Factors to Consider When Strengthening Talent Supply Chain

Worldwide, and Mexico is no exception, the labor market is undergoing dramatic transformations influenced by emerging global trends and local disruptions, such as geopolitical factors (new economic blocks and trading partners, wars) social factors (demographic changes), economic factors (economic slowdown) and technological factors (Industry 4.0), that are rapidly changing consumer and worker expectations and impacting the talent supply chain.

But there are many factors to consider when building a talent supply chain, including a company’s human resources and procurement policies, as well as the risks associated with talent retention and intellectual property protection. Striking the ideal balance regarding building, buying, and borrowing talent is a crucial decision that can affect access to scarce talent or lead to missed opportunities to increase productivity and efficiency.

Every day, thousands of people contribute to the success of companies. This workforce consists of permanent workers, temporary or contingent workers, independent contractors, consultants, interns, and various other classifications. These workers are employed in companies of all sizes and in multiple industries and fill all types of roles. 

Therefore, all organizations need to strengthen their talent supply chain through successful strategies based on the following scope:

1. Understanding global skills requirements and gaps. This can be done proactively by predicting macroeconomic trends or reactively adjusting socio-economic conditions; as well as developing more efficient job reallocation mechanisms and capabilities in basic skills for the future.

2. Closing the skills gap by offering adequate training to your people. Talent retention and training are connected. Employee experience (including wellness initiatives, remote and hybrid work opportunities, diversity and inclusion policies, and environmental, social and governance programs) is important for talent retention, as much as or more than traditional incentives, such as pay raises and promotions.

3. Designing, accessing, and obtaining the best and correct workforce. Global trends have opened additional channels for talent sourcing. Keep in mind that there are four main resource models, each with variations and nuances that depend on the industry, legislative requirements and company policies. 

These are the four models: 

1. Permanent workers. They are employed for a limited or unlimited length of time. For their attraction, selection, hiring and training, organizations may consider the use of in-house resources and intermediary services authorized and regulated by the Federal Labor Law in Article 12. 

2. Temporary or contingent workers. These workers are not prohibited in Mexico and are hired only for a specific period of time and used to add capacity to an organization's permanent workforce. These types of workers often help companies meet higher volume driven by seasonal demand cycles, short-term production requirements, absence of permanent employees, lack of specialized skills or expertise needed for a short-term project. As with permanent workers, organizations may consider the use of in-house resources and the use of recruitment services as a strategy for attracting, selecting, hiring and training permanent workers.

3. Project-based workers. Independent service contractors, as they are also known, tend to be utilized to fulfill requirements that have a defined start and stop, are longer term in nature (generally six to 36 months), and require semi- to highly skilled workers to deliver the desired project outcome. Additionally, project worker contracts are governed by a Statement of Work (SOW) which describes specific deliveries, terms, and Service Level Agreements (SLA) to meet project requirements. This type of model refers to an external source of services, known as outsourcing, which is not prohibited in Mexico, but is regulated by the Federal Labor Law in its articles 14 and 15.

4. Fully outsourced services: Fully outsourced service provider arrangements are used for job functions ranging from routine administrative tasks to complex engineering services, and from high-volume transactions to specialized technical support. While certain outsourced functions are considered "non-core" to the bill-paying customer's business, other services are vital to the enterprise, but are managed more efficiently by the service provider due to technology or specialization level. Services provided in this model may be performed off-site at the service providers’ location or on-site at the customers’ facility. Either way, this model represents the most significant level of work outcome responsibility transfer from bill-paying customer to service provider. This type of model, as for project workers, also refers to the contracting of an external source of services, known as outsourcing, which is not prohibited in Mexico.

• Creating new service and product delivery models to take advantage of the talent supply. This is the key measure of success in the talent supply chain. Government policies can make it easier for domestic and international companies to establish captive centers, relocate and hire temporary or permanent workers, as well as external sources of services, processes, and goods.

In conclusion, due to the shortage of talent in our country’s supply chains and the relocation initiatives, all organizations in Mexico should adopt the aforementioned scope as part of their strategies.

Indeed, for many companies, adopting such an approach can be a great way to maintain a level of flexibility in their workforce to meet the demand cycles in their business. For others, this may be more strategic, as they need specialized talent to carry out critical projects, such as product design, test and launch, new technology implementation, or reacting to an unforeseen product quality issue. However, many other organizations may consider integrating various labor resource models into their talent supply chains, often to manage their business as efficiently as possible. Organizations may do so because they need access to specialized services to reduce operating costs, increase the product and service quality, eliminate risks due to lack of qualified personnel, create collaboration, support and diversity networks, or delegate responsibilities to increase business competitiveness, reduce inefficiencies, production times and error rates, leverage technological knowledge and resources without further investment, increase safety and security, and improve the quality of the products and services offered to customers. 

All organizations in Mexico can take advantage of the skills and experience of all types of professionals available in the talent supply chain and eliminate the restrictions and bureaucracy of traditional employment in order to become more agile, innovative and competitive in this globalized world, where the economy is growing at a fast pace.