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Challenge
In 2017, this client partnered with CXC to deliver compliant engagement, management and payroll of a large portion of their contingent workforce.
Through our extensive partnership, we learnt that a significant cohort of contractors were being sourced through a statement of work (SOW) arrangement. Generally, a SOW defines the project or tasks that are to be successfully completed before payment is made.
However, for this client and many others in the market, we were seeing workers engaged on a time-only basis and paid a daily rate regardless of whether or not they complete specific outcomes. This was because SOW staff do not appear as headcount, and cost allocation can be managed to different cost code (generally procurement).
This resulted in significant cost leakage and inconsistent market rates – not to mention compliance failings, limited visibility and varying experiences depending on the worker.
CXC’s solution
To compliantly engage and manage this segment of the workforce, as well as providing a governance layer across the entire program through an MSP.
CXC’s hybrid MSP solution is comprised of five main elements:
Bringing suppliers into the model: CXC will manage role requisitions through the existing 28-strong supply panel. While these suppliers are being brought across to the model, we implemented a panel of pre-vetted agencies to manages role sourcing.
Supplier management and optimisation: Monitoring the client’s roles and requirements, while aligning the supplier panel to those needs. We also manage supplier performance through a scorecard to ensure timeliness and quality, and regularly review the panel to determine whether we need to add new suppliers.
A spotlight on direct sourcing: Through our team of three expert MSP specialists, we aim to lower costs through sourcing workers outside of the agency panel. Due to policies on the client side, we aren’t able to use their brand. Despite this challenge, our success in placing their contractors demonstrates our ability to target the right talent with the right messaging.
Implementation of Workforce Exchange (WEX): CXC supplements our direct sourcing with WEX, our talent pool of proven contingent workers who have finished assignments with other clients. This gives the client access to pre-qualified workers with full compliance adherence.
Workforce management and payroll: All contingent workers, regardless of source or engagement structure, now come through CXC’s model. This enables the client to have greater visibility and compliance, while minimising cost blowouts.
Finally, to ensure that contractors were being engaged under the right structure, we implemented a decision tree that guides hiring managers in choosing the right worker for their needs – whether that’s perm, contingent, temp or a true milestone-based SOW.
Results
CXC has successfully implemented our MSP model, with the first tranche of contractors being transitioned into the model. The remaining 170 contractors will be coming across in a phased approach, minimising disruption for all parties.
The program has already achieved:
- Rate realignment: All workers going forward will be benchmarked according to market rates.
- Supply chain margin: Suppliers in the model will have their margin reduced after 12 months, creating significant cost savings.
- Direct sourcing enhancement – CXC’s MSP talent partners work with the internal talent team to forecast up and coming roles, curating talent pools to reduce time to hire for each individual role. We’ve previously had significant success with other clients using this methodology, leading to savings of $404,328 within the first six months for GE Vernova and $470,000 in twelve months for Transurban.
- Consultancy workers – Often permanent employees of these organisations, we engage the consultancy as a business to business relationship to ensure the workers compliantly go through our model. We are currently transitioning the remaining consultancies in a phased approach to minimise disruption.
We also supported the client’s leadership with comprehensive question and answer sessions, to resolve any concerns about the new model with hiring managers.
