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The growth of the contingent workforce
The contingent workers have become an integral part of many companies’ workforce planning. Prior to the pandemic, the average headcount for the contingent workforce was around 43%. And it’s expected that there will be further growth in this part of the workforce. In fact, a recent survey says that 65% of company leaders globally intend to increase their use of contingent workers in the next two years.
Catapult back to the global financial crises in 2008 and that number was considerably lower at around just 10-12%. The tremendous growth of this sector of the workforce can be narrowed down to a few key reasons.
- The contingent workforce enables better workforce planning and aligns the talent and skill sets with company projects and goals.
- The explosion of technology in hiring and talent management makes it easier than ever to engage on-demand talent.
- Significant cost savings can be realised when compared with more traditional models of engaging talent.
- Greater financial flexibility can be experienced with the use of contingent workers in an organisation.
While the benefits of using a contingent workforce model are clear, the management of such a workforce also comes with its own unique set of challenges.
Challenges of managing a contingent workforce
A company’s workforce probably generates the highest expenses for the business. Because of that, companies are always looking at ways to reduce those overhead costs, and so they turn to the contingent workforce as a way of managing cost efficiencies.
Hiring contingent workers is only the beginning. Managing a contingent workforce program is much more involved and is the reason more companies are turning to third party providers or HR outsourcing companies, like CXC, to manage their program.
Contingent workforce program management is time-consuming and costly if not implemented properly. With tax intricacies and variances in each state or country (if running a global program), worker classification and compliance checks should be an essential part of any program.
Key areas of focus for your contingent workforce program
For a contingent workforce program, the key areas of focus should be:
- Quality of talent. Ensure you have the top-tier talent to support your organisation’s short-term or specific project needs.
- Efficiency. Streamline processes and workflows so you can save time and resources, achieving optimal results.
- Risk compliance. Manage the risks associated with contingent workers. Adhere to laws and regulations to mitigate potential financial and legal risks, like worker misclassification.
- Cost efficiency. Gain significant cost savings without compromising the quality of your workforce.
Your contingent workforce program should manage all aspects, from finding the talent or sourcing, onboarding, managing, centralised invoicing and payroll, reporting, analysis, compliance management, and currency management and conversion if you’re running a global program.
How to ensure maximum benefits from your contingent workforce
You will know the success of your program implementation by the benefits it produces for your business, which include better access to talent, reduced costs, a better bottom line, greater efficiencies in processes, and a more consistent process across your entire organisation.
To fully realise these benefits, companies outsource the management of their program to a managed service provider (MSP).
MSP and contingent workforce
When it comes to managing a contingent workforce, an MSP, a third-party company specialising in providing business critical services to other organisations, plays a pivotal role by taking charge of sourcing, hiring, onboarding, and managing your company’s contingent workforce. Think of them as a strategic partner who contribute to your overall contingent talent strategy. MSP has the ability to provide tangible data that can help you make smarter talent decisions. MSP can also offer insights on your contingent worker spend, talent channels, and even supply chain performance.
Moreover, reliable MSPs, like CXC, offer a range of additional services that benefit your organisation. These include sourcing, vetting, and engaging contractors in a compliant manner, reviewing supplier contracts, building candidate pools, advising on labour market trends, providing workforce analytics and insights, and introducing new vendors to your company.
3 types of MSP program
In the following, we analyse 3 different types of MSP program.
1. Vendor Neutral MSP
A vendor-neutral MSP can tailor a vendor management program specifically to your business and workforce needs. Being vendor-neutral, there are no obligations to any other staffing vendors, tech companies, or other providers.
This type of MSP can be more transparent when it comes to pricing and offer more visibility to their clients. While they do allow for more competition, too much competition could leave suppliers not wanting to compete. It’s important to ensure they get to know your business and your unique requirements.
2. Master supplier/vendor MSP
As the title suggests, the master supplier/vendor MSP program is the one stop shop for the entire program management and provides all the aspects directly to the client for engaging contingent talent. The provider assumes the overall responsibility, with all requisitions and orders going directly to the master supplier, to be filled directly or sub-contracted out.
This model offers simplified billing; however, as there is only one supplier, there may be a lack of competition, resulting in less choice.
3. Hybrid MSP
In the hybrid program approach, the MSP uses some of the functions from both the vendor-neutral and master supplier models as their contingent workforce management strategy.
For some services, the organisation would engage a single provider, but for others, multiple providers. This type of engagement may offer greater flexibility to the organisation and the ability to shop rates, but it does increase the touch points.
There are pros and cons to each different type of contingent workforce management strategy —knowing which program is best for you and having a reliable MSP are key to gaining a strategic advantage. With the right implementation and management, you can ensure the overall program success for your organisation.
Streamline contingent workforce management with CXC
Don’t let the complexities of managing contingent workers hinder your growth and success. At CXC, we’ll help your organisation streamline the entire process, from sourcing and engagement to payment, supply chain management, and compliance. Freeing up your time so you can focus on growing your business while we take care of the time-consuming tasks.
Whether you want to partner with us to hand over the entire supply chain or simply select the services that require extra support, we have a tailored approach to meet your unique needs, without charging you for functions that you’re comfortable handling in-house.
Get in touch with us today to learn more about the different types of MSP programs and the significant benefits to your company’s contingent workforce management strategy.
