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AI’s next big opportunity is optimizing human capital sourcing, says AGS

Gary Flood Profile picture for user gflood May 14, 2024
Summary:
The use of Globality Machine Learning technology has made the effective matching of skills to tasks a reality, says Allegis Global Solutions

Magnet and figures of people. Customer acquisition and retention © designer491 - Canva.com
( © designer491 - Canva.com)

In 2019, human capital industry veteran Bruce Morton wrote a book called Re-designing The Way Work Works, in which he warned:

We must [start] make hiring decisions based on the macro and micro-objectives we face - deconstructing work so that we can reconstruct a partnership between what must be done, who can best do it, and how.

Five years on, he says, he regrets not being more aggressive in the timeline he predicted for this to happen - as most of what he expected to happen in 10 or 15 years has happened in two, because of COVID.

His new problem is whether to try to update his book - or just keep on pushing what he says is the next evolution in recruitment: AI-empowered service procurement.

He may not have time, as he and the rest of his colleagues at Allegis Global Solutions (AGS) believe that a partnership with an AI Procurement platform called Globality is their new go-to-market strategy for helping its 3,000-plus customers find people for new projects. 

That could matter to the entire workforce human staffing sector, as AGS is an operating company of the privately held $14.5 billion Allegis Group, which claims to be the market leader in the global permanent and extended workforce management, services procurement, consulting, and direct sourcing market.

And if Morton - who has been in the sector for over 40 years and is a previous North American HR Thought Leader of the Year - is right, then the next AI use case is already here: helping businesses streamline sourcing of not just goods, but human services.

Morton, whose formal job title is Head of Strategy at the firm, says:

In our everyday lives, you need something, you go to Amazon, and it turns up four hours later.

You trust that it’s taken all the guesswork out of it, done the research and that this is your best deal, at the best quality you will get - you click a button, it's all you have to do.

And that’s the way it should happen at work, but because of antiquated systems and organizational ability to use the technology that's there, we’re just not.

My hope is for the future we can have the same consumer-grade experience at work. And the tech can do it, but companies have got to get themselves organized so that they can take advantage of what AI sourcing can do for them.

Starting with skills, not resumes 

The use case we’re talking about here is using both Machine Learning and generative AI to streamline the identification of a staffing solution that starts from a different basis than the traditional one.

Specifically, this must be from a definition of the task itself, and what the optimal way of accomplishing that is. 

Morton explains:

In HR, it’s always been about talent: here's a job spec, can you send me some candidates that match it?

But that isn't the right place to start; the right place to start is the work itself. AI can deconstruct the work that the organization needs to get done and then take a skills-based approach to matching to who stands the most success in getting that specific work done.

Morton has an interesting example of what that means in practice:

We had an organization with us very, very recently that just couldn't hire project managers fast enough. But by taking a skills-based approach, they hired a wedding planner.

Well, guess what: wedding planners have great project management skills. It shows what you can get if you think about hiring on skills and potential instead of trying to hire on experience.

In AGS’s reading of the market, if a scope of work is broken down task by task, organizations can start ask questions they hadn’t been able to consider before, such as: 

  • Should we even be doing this: should it be automated instead?
  • Could we just be using employees for this? Have we already got skills inside the business?
  • If we haven't got the people, is this work best done by contractors or freelancers?
  • Or should we bundle it up, put a price on it, and bid that out to service providers?

It’s the last option - offering project help to third-party service providers - that AGS says is where it is concentrating its use of AI-enhanced Procurement.

Morton adds:

The easiest way to think about the difference is a contractor will typically be paid by the hour or the day, a service provider will quote against a brief statement of work and that will be measured on the outcome of that. And we’re the market leader in providing that to the enterprise.

And that market will like this, he predicts, because it gives them options they just didn’t have before: 

This is all about giving organizations choices. If I give this work to a big four consulting firm, they're going to charge me a million bucks, it's going to take six months, but I've got guarantees against work and timing, penalties, etc. Or do I get a couple of my guys that already worked for me involved in who could bring in half a dozen contractors, that's going to cost me $850,000?

I can now properly decide if the risk is worth 150k - do I pay a million and get it off my books and guarantee delivery, or do I have my own ability to manage those people to deliver against it? Or do I have the expertise and the capacity to do this ourselves even cheaper?

This is the right way to make resourcing decisions - not, let's pull a job description off the HR system, put that out to the market, and see what we get.

Using AI to generate demand requirements

This level of choice wasn’t possible, says his colleague Jon Kesman, Procurement & Sourcing Strategy Practice Leader at AGS, until the advent of tools like that of AGS’s new strategic partner - and which has only come on-stream in the last couple of years:

What we're talking about here is complex services acquisition and using the ability to use AI to generate the right demand requirements.

I've worked in procurement my whole career, and I know people are really good at creating contracts and instructing their purchasers what to pay the right service providers, but the sourcing aspect of that - how they find them, how they match their requirements to supplier and ultimately make the decision for absolutely optimal sourcing choice - is a very lengthy and time-consuming process.

So, because it's difficult and cumbersome, it’s often just ignored. This partnership came about because we saw the need for bringing their technology into our service provision to create a closed-loop process for our clients, where they go from quick sourcing through to spend management on the back end, to make sure that the process becomes more highly optimized than it has ever been before - helping the user define what it is they really need, instead of the supplier to tell them. 

Using AI in procurement can also promote wider efficiencies, he adds, as having a common database can help users understand what is happening within the ecosystem:

It’s helping to identify what behaviors have occurred within the organization before, so that I can leverage that and create some efficiencies, as opposed to going and finding somebody new every time. 

Potentially, there could also be huge cost-savings here. Kesman says 50% time saving on better and easier creation of RFPs is “probably a conservative” estimate, while Morton cites procurement industry data that just competitively bidding saves an average of 14% in budget outlay. 

As it stands, since starting to talk to its AI partner in mid-2021, AGS has now formed the service up to the point where the partners have a joint customer a year moving into using the system, and two more are in implementation.

But that is set to change, Kesman concludes:

Right now, we have a handful of others that we are anticipating awarding from, let's say in the next 30 days. But the point is this is now part of the way we will be proposing a solution for every single customer that comes asking.

As we continue to build and evolve our capabilities in how we're delivering procurement services, this has been a game changer so far. And we anticipate it will continue to be.

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