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For many businesses striving to succeed in today’s landscape, it’s crucial to stay on top of industry changes and fluctuations in market conditions. This often involves knowing how to manage staff effectively, and one way to achieve this is by implementing an internal contingent workforce program.
Internal contingent workforce programs are arrangements where organisations employ temporary or contract workers to fulfil specific roles or projects on a short-term basis.
Common internal contingent workforce programs include temporary staffing, contract staffing, internships, and freelancing. These programs offer flexibility, cost-effectiveness, and access to specialised skills, among other benefits.
This article offers valuable insights into how an internally managed contingent workforce program can enhance a company’s overall performance. If you’re considering the advantages of such a program—like greater customisation, direct control, and potential cost savings—to find the best approach for your organisation’s workforce needs, keep reading to discover more.
Relying solely on Managed Service Providers (MSPs) can present some challenges
While staffing MSPs can offer numerous benefits, such as cost-effectiveness and access to a vast talent pool, relying solely on them can present certain challenges, such as:
- Lack of control: Organisations may need more control over selecting and managing individual contractors. Relying solely on traditional MSPs can lead to misalignments between the MSP’s recommendations and the organisation’s specific needs.
- Hidden costs: While MSPs often claim to reduce costs, hidden fees or markups may erode the perceived cost savings. Most of these hidden fees pop up when dealing with low-performing MSPs.
- Vendor lock-in: Overreliance on a single MSP can create vendor lock-in issues, which limits the organisation’s flexibility and negotiation power.
- Quality concerns: Ensuring consistent quality and performance across the board can be challenging when working with multiple contractors through an MSP.
- Data security and compliance: Organisations must carefully evaluate MSPs to ensure they have adequate data security measures and comply with relevant regulations.
Who would be considered as a contingent worker?
A contingent worker is an individual who works for an organisation on a temporary, contract, or freelance basis. They are not considered full-time employees and do not have the same employment benefits or protections as regular employees.
Examples of contingent workers include:
- Temporary employees: Hired on a short-term basis to fill specific roles or projects.
- Contract workers: Employed on a contract basis to perform specific tasks or projects.
- Freelancers:Independent workers who offer their services on a project-by-project basis.
- Seasonal workers: Employed on a seasonal basis, such as during peak periods or holidays.
- Interns: Students or recent graduates who gain work experience in exchange for a reduced or unpaid position.
It’s important to note that while contingent workers aren’t full-time employees, their contributions to a company’s success should never be undervalued. Contingent workforce programs are part of the overall workforce strategies of companies that lead to their success.
Why and how does an internal contingent workforce program outperform an MSP?
While working with MSPs does have benefits, an internal contingent workforce program excels in many areas.
Increased control and flexibility with an internal contingent workforce program
Internal contingent workforce programs offer organisations greater control and flexibility than relying solely on MSPs.
Organisations have direct control over the selection, hiring, and management of contingent workers, ensuring that they align with the company’s specific needs and culture. Additionally, companies can tailor the processes depending on their unique needs and systems. When managing contingent workers internally, organisations also have greater control over data security and compliance.
When a contingent workforce program is handled internally, organisations can quickly scale up or down their contingent workforce to meet fluctuating demands—avoiding the need for long-term commitments with MSPs.
Increased cost-effectiveness and efficiency
An internal contingent workforce program can offer significant advantages in terms of cost-effectiveness and efficiency compared to MSPs. Here are some use cases:
- Reduced overhead costs: Organisations can eliminate or reduce the fees associated with MSPs, such as placement fees, management fees, and markups.
- Greater control over costs: Internal programs give organisations more direct control over the costs associated with contingent workers, enabling them to negotiate rates and terms more effectively.
- Reduced hidden costs: While MSPs may claim to reduce costs, hidden fees or markups can erode the perceived cost savings. Internal programmes can provide greater transparency and control over costs.
Consider these hidden costs and inefficiencies associated with MSPs:
- MSPs often add markup fees to contingent workers’ hourly rates, increasing the organisation’s overall cost.
- MSPs may charge administrative fees for managing the contingent workforce, which can add to the overall cost.
- Potential for mismatches: MSPs may only sometimes understand an organisation’s specific needs, leading to potential mismatches between the contingent workers provided and the actual requirements.
Risk mitigation through internal management
The contingency planning involved with an internal contingent workforce program helps organisations prepare for unexpected events or disruptions that may impact their contingent workforce—such as economic downturns, project cancellations, or natural disasters.
By having a plan in place, organisations can minimise the negative impact of such events on their operations and ensure business continuity. Risk mitigation is also very possible and doable when working with MSPs, but it may require additional steps due to coordinating with them.
Better understanding of crucial differences between contingent workers and core employees
By managing core and contingent workforces, organisations can better understand each group’s unique characteristics and needs.
This knowledge can lead to effective management strategies, including role definitions, determining benefits and compensation, processing legal and regulatory compliance, conducting performance management, and improving employee engagement.
When contingent workforce management is handled internally, it is easier to adapt to changes as they arise. Relying on MSPs solely may sometimes lead to misalignments or confusion.
What is the difference between contingent workers and core employees?
Contingent workers typically have a temporary or project-based relationship with the organisation, while core employees have a more permanent and secure employment arrangement.
Understanding the differences is one thing—but applying them to your workforce management practices is another. It’s crucial to draw the line, not just for the workers’ sake, but to ensure that your company complies with various labour laws and regulations. This is especially true for organisations operating globally with contingent and full-time workers from different countries.
Leveraging a contingent workforce comes with critical advantages
A contingent workforce offers several unique advantages for companies, allowing them to remain agile, adaptable, and effective in a rapidly changing business landscape.
When organisations implement a sustainable contingent workforce program, they can reap benefits that propel their business forward. These benefits go beyond those discussed above. Here’s what we mean by critical advantages:
They can stay highly competitive. Responding quickly to market changes or new opportunities is crucial in fast-paced industries. A contingent workforce can be deployed rapidly, helping companies accelerate product development, meet tight deadlines, or enter new markets without delays. This can lead to faster time to market for products and services,—offering a competitive edge.
They have a buffer during economic uncertainties. By hiring workers on a short-term basis, companies can avoid the risk of overstaffing and potential layoffs when business slows down. This is how contingent workers can act as a buffer—helping organisations navigate financial downturns without impacting their core teams.
They get on-demand access to workers with niche expertise or specialised skills available only within the part-time workforce. This allows companies to fill skills gaps quickly without committing to long-term employment contracts. Whether IT, engineering, marketing, or any other specialised field, contingent workers can bring in experts on a project-by-project basis.
Start scaling with an internal contingent workforce program
Internal contingent workforce programs offer organisations many benefits—the capability to tailor their workforce to specific needs, reduce overhead costs, and ensure alignment with company culture, just to name a few.
However, integrating the knowledge and expertise of external contingent workforce management providers can further enhance your internal program. This holds true, especially for organisations that work with international talent. CXC, for example, has decades of experience working with global companies in their quest to achieve a robust workforce.
Aside from our experience, we also bring in our knowledge and insights on compliance to ensure you get the most out of your contingent workforce strategy. So, if you’re ready to experience the full benefits of a contingent workforce, don’t hesitate to contact us today.
