers and staffing agencies in our new world of work.
In the interview, we discuss:
• The current state of the market
• The rise of contractors, freelancers and fractional workers
• Accessing global talent pools
• The challenges of an evolving workforce
• What are the most innovative businesses doing?
• Building a culture that is inclusive of temporary and contract workers
• How complicated is it to make sure everyone gets paid
• The growing demand for early wage access
• Innovative financial benefits to attract talent
• What opportunities does Fintech innovation open up for recruiting and talent acquisition?
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Transcript:
Sonovate (0s):
Support for this podcast comes from Sonovate, the leading provider of finance and payment solutions for the contingent workforce If you are placing contractors in the UK or overseas, Sonovate s technology and funding can help you unlock your working capital. Whether you are a large recruitment business or just starting up with Sonovate, managing your contractor payments has never been easier, allowing you to focus on expanding your business. Don’t let payment deadlines hold you back. Trust Sonovate to keep your funds in place and your business growing. Find out more at www.sonovate.com.
Sonovate (43s):
That’s www.sonovate.com.
Matt Alder (Intro) (1m 5s):
Hi there. This is Matt Alder. Welcome to Episode 516 of the Recruiting Future Podcast. The balance of the workforce is changing. Remote working, talent scarcity and evolving attitudes to jobs and careers are driving the increasing use of contractors, freelancers and fractional workers. However, the practicalities of managing this changing workforce are significant, including everything from building a culture to ensuring everyone gets paid on time. So how should employers approach this, what role can technology play, and how can they turn the challenges into opportunities?
Matt Alder (Intro) (1m 46s):
My guest this week is Richard Prime, Co-Founder and CEO of Sonovate. Richard has some fascinating insights to share on the state of the market and how fintech innovations are creating opportunities for employers and staffing agencies in our new world of work.
Matt Alder (2m 5s):
Hi Richard, and welcome to the podcast.
Richard Prime (2m 8s):
Hi Matt. Thanks for having me on.
Matt Alder (2m 10s):
An absolute pleasure to have you on the show. Please, could you introduce yourself and tell us what you do.
Richard Prime (2m 15s):
Manage? Richard Prime, I’m the co-founder and CEO of Sonovate. My background prior to launching Sonovate is that I worked for around 15 years in the recruitment agency space. I worked for a staffing group called SThree. I joined that in 1996, and so spent a great deal of time in agency. Prior to launching Sonovate, and the co-founder of Sonovate, we initially launched with the aim was to start providing workflow technology for startup recruitment agencies. They’re kind of their technology for placing contractors contracts, time sheet technology, invoice technology payments, and at the heart of that, providing them with the working capital finance to basically ensure their workers got paid immediately and so did they.
Richard Prime (3m 4s):
So I think, in today’s language, they call it embedded finance. We certainly didn’t come up with that, that title back then. And fast forward to today, Sonovate is the leading platform for embedded finance and payment solutions to basically the contingent labor supply chain. So recruitment agencies, consultancies, labor marketplaces. Today, we funded, since we launched the platform, three and a half billion to around three and a half thousand companies and around 40,000 workers have been paid through the platforms to around and funded into about 40 countries. And this year we’re expecting to fund around 1.8 billion to the sector as we go into 2023.
Matt Alder (3m 50s):
It’s been a very disruptive few years in the recruitment space. Well, it’s been a very disruptive three years everywhere, but obviously specifically to recruiting. And 2023 looks like it’s gonna be sort of be no exception to that. What’s your perspective on the current state of the market and how are you sort of seeing that play out in different countries that you operate in?
Richard Prime (4m 14s):
Yeah, I mean, for sure it’s been incredibly disruptive few years, right? Everything from COVID all the way through to kind of great resignation, hyperinflation, cost of living, all those things. And I think anybody in the staffing space has had to be dealing with quite significant changes constantly. I think, where do we see the state of the market? I think, you know, macro concerns still persist for sure. I think they are still on people’s radar. Although I think people are feeling a little bit calmer as to how their staffing looks over the next year. I think for recruitment agencies, they, you know, 2022 undoubtedly was a bump a year for them.
Richard Prime (4m 54s):
But I don’t think for one second that 2022 is going to be a bad year and acre think maybe that, you know, from an employer’s perspective, maybe it calms down a little bit. Although there is still a fight for talent. I’m sure that’s still gonna be part of the, the consideration. We still see job activity is still strong even in the face of some of those challenges. I think the SIA, for example, brought out to report just a few days ago, particularly around contract and temp and market and still saying that there’s still very positive signs in the supply of contract and temp.
Richard Prime (5m 36s):
But broadly, I think the market is okay. I think good recruiters, you know, they historically, they find the right way to do it. I think, you know, 2022 as I mentioned has been a boom year, but I do think they’ll figure out the right things to be doing to still make 2023 a good year. And what do we see,geographically? I think very common story. I think certain parts of the market, there is still a shortage of labor, particularly around the sort of blue collar space and in the higher paid white collar stem sectors. There still is pretty buoyant market and we’re sort of seeing that data across both the UK market wider into Europe and even the same in the US.
Matt Alder (6m 21s):
One of the things that’s becoming sort of very apparent over the last few years and seems to have been very much accelerated by the pandemic is employers starting to look at their talent needs very differently. We’ve got remote working, opening up talent pools for some companies all over the world. Do you think more people are choosing to work as contractors, as freelancers independently, as fractional? And how quickly are employers adapting to that and kind of really looking to sort of make the most of this new thinking about the way that we work?
Richard Prime (6m 56s):
Yeah, No. It’s an interesting question, Matt. I mean, look, starting off, you know, the first part of your question is that I think that the remote stroke hybrid way of working has undoubtedly changed the way people should be thinking about talent pools. And I think if businesses aren’t adapting and thinking about that, then they’re gonna be left behind in that — a not only the fight for talent, but equally how how do they commercially position their business to be efficient in the changing ways in which, you know, talent is going to be used. Sort of second part, yeah, look, undoubtedly there’s more and more people choosing to work in a sort of freelance contract, plural, nature.
Richard Prime (7m 36s):
You know, we see this in younger generations for sure. That actually at the other end of that, particularly again with the cost of living wise, you’re seeing it in the closer to retired or even some that had retired that had gone back into working because of the nature of being able to do their work in a remote fashion. And we run a future world of work reports. We did our second year in 2023, and I maybe mentioned a few statistics in support of that question. If we look at sort of businesses starting on that side, 67% of businesses are experiencing a shift towards a greater proportion of their workforce being contingent workers. That’s up from 55% in 2021, 60% of reporting that members of their permanent staff.
Richard Prime (8m 21s):
So full-time employees, they’re having some of those asking to work in a more contract flexible nature. 67% of UK businesses believing, offering flexibility is crucial in this fight for talent and sought after skills. Now, I know some of these data points will be coming out of 2022. But I do think the general trend for a lot of those things is still holding up. And if we think about it from the worker side of things, you know, 45% of workers think freelance working will help more people stay working or earn more than they would do maybe in a full-time role and to fight against that cost of living.
Richard Prime (9m 4s):
So I think it’s, it’s undoubtedly shifted. It shifted rapidly because of COVID. But I do think a lot of the data, Matt is suggesting that it’s here to stay, and it’s not something that’s kind of a flash in the pan and will revert back to what it was historically.
Matt Alder (9m 24s):
And I think that is really interesting and it is really interesting that you’ve got data around that because certainly what comes across from a lot of the people that I speak to on the podcast. But if we look at the sort of the narratives that are out there in the media and some of the commentators, it would seem that there’s a massive drive to have full-time workers back in the office, but that isn’t actually the case, is it?
Richard Prime (9m 45s):
No. And look, the the one thing I would say, and it sort of leads on to maybe some other things we’ll talk about. But look, this is a challenge. And I think that businesses have to realize that this isn’t easy, and there’s no one silver bullet that solves all of the challenges that come with it. And I think that’s something that we just have to consider. And I think businesses and workers are like trying to work through those challenges.
Matt Alder (10m 12s):
And what are the most innovative businesses doing in this area.
Richard Prime (10m 15s):
That to me, exactly leads off from where we were there. As I said, I think the first thing that the innovative businesses are realizing it’s a challenge, but ultimately it is a big opportunity for them. And I think what they’re doing at the initial point from what I can see is that they’re asking themselves a lot of questions and challenging kind of their longstanding beliefs as to whether they’re relevant today. You know, working culture to ensure it’s ready for flexible working. So how do you better incorporate temporary contract staff. What are you doing beyond just providing ITfor people to work anywhere, anytime. How do you keep your organization’s culture and DNA alive.And how do you promote collaboration across teams and across functions?
Richard Prime (10m 58s):
How is trust high and people believing that people are still working with sort of efficiencies in doing the work that they said that they’re doing. So I think the innovative businesses are asking the challenging questions and trying to come up with the right answers there. And I think clearly technology is an enabler. And I think that the businesses that were embracing technology and understanding how it can help, not only in the finding of talent of candidates, but also in that kind of making it a strong organization for what is gonna become a much more flexible and disparate workforce over the coming years and likely to be the future of how those organizations are set up.
Richard Prime (11m 40s):
And, and maybe finally, Even to some extent in internationally in some businesses having more and more of their workforce on an international basis.
Matt Alder (11m 49s):
Picking up on that. I think that’s some really interesting stuff there. And I think one of the things that doesn’t necessarily get discussed as perhaps as much as it should do, are some of the practicalities around this and round the way that works changing, and you just – you seem like the perfect person to talk about this and ask this question too. How is this panning out in practical terms? What are the issues? What are the solutions? Basic level, how complicated is it to make sure that people get paid?
Richard Prime (12m 18s):
It’s a great question, and I think it has been a challenge that businesses have had to react to very, very quickly. Particularly obviously large, larger organizations that have realized that maybe if their workforce was quite international anyway, the talent has moved away, often moved back home, they are now more disparate. So things like, how do I actually employ somebody? How to actually have a contract in place? How do I actually make a payment to somebody? How do I make sure taxes are dealt with correctly? So there’s been a lot of innovation around things like employer of record, and businesses that have grown very rapidly to solve those challenges. But certainly on the payment side of things, I mean, look, this is a constant concern for the contract freelance world.
Richard Prime (12m 59s):
We’ve gotta remember this is paid to them. They may be working under a business, they may be supplying an invoice for the services that they’ve carried out if they’re working under that type of vehicle. But ultimately, it’s their pay that they need to get in, and they need to get it regularly. And that’s often been a big problem for folks working like this. And again, some of these data points came out of our survey. And I think it may be worth highlighting what the workers were saying that they wanted and were key to them. And they said technology and administrative change that provides prompt payment for invoices that was 27% the main driver prompt time sheeting and processing to ensure that they could submit their request for pay.
Richard Prime (13m 44s):
That was 26%. More frequent payment comment to maybe, comment around that. And one in five of them called for earlier more flexible access to payment. And the sorts of things that we are seeing, Matt, is the emergence of things like offering flexible and frequent pay solutions. In the permanent arena, you are seeing more and more of the kind of early wage access, gaining momentum in the UK and around the world, which enables businesses to rethink traditional payroll and for people to get access to their pay intra month, particularly with this kind of cost of living spike. That is something that is hurting people, and people are needing to gain access to their pay.
Richard Prime (14m 25s):
So, these are key things that we’re sort of seeing around the payment side of things. What we also see in the SME world, which is as we all know is, the kind of lifeblood of the UK economy. We believe that there needs to be an increase in awareness of what options are available today from folks like ourself in the FinTech space that find it harder to gain lending via the banks and the traditional funders and that was some really strong statistics that again came out from the report that we did in 2022. So SMEs thoughts around lending, 26% of the SMEs surveyed last year said they had difficulties accessing finance from their main banks.
Richard Prime (15m 21s):
38% said that banks don’t understand their business needs and 41% think banks lending policies haven’t kept pace with business needs. So when you think about that in a staffing perspective, if you are a business that’s got more and more of your workforce that is working in a contract or temp nature and they’re expecting to get paid on a weekly basis or maybe monthly, but people want access more quickly. You haven’t got your finances in your sort of payroll structures in place, then that fight for talent, and that desire for people to want to work in that organization is going to diminish. So payment is a key thing, and I think it’s something that people need to keep mindful of in this sort of changing future world of work.
Matt Alder (16m 4s):
Yeah, that’s really interesting. And I suppose it leads on to the final question because you got quite a unique position in you are a FinTech company, but you are very much in the recruiting and staffing sector. How do you see things developing in the future at that collision point between FinTech and recruiting?
Richard Prime (16m 24s):
I think it’s a really, really exciting period that we’re gonna come into where you see the capability of service businesses, like recruitment agencies, like consultancies gain access via the kind of FinTech embedded finance community that is gonna enable them to start thinking about what are the services that they provide to their customers. So if we think about the kind of natural world is at the moment, you’ve got say a recruitment agency that’s got hundreds if not thousands of contractors that are working through their business, they’re making payments to them constantly, they’re having to onboard them bank accounts, things like knowing their customer, all of those sorts of things where they then take that information where in reality with the way open finance and open banking is coming to play and people like Sonovate providing our services via a public API, it can mean that they can actually own a lot more of that process and actually feel to their community of contractors and freelancers that they actually can provide sort of financial services products at that point of need.
Richard Prime (17m 36s):
So it enables them to get much closer to provide a wider service capability, undoubtedly open up other revenue streams for them. And I think it’s gonna happen from their client side of things where things like open banking and open financing and even open data means that things like payments onboarding, KYC, checking, all of those things that can happen in that supply chain just become much more knitted together rather than historically where, for example, a financial or a bank sits third party payments are made outside of that flow. Nobody knows what’s happening constantly. Have I been paid? Haven’t I been paid? Those types of basic things that people want to know and understand.
Richard Prime (18m 19s):
I think that’s gonna be embedded and much more into the sort of staffing, whether that’s the recruitment agency or even to an extent in talent management within large corporations where they’ll utilize the FinTech community to change that user journey and add other features and products as they go forward.
Matt Alder (18m 39s):
Richard, thank you very much for talking to me.
Richard Prime (18m 42s):
Thanks Matt. Very, very nice to be speaking with you as well. Thank you.
Matt Alder (18m 46s):
My thanks to Richard. You can subscribe to this podcast in Apple podcast, on Spotify, or via your podcasting app of choice. Please also follow the show on Instagram. You can find us by searching for Recruiting Future. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to our monthly newsletter, Recruiting Future Feast and get the inside track about everything that’s coming up on the show. Thanks very much for listening. I’ll be back next time, and I hope you’ll join me.
