Back to Blog
Contingent workforce management in a global setting
2025 and beyond marks a new era for contingent workers, as more businesses shift to a blended employment model to take full advantage of the flexibility and specialised skills these workers bring.
In fact, we’ve seen a remarkable rise in the use of contractors among our clients across various industries. In the Philippines, for example, there was a mounting 215% increase in the use of contractors in the IT sector, showcasing a growing reliance on these types of workers to fuel business growth.
To thrive in this evolving workforce landscape, companies must implement effective strategies to manage their contingent workers successfully. This includes ensuring compliance with local labour laws, optimising performance, and integrating these workers seamlessly into their business operations.
In this blog, we’ll share best practices that will help your organisation effectively manage its contingent workforce and maintain a competitive edge.
What is contingent workforce management, and why is it important?
Contingent workforce management involves the strategic oversight of non-permanent workers, including freelancers, contractors, gig workers, and temporary staff. These workers are hired to address specific needs, such as filling short-term roles, providing specialised skills, or managing fluctuating workloads, without the long-term obligations associated with traditional employment.
In 2024, a report from HR.com shows that a majority (84%) of organisations are already using contingent workers, and this percentage is expected to grow. Companies that excel in managing contingent workers can quickly adapt to shifting market conditions, ensure compliance with local and international regulations, and fully leverage the expertise of their contingent workforce to achieve strategic goals.
Key strategies for cross-border compliance in contingent workforce management
Ensuring legal compliance and navigating regulatory complexities
Managing contingent workers across multiple countries requires a deep understanding of cultural norms and compliance with various local labour laws and tax regulations. Every country has unique rules regarding worker classification, tax obligations, social security contributions, and employment contracts. Failing to adhere to these regulations can lead to hefty fines, legal disputes, and even reputational damage.
In the US, for instance, the classification of independent contractors and employees is governed by the Internal Revenue Service (IRS) and the Department of Labour guidelines. On the other hand, countries under the European Union (EU) enforce strict protections for workers through directives like the EU Directive on Platform Workers, which aims to improve the working conditions of professionals in the gig economy.
What measures should I take to ensure compliance with local labour laws when managing cross-border contingent workers?
To ensure compliance when managing cross-border contingent workers, businesses need to take proactive steps, including conducting regular audits to evaluate current workforce practices and identify potential risks. However, this is challenging for companies that don’t have the bandwidth or lack internal expertise to understand labour laws and regulations across multiple jurisdictions. Partnering with a trusted global workforce provider, such as CXC, can streamline compliance processes and provide industry best practices.
Classifying workers correctly and mitigating risks
As an employer, you may misinterpret the distinction between independent contractors and employees, especially when laws vary across jurisdictions. This can lead to misclassifying workers, which is one of the biggest risks businesses face when managing a global contingent workforce. Take FedEx as an example: the company faced a $228 million class-action lawsuit for misclassifying delivery drivers as independent contractors, resulting in unpaid benefits and tax contributions.
To avoid these costly mistakes, you must review the nature of your working relationship with your contingent workers. Assess the level of control and draft clear contracts that emphasise project-based work, flexibility, and independence from direct supervision.
Streamlining payroll and tax management
Running payroll and managing tax obligations is another complex puzzle you need to consider. Different countries have unique tax regulations, social contributions, and payment systems. In countries like Germany, employers must contribute to workers’ health insurance, pension, and unemployment funds. On the other hand, employers in Mexico are required to provide a yearly bonus of at least 15 days’ salary by December 20.
To prevent costly payroll errors, it’s best to stay on track with tax laws and regulations as it change frequently. Set clear and consistent payment policies for all contingent workers while accommodating regional differences. Partnering with a local payroll expert or global payroll provider, such as CXC, can help navigate the nuances from tax deduction to benefits programs.
Implementing data security and privacy standards
Each country has unique data protection laws that businesses must comply with. For companies with global teams, this means handling sensitive employee data carefully and compliantly. For example, if you have contractors in the EU region, you must comply with the General Data Protection Regulation (GDPR), which mandates strict consent protocols, encryption of sensitive data, and immediate reporting of data breaches. Similarly, the California Consumer Privacy Act (CCPA) in the US grants workers and consumers the right to know how their data is used and the ability to opt out of data collection.
To comply with these regulations, businesses should conduct regular data audits, implement robust encryption tools, and use secure cloud-based storage solutions. Training your workers, including HR and management teams, on data privacy laws is also essential, as fines for breaches can be significant.
Building cultural and operational integration for global teams
Fostering culture in globally distributed teams can be challenging, especially with differing cultural norms and expectations. Miscommunication can happen at any moment and can negatively impact team performance and morale. But there are steps you can incorporate to integrate contingent workers into your company culture, such as:
- Hosting virtual team-building activities: Activities like online trivia games or virtual coffee hours can help contingent workers feel included, even when working remotely.
- Offering onboarding programs for contingent workers: Tailoring onboarding programs to include training on company values, expectations, and tools can help contingent workers integrate faster and feel like part of the team.
- Celebrating diversity: Highlighting different cultural holidays or encouraging workers to share unique traditions during team meetings can help foster camaraderie.
Leveraging technology for global flexibility in contingent workforce management
Using digital tools for seamless communication and compliance monitoring
Working across different time zones, tracking compliance, and maintaining clear communication are among the top challenges when managing a global contingent workforce. This is where tech tools come into play to overcome these barriers. Tools like Slack and Microsoft Teams enable seamless communication by providing real-time messaging, video calls, and task management features that keep your global teams connected. In addition, tools like Asana or Trello help manage projects efficiently, making sure that everyone stays on track with deadlines.
For compliance monitoring, platforms like CXC Comply can help with right-to-work checks, worker classification, and background checks, ensuring all legal requirements are met.
Benefits of managed service providers (MSPs) and vendor management systems (VMS)
As businesses scale globally, managing contingent workers becomes increasingly complex. And the lack of expertise and tech tools can slow down your growth journey. Workforce solutions such as managed service providers (MSPs) and vendor management systems (VMS) can help you by centralising workforce management, reducing compliance risks, and enhancing operational efficiency.
MSPs take on the responsibility of managing vendors and contingent workers on behalf of a company. They handle tasks such as compliance monitoring, contract negotiation, and payroll processing. VMS platforms, on the other hand, provide a digital interface to manage multiple vendors and contingent workers in real time. Platforms like Beeline help with managing worker classification, compliance tracking, and detailed analytics on workforce performance. Combining the strengths of MSP and VMS can significantly enhance your contingent workforce strategy, particularly when you’re growing your global teams or expanding into new markets.
For instance, Boeing, the world’s largest aerospace company, faced challenges in managing contingent worker costs with inflated margin, non-compliant practices, and process inefficiencies. Boeing partnered with CXC to implement a global MSP and VMS model across multiple international locations, improving compliance and operational efficiency for over 800 contractors.
With the capabilities of MSP and VMS combined, organisations can enjoy:
- Simplified compliance: MSPs and VMS platforms ensure adherence to local labour laws and regulations, minimising the risk of penalties.
- Cost optimisation: By centralising operations, businesses can negotiate better rates with vendors and identify cost-saving opportunities.
- Scalability: These solutions enable organisations to onboard contingent workers quickly, even during periods of rapid growth.
- Enhanced visibility: Real-time analytics provide insights into worker performance, helping businesses make informed decisions.
Leveraging MSPs and VMS solutions for managing contingent workers enables your organisation to grow efficiently while maintaining compliance and scalability.
Optimising contingent workforce management for compliance and flexibility
To thrive in 2025 and beyond, companies must prioritise compliance, payroll efficiency, data security, and cultural integration with their global contingent workforce. Incorporating these components while leveraging technology to automate compliance tracking, streamline payroll, and improve communication is key to maintaining seamless operations.
In addition, forming strategic partnerships with a trusted global workforce provider, such as CXC, can offer invaluable support and provide expertise in navigating complex regulations. This way, you can avoid costly mistakes that can jeopardise your reputation.
How CXC can help
Managing a cross-border contingent workforce may seem overwhelming, but you don’t have to do it alone. Trust CXC’s 30+ years of extensive experience in the global employment space. When you partner with us, you don’t have to worry about compliance and administrative tasks that come with managing a contingent workforce. We’ll take care of all of those, so you can focus on what you do best: growing your business.
Ready to take the next steps? Speak to our team of experts today.
