As organizations accelerate digital transformation and confront widening skills gaps, external workers—once seen primarily as a cost-containment measure—are now a strategic source of agility, innovation, and expertise, giving businesses the competitive edge they need to thrive in an AI-driven economy.
External talent already represents a significant share of the labor: about 20% in the UK and 40% in the U.S., with projections reaching 50% globally by 2050. This surge reflects the growing demand for specialized skills and flexible cost structures.
A new global study sponsored by SAP and conducted by Economist Impact captures this shift. Drawing on insights from more than 2,000 C-suite executives across industries, the report, “From Cost to Capability: Redefining External Workforce Strategy in 2025,” reveals how the external workforce is evolving from a transactional resource into a core capability that drives adaptability and resilience in the AI era.
The findings underscore a critical imperative: organizations must rethink how they engage talent, integrate technology, and foster collaboration across procurement, HR, and finance to unlock the full potential of external workers.
From cost to capability: a strategic pivot
In 2023, nearly one-third of organizations cited risk reduction as their primary reason for using contingent labor and service providers. By 2025, that number dropped to just 6%. Today, cost efficiency (74%) and access to specialized skills (62%) dominate the list.
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Cost efficiency is no longer about short-term savings. It’s about managing broader business risks, from financial exposure to talent scarcity. As Professor David Ulrich of the University of Michigan notes in the report, “To mitigate risk, businesses need to reduce fixed costs, and labor is often a high fixed cost that needs to be seen as a source of growth.”
Leaders increasingly view external talent as a long-term solution for project-based and technology-driven work, especially in fast-moving fields like AI, automation, and data science. Looking ahead, 64% of executives plan to expand their talent networks within three to five years, up from 54% last year—clear evidence that external workforce strategies are becoming integral to workforce planning.
Building a holistic talent ecosystem
Economist Impact’s research points to the rise of holistic talent supply chain management—a model that unites HR, finance, and procurement to forecast talent needs, close skills gaps, and treat the workforce as a dynamic ecosystem rather than a fixed headcount.
This evolution builds on the themes from previous Economist Impact Procurement Imperative reports, where procurement shifted from cost controller to strategic orchestrator of risk, sustainability, and innovation. Forward-looking organizations now embrace “total talent management” models that integrate people, platforms, and partners while aligning culture and communication across internal and external teams.
Breaking down silos and embedding digital tools for real-time visibility will be essential to managing an integrated, skills-based workforce that adapts quickly to business needs—while ensuring external workers feel valued and connected to enterprise goals.
Procurement at the center of workforce transformation
Procurement leaders are moving beyond sourcing and compliance to orchestrate entire talent ecosystems built on governance and collaboration. Yet the function faces challenges: confidence in procurement’s workforce management skills fell from 51% in 2024 to 43% in 2025, reflecting the complexity of its expanded scope.
CFOs and COOs are also taking a more active role, linking external workforce oversight to financial, compliance, and ESG performance. This trend echoes Economist Impact’s “The Resilient Edge: Procurement in an Era of Polycrisis” report, which showed procurement’s remit expanding as risk management becomes central to business strategy.
To succeed, procurement must double down on visibility, digital integration, and strategic alignment. Platforms that unify workforce data—from contingent contracts to skills mapping—will enable teams to balance cost optimization with agility and governance.
AI: driving agility and accountability
Artificial intelligence is reshaping how organizations manage external talent. According to the report, 68% of procurement leaders cite AI proficiency and ethics as their top development priority over the next 18 months. AI can predict workforce needs, automate sourcing, and fill gaps in emerging fields like agentic AI and automation. The payoff: higher productivity and faster decision-making.
But AI also raises a critical questions: who benefits from efficiency gains? How should productivity improvements be measured? Answering these will require new cost models and shared accountability across the enterprise.
As seen in earlier Economist Impact research, AI is once again a catalyst for transformation, redefining how organizations manage, measure, and mobilize external talent.
The external workforce of the future
The evolution of the external workforce underscores a broader truth: agility, capability, and collaboration now define competitive advantage.
Organizations that treat external talent as a strategic asset—integrating governance, data, and culture across internal and external teams—will be best positioned to respond to technological change and seize new opportunities.
To meet these demands, companies are turning to solutions like SAP Fieldglass and SAP Ariba, which help connect procurement and external workforce management. These solutions can deliver the visibility, intelligence, and agility needed to manage today’s dynamic workforce ecosystem.
Gordon Donovan is global vice president of Research, Procurement, and External Workforce at SAP.
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