European businesses will rely increasingly on freelance, geographically dispersed employees as they vie to attract the top skills over the next 5 years.
But they lack the technology and strategies to manage their workforce effectively, a survey of 5000 executives in 27 countries from Oxford Economics and SAP found.
By 2020, over 80% of companies will rely on temporary or contingent workers to fill skills gaps as the war for talent intensifies.
The trend will put them under pressure to invest in sophisticated data analytics technologies that will help them identify the experts they need.
However businesses admit they don't have enough data about their workforce to manage the the growing talent gap. More than half of the businesses surveyed in a study said that workforce development will be a key priority for their organisations.
But just 38% said they have enough data about their employees to understand the skills and talents in their organisation.
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And even when data is available, just 42% said that they know how to extract meaningful insights from the information they have.
Managing a growing workforce that is made up of a growing proportion of part time and self employed staff will create new headaches for employers.
Mike Molinaro, senior vice-president for HR operations at the engineering group, Meggitt, said that companies were still struggling to work out how to respond.
“We are all going to have more contingent workers. What do we do about it ? Do we train them? Do we indoctrinate them in our company values? If we don’t its going to change our company culture,” he said.
The survey suggests that companies are particularly out of touch with the younger generation of technology savvy employees - the millennials.
Many of the assumptions made by senior managers that the new generation of employees have different expectations of work are wide of the mark, it suggests.
Both older workers and millennials share similar career goals, have the similar views of management, and are equally enthusiastic about collaborative projects.
Yet too many employers expect younger workers to take jobs with companies using yesterday’s technology in the workplace, said Jacob Morgan, author and specialist in the future of work. “We live in 2014 and we work in 1975. There is a big gap and organisations need to fill that gap."
As the trend towards hiring more temporary workers continues, employers are likely to create their own in-house markets for freelance workers, he predicts. "A large company, instead of hiring contingent workers will build their own contingent workforce. They will shift from project to project, geography to geography, but they are still part of same company,” he said.