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 and conducted by Economist Impact captures this shift. Drawing on insights from more than 2,000 C-suite executives across industries, the report, 鈥淔rom Cost to Capability: Redefining External Workforce Strategy in 2025,鈥� 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.

Cost efficiency is no longer about short-term savings. It鈥檚 about managing broader business risks, from financial exposure to talent scarcity. As Professor David Ulrich of the University of Michigan notes in the report, 鈥淭o 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.鈥�

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鈥攃lear evidence that external workforce strategies are becoming integral to workforce planning.

Building a holistic talent ecosystem

Economist Impact鈥檚 research points to the rise of holistic talent supply chain management鈥攁 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 reports, where procurement shifted from cost controller to strategic orchestrator of risk, sustainability, and innovation. Forward-looking organizations now embrace 鈥渢otal talent management鈥� 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鈥攚hile 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鈥檚 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鈥檚 鈥溾�� report, which showed procurement鈥檚 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鈥攆rom contingent contracts to skills mapping鈥攚ill 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鈥攊ntegrating governance, data, and culture across internal and external teams鈥攚ill be best positioned to respond to technological change and seize new opportunities.

To meet these demands, companies are turning to solutions like and , which help connect procurement and external workforce management. These solutions can deliver the visibility, intelligence, and agility needed to manage today鈥檚 dynamic workforce ecosystem.

Gordon Donovan is global vice president of Research, Procurement, and External Workforce at SAP.

In a , Economist Impact highlights this continuing shift in perception and performance, revealing a rising confidence in procurement鈥檚 ability to make business impact. This is the fourth consecutive year that 51风流and Economist Impact have partnered on a study, and the survey includes responses from more than 2,000 C-suite leaders globally.

The report, titled 鈥淭he Resilient Edge: Procurement in an Era of Polycrisis,鈥� also underscores procurement鈥檚 growing influence in advancing AI adoption and sustainability performance. However, the field still faces obstacles in assuming this larger role, including readiness for technology and building a future-proof workforce.

Still, the overall trend is clear: procurement鈥檚 fundamental transformation is putting it in a position to play an important role in business strategy.

Growing confidence in procurement to drive strategic value

Businesses today face a convergence of crises鈥攁 鈥減olycrisis鈥濃�攚hich includes environmental shocks, shipping delays, and growing regulatory restrictions. Tariffs are the latest disruption, prompting businesses across sectors to seek quick solutions to avoid price hikes.  

Weathering this storm requires procurement leaders to take on higher risk as they navigate this uncertainty. The Economist Impact report finds that geopolitical risk has emerged as the top concern for procurement leaders, with 64% listing it as their top focus over the next 12 to 18 months, up from just 30% in 2024. This surge reflects both the growing complexity of global operations and procurement鈥檚 expanding influence.

As risk becomes more multifaceted and severe, procurement professionals have a role beyond sourcing supplies at the lowest cost. Instead, they are developing robust strategies to identify, assess, and mitigate risk. This strategic pivot is also reflected in growing cross-departmental trust. In fact, 78% of respondents expressed confidence in procurement鈥檚 ability to manage external risk鈥攁 37% increase from last year鈥攕ignaling procurement鈥檚 growing value as a strategic partner.

AI has a central role in procurement

From detecting demand signals and enabling scenario planning to automating routine workflows, AI is dramatically expanding procurement鈥檚 capabilities.

The Economist Impact report notes that organizations are prioritizing AI proficiency more than any other skill over the next 12 to 18 months, including predictive analytics, demand forecasting, and managing data bias and privacy concerns. These skills are essential for procurement teams that need to pivot quickly in response to unexpected disruptions.

Most importantly, AI will be at the center of procurement鈥檚 continued transformation. An overwhelming 89% of respondents in the study said they are confident in their ability to adopt and apply AI to improve efficiency and productivity. This confidence is grounded in tangible benefits that AI can provide, including identifying early demand signals, optimizing supplier performance, and simulating risk scenarios to support better decision-making

Simply put, AI is no longer optional鈥攊t is essential to procurement success and relevance.

Improved environmental results

Sustainability has climbed to the top of corporate agendas, and procurement is now on the front lines of this effort, managing supplier emissions and ensuring ethical labor practices. Over half (53%) of survey respondents named sustainability as their top strategic priority for the next 12 to 18 months.

Cross-departmental collaboration is central to these efforts and has enabled procurement to align with key financial and environmental goals. Tools like ESG scorecards and supplier decarbonization plans are now standard practice for measuring environmental impact. These innovations are helping companies meet rising expectations from customers, regulators, and shareholders alike, while also reducing long-term operational risks.

These developments show that procurement isn鈥檛 just supporting sustainability鈥攊t鈥檚 driving it.

Procurement鈥檚 inflection point between strategy and cost-cutting

While cost control remains a key part of procurement鈥檚 mandate, the balance for today鈥檚 procurement teams is shifting鈥攆rom tactical cost-saving measures to strategic contributions that enhance agility, foster innovation, and safeguard reputation.

To manage these dual demands, companies are turning to procurement technology, like , to address key priorities and reduce siloes across the organization.

The insights above were explored in depth during an Economist Impact webinar titled,鈥淢easuring up: Balancing risks and goals for Strategic Procurement.鈥� To delve further into these topics and hear expert perspectives, .

Gordon Donovan is global vice president of Research, Procurement, and External Workforce at SAP.

The SAP-sponsored report offers insights from more than 2,300 C-suite executives spanning multiple countries, regions and industries and examines the pressures facing today鈥檚 procurement teams. As these teams manage risks like geopolitical shifts, supplier threats, and liquidity risks, the surveyed executives emphasize an urgent motivation to improve their procurement operations through agile, innovative, and fast-paced solutions.

Today鈥檚 complex and uncertain business environment has pushed procurement teams to take matters into their own hands. Not only are they accelerating digitalization by adopting emerging technologies like AI, they are driving it by searching for ways to change the procurement operating model.

As Always, It鈥檚 All About Innovation

Procurement officers view driving innovation as one of their function鈥檚 chief objectives. Doing so will help them navigate risks and respond to an evolving consumer environment.

When procurement is truly influential, it is proactive. Teams that understand digitalization and the technologies being acquired have more impact in this area than those that are reactive. Over two-thirds (70%) of the survey respondents agree that procurement is actively involved in developing their wider organization鈥檚 digital transformation strategy 鈥� though whether this is true in the day-to-day may vary from business to business.

If procurement is to play a more integral role in businesses, changes to the function鈥檚 operating model are likely for some organizations, which is why the research also shows that procurement is accelerating its digitalization, including through the adoption of emerging technologies. Approximately 84% of executives are confident in their procurement team鈥檚 ability to apply technology successfully to automate some processes and shift attention to more strategic and complex tasks.

This ability to seamlessly integrate and adopt new solutions will be critical as procurement teams work to balance capabilities, know-how, and expertise from suppliers to achieve the best possible results.

Digitalization Remains a Top Priority

While innovation is at the core of many companies鈥� priorities, C-suite leaders are laser-focused on the solutions that enable their teams to be more efficient, cost-effective, and risk-averse.

More than half (57%) of the C-suite cite digitalization as the top strategic priority for their procurement teams. This emphasis may be fueled by recent advances in generative AI, which is the top technology trend (34%) executives plan to implement in the next 12 to 18 months.

Digitalization efforts can offer real-time capabilities that better address dynamic market challenges and make existing procurement processes more efficient. Data-driven insights allow for more actionable outputs in strategic decision-making and can even impact procurement鈥檚 role in engaging contingent labor. Augmented with AI, they can easily manage contingent labor by streamlining and standardizing recruiting processes like job advertising, resume scanning, expediting background checks, and more.

More efficient intake management also goes hand-in-hand with digitalization. While generative AI occupies the highest priority, intake management is only one percentage point behind it, making it the second-most likely tech trend to be piloted or implemented. 

Value of Multi-Sourcing and Supplier Diversity

The top organizational risk for procurement was monetary uncertainty (49%), as macroeconomic risks can have a large impact on operational external risk. This is a potential factor as to why procurement teams are focused on risk as a longer-term priority.

Updates here can create opportunities like multi-sourcing, which can improve risk reduction and resilience amid growing external threats, and supplier diversity 鈥� driving market expansion through a more diverse supplier base. This can also reduce single-sourcing dependencies to mitigate risks against potential disruptions.

These possibilities prove how companies must make it a mission to improve the quality of data and the models needed to effectively analyze it. Subpar data directly hinders procurement鈥檚 ability to make good decisions, undermining its overall effectiveness and derailing successful digitalization before it takes hold.

Executives Agree: Time to Go All-In on AI

No other strategic priority attracts nearly as many responses as a priority across all industries as digitalization. However, respondents also agreed on one other key topic: the role that AI will take in the digitalization journey.

Adoption of an AI strategy stands at the joint top of executives鈥� list of digitalization priorities for procurement, alongside spend analytics, both cited by 44%. Almost half (48%) of executives aim to use AI to improve procurement processes through source-to-pay and AI-enabled spend management and decision support.

As the main drivers for digital transformation in procurement, these two objectives are complementary. AI tools can read a contract to evaluate clauses and suggest how they can be improved. It can also enhance data management, streamlining the processes needed to make key procurement decisions.

Fully digitalizing procurement operations has been on the function鈥檚 agenda for several years, but it is a continuous challenge. It is a process that does not have an endpoint, particularly as technologies advance quickly. The leading technologies from just three years ago pale in comparison to what can be accomplished today, which require knowledge across software development, APIs, and AI.

Therefore, success in building a thorough and adaptable AI strategy requires top-level expertise. Acquiring the necessary skills could entail considerable organizational and cultural change in procurement and across the business 鈥� extending beyond the structural shifts and developing new ways of working to build these skills.

The Start of a Procurement Renaissance

Across industries, procurement is already finding new ways to add value to the organization. But now that chief procurement officers and their teams are more consistently gaining a seat at the decision table, the challenge is to keep it.

The ongoing state of disruption offers ample opportunity for procurement teams to continue evolving and demonstrate their worth. Above all, improving collaboration with other business stakeholders will be the key to strengthening procurement鈥檚 role within the organization. Today鈥檚 technology-driven initiatives are as much a human challenge as they are a technology one, and when organizations are planning these initiatives it is clear that they need to consider people, process, and technology in equal measure to ensure success.

For more about the findings from this year鈥檚 Economist Impact report, tune in to this podcast hosted by Art of Procurement: .

Gordon Donovan is global vice president of Research, Procurement, and External Workforce at SAP.

In the Economist Impact report, titled “” and sponsored by SAP, surveyed executives share increased confidence in procurement to deliver against risk-mitigation objectives. Particularly when it comes to internal risk, which involves stakeholder management and strategic alignment, confidence levels rose to 83% this year, from 64% last year. This illustrates that procurement is becoming more aligned with key stakeholders across the organization.

However, a “state of permanent crisis” has shaken executives鈥� confidence in procurement鈥檚 ability to manage external risks such as geopolitical shifts, supplier threats, and liquidity risks.

Procurement鈥檚 role in business strategies is ever-growing, but it is imperative to maintain agility.

Heightened Attention to Risk Management

Ongoing inflation, global conflicts, and fluctuating commodity prices have placed risk management at the center of business strategies. Procurement plays a pivotal role in this effort by identifying high-quality alternative products and services while limiting costs.

Yet, respondents noted concerns over procurement鈥檚 ability to manage external risk factors, as only 41% of respondents said they are highly confident in its ability to control vulnerabilities. Comparatively, in 2023, 62% of business leaders expressed assurance in procurement鈥檚 handling of these factors, like supplier shortages, market fluctuations, and supply chain disruptions. Several drivers are pushing this trend, as the report notes that organizations experience four supply chain disruptions every day. Also, inflation continues to influence organizational decision-making, as monetary uncertainty was listed as the top organizational risk priority for procurement. Additional key external factors impacting organizational strategy over the next 12 to 18 months are macroeconomic (71%) and legal and regulatory risks (70%).

Diversifying Supplier Relationships

Businesses have looked to ease fears of shortages by moving away from sole sourcing suppliers. According to the survey, 40% of executives aim to prioritize supply chain diversification to build trusted and long-lasting relationships. In fact, three of the top five strategies listed in the survey are focused on mitigating risk, including reshoring/nearshoring and multi-sourcing.

Visibility has also been listed as one of the highest two priorities for a second consecutive year, proof that it is an urgent need for organizations to invest in technology that increases access to supply chain metrics, develops connections with suppliers, and identifies alternative sellers. Platforms that utilize automation, AI, and advanced analytics are another way to enable procurement teams to make data-driven decisions that improve efficiency and reduce risk.

Sustainability: Procurement鈥檚 Green Thumb

ESG ranked second on the list of priorities for the next 12 to 18 months, an increase from fifth in 2023.

鈥淧rocurement鈥檚 work at the convergence between the business and wider supply-chain ecosystem thus offers it a unique strategic opportunity to lead the sustainability agenda,鈥� the report states. By engaging with sourcing and suppliers, two critical stakeholders in achieving sustainability KPIs, procurement can use its role to translate companies鈥� green ambitions into tangible results.

New regulations such as the (ESRS) and (CSRD) have driven companies to enhance their sustainability practices. 聽According to the Economist Impact report, procurement has capitalized on this opportunity to gain the confidence of executives across the C-suite, with 68% of business leaders expressing belief in procurement鈥檚 abilities to deliver against ESG objectives. This is an increase from 49% in 2023, signaling that procurement鈥檚 remit has expanded beyond cost management.

Sustainability has also become a critical risk category, as 39% of respondents listed compliance as a driver to becoming greener. A failure to conform to governmental policy can lead to penalties and fines that limit growth.

to discuss strategies that leading companies are using to develop sustainable supply. The discussion also includes insights into how procurement can add value to ESG initiatives beyond compliance and reporting.

Leveraging Technology for Sustainable Sourcing

Procurement鈥檚 role in engaging buyers and suppliers to drive sustainability is pivotal. CPOs can set standards for sustainable sourcing and supplier practices, reducing carbon footprints and helping reach ESG benchmarks.

The increasing alignment of procurement with C-suite priorities is seen through the increased focus on sustainability and risk management. The shift in reporting lines toward COOs and the greater involvement in strategic discussions highlight the growing influence of procurement in organizational decision-making.

The expanded role of procurement has placed it at an inflection point, with heightened expectations to deliver results beyond cost mitigation. How will procurement leaders meet these new demands? Investing in technology offers a solution for uncovering valuable insights that to demonstrate procurement鈥檚 value. Coupled with developing people and processes, this approach allows procurement leaders to successfully fulfill their increasing remit.

Utilizing 51风流Business Network for Strategic Priorities

Business leaders should look for a platform to bridge the gap between companies and buyers and suppliers, enhancing visibility, collaboration, efficiency, and compliance. By leveraging such a comprehensive solution, companies can streamline their procurement processes, reduce silos, mitigate risk, and achieve substantial time and cost savings.

can align these benefits with the strategic priorities of risk management and sustainability. The technology has facilitated 780 million B2B transactions and $5.8 trillion in annual commerce, highlighting its vast influence across 190 countries. There has also been a 13% growth in transacting relationships and a 7.3% increase in B2B transactions over the past 12 months, a testament to our growing global community.

Embracing the Future of Procurement

With growing confidence from executives and risk-focused strategies, procurement is well-positioned to lead organizations through today鈥檚 complex business environment. The Economist Impact report underscores this belief, but procurement teams must aim to ensure long-term success by leveraging digital transformation.

Through in-depth interviews and targeted research, the Economist Impact report provides a broad analysis of the state of procurement.

View the and download the .

Gordon Donovan is global vice president of Research, Procurement & External Workforce at SAP.

These are among the findings of the newly released , conducted by and sponsored by SAP. In examining the current state of services procurement, the study seeks to answer two basic questions: Is procurement moving beyond the role of 鈥渁 pass-through for services contracts鈥�? And how are procurement teams using new approaches and technology to innovate services procurement?

The Challenges of Procuring Services

Whether it鈥檚 for IT consulting, marketing services, facilities management, or legal services, procuring services through a third party gives organizations access to personnel with advanced skills and expertise. It can also be cost-effective.

Business leaders have taken note, as highlighted in . 鈥淥n average, professional services spending comprises between 45% and 65% of an organization鈥檚 total non-employee spending,鈥� Ardent reports.

However, acquiring these services requires a significant level of procurement sophistication. Many services are too complex to fit neatly into a catalog and sourcing them requires organizations to consider key questions, including:

• Are we buying labor or an outcome?
• What is the cost mechanism 鈥� daily rates, time and materials, fixed-fee?
• Can we balance risk with agility?
• How do we maintain our service provider relationship?

Procurement teams have the expertise to bring a higher level of maturity to professional services. They provide a strategic approach that streamlines everything from sourcing and contracting to invoicing and vendor management. But are businesses taking full advantage of their expertise?

Three Things the Study Tells Us

The Art of Procurement study reveals a lot about the state of professional services procurement. Here are a few of my thoughts 鈥� from a global perspective.

Many organizations aren鈥檛 benefiting from technology.

Fifty percent of respondents said they purchase services contracts via e-mail and phone, and 23% buy from the same procurement catalogs they use to buy goods. Only 27% use a technology platform designed for services procurement.

Choosing not to use services procurement technology creates compliance and governance challenges. It also limits buyers鈥� ability to get the best pricing. Moreover, e-mails and phone calls don鈥檛 provide a secure, centralized data trail, which is useful for demand planning and forecasting and for making strategic decisions about insourcing and outsourcing.

Too often, bidders seek fixed pricing. That inhibits innovation.

Seventy-nine percent of respondents said they use some form of fixed pricing to buy services. Although this allows them to know the price up front, it also presents challenges. For example, with fixed pricing, statements of work must be tightly written to detail exact project requirements. Otherwise, businesses could pay for more than they receive.

The Art of Procurement research also notes 鈥渁 worrisome lack of risk and reward mechanisms in services procurement contracts.鈥� It warns that disregarding these innovative mechanisms can jeopardize supplier relationships and stifle innovation. 鈥淲ithout clear incentives for success and mitigations for failure, procurement could unintentionally foster a transactional, short-term mindset in suppliers, leading to cut corners or a reluctance to invest in long-term innovation.鈥�

Organizations prefer single project bids, which are less efficient.

In the survey, 39% of respondents said they set rates by project. Managing bids one by one forces businesses to go back to the market continuously 鈥� requiring more proposals, more negotiation, and more contracts.

But there鈥檚 also good news. The remaining 61% of respondents say they use either frameworks or preferred supplier panels to drive efficiency. A framework is a general agreement with pre-qualified suppliers, outlining terms and conditions under which specific goods or services will be procured. Panels are groups of pre-approved suppliers, selected for their ability to deliver specific services. These suppliers meet specific qualification criteria and have undergone a competitive selection process.

Overall, the Art of Procurement study paints a picture where procurement is not putting forth its expertise to help the business acquire and manage professional services. As such, it is conceding its strategic role to stakeholders and suppliers.

How Technology Can Help Turn the Tide

The Art of Procurement study advises procurement teams to 鈥渟elect and implement technology with breadth in mind, aiming to address as much services spend as possible rather than allowing pockets of sourcing activity to flow through non-standard platforms and processes.鈥�

is a broad technology application that can simplify how external services projects are initiated, engaged, managed, and completed. It can enable procurement teams to:

• Initiate service requests with competitive bidding, facilitating collaboration on bid criteria with colleagues, expedited approvals for authorized terms and budgets, and distribution of bids to services providers.
• Engage selected vendors through a negotiation process that follows a side-by-side evaluation of all responses, and then finalize an agreement.
• Manage global services engagements within a single, centralized system 鈥� securely onboarding workers, tracking deliverables, validating work, and generating invoices.
• Complete the project with automated offboarding, including terminating system access, retrieving assets, and giving performance feedback.

51风流Fieldglass has been named to the G2 list of , based on user reviews. It is also one of G2鈥檚 .

Procurement Must Lead the Way

Based on the findings of the Art of Procurement study, it鈥檚 clear that organizations need to adopt a more mature approach to services procurement. Procurement teams have the expertise to lead this transformation, although they must do more to assert themselves within the business. Technology can help accelerate this by enabling procurement to establish consistent, end-to-end processes for initiating, engaging, and managing external service projects.

Read the Art of Procurement report .

Gordon Donovan is global vice president of Research, 51风流Procurement, and External Workforce at SAP.