Do You Need an External Talent Cloud?
Aug 2, 2022
The biggest headache (and cost) businesses confront today is securing software development talent. Many are circumventing their organizations’ standard hiring processes and turning to digital talent platforms to find skilled help on-demand. Learn how companies are tapping millions of highly skilled freelancers from around the world to staff projects, especially nearshore talent in LATAM, as the new workforce solution.
### Do You Need an External Talent Cloud?
*Harvard Business Review, January–February 2024*
**Authors:** John Winsor | Jin H. Paik
[Article link at HBR](https://hbr.org/2024/01/do-you-need-an-external-talent-cloud?utm_source=Open+Assembly&utm_campaign=e49a459866-EMAIL_CAMPAIGN_2019_09_05_02_43_COPY_01&utm_medium=email&utm_term=0_108c89e8c4-e49a459866-441132228)
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**Summary:**
The biggest headache—and cost—for global businesses today is securing talent. Managers are privately bypassing standard hiring processes, turning to digital talent platforms (now numbering 800+) to source skilled freelancers quickly and affordably. But treating this as a tactical hack misses the strategic opportunity: companies need an **open-talent strategy**—a fundamentally new, holistic approach to hiring that uses a global “external talent cloud” of internal staff, contractors, and vetted freelancers on demand.
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#### Key Points
- **Talent crisis is real**:
- In March 2021, 41% of workers considered quitting; April 2021 saw 4 million U.S. resignations.
- Tech jobs grew from 10 million (2021) to 35 million (2022) and may reach 150 million by 2025.
- By 2030, 85 million roles could go unfilled, costing \$8.5 trillion.
- **Open talent vs. gig economy**:
- *Open talent* = strategic use of global freelance experts via digital platforms (developers, data scientists, CFOs, etc.).
- *Gig economy* = predominantly B2C, often exploitative and platform-controlled.
- **Benefits of an external talent cloud**:
- 4–5× faster time to deliver
- 8–10× lower costs
- Flexibility, lower fixed salaries, and access to specialized skills
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### Building Your External Talent Cloud
1. **Establish a Center of Excellence**
- Coordinate open-talent strategy, retain knowledge, support problem definition, incentive design, and evaluation.
- Build cross-functional coalition (HR, procurement, legal, IT, security).
2. **Define Strategy, Goals & Objectives**
- **Strategy**: What problems will external talent solve? Success metrics, security/compliance, change management.
- **Goals** (“taskification”): Focus on tasks, not roles—e.g., “Hire 20 AI coders for a new project.”
- **Objectives**: Quantifiable outcomes—e.g., “Integrate with four platforms and fill AI roles within 60 days.”
3. **Select Platforms**
- Evaluate hundreds of open-talent platforms by security, scope (niche vs. broad), and user experience.
- Track KPIs: time to hire (hours–days), cost to hire (10% of freelancer pay vs. 20% agency fees), cost savings, and productivity (freelancers average 8 productive hours/day vs. 5 for employees).
4. **Launch & Learn via Pilot**
- Include procurement, legal, IT, and business units; address friction points (onboarding, billing, IP).
- Use pilot data to refine processes, communicate transparently to employees, and scale success.
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### The Road Ahead
- **Web 3.0 & DAOs** are reshaping open talent: platforms like Braintrust use blockchain governance to align incentives, cut fees (0% for freelancers, 50–75% lower for clients), and give community ownership.
- **Future vision**:
- Seamless, multi-platform freelancing with portable credentials and even shared IP ownership.
- An external talent cloud becomes a strategic imperative, not a tactical workaround.
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*Adapted from* Open Talent: Leveraging the Global Workforce to Solve Your Biggest Challenges *(Harvard Business Review Press, 2024).* [Buy it here](https://www.amazon.com/Open-Talent-Leveraging-Workforce-Challenges/dp/1647823889/).
