Contingent Workforce Management

A Complete Overview of Contingent Workforce Management Solutions

Businesses today are increasingly reliant on contingent workers to fill talent gaps and support growth.

In fact, the contingent workforce has boomed in recent years, as workers seek careers with more flexibility or “side hustles” that boost their income.

According to a report from Intuit, 80 percent of large US corporations plan to increase the use of a flexible workforce in the coming years, with contingent workers making up over 40 percent of the total workforce. In addition, 62 percent of enterprises perceive contingent labor as a vital component of their overall workforce, according to the “State of Contingent Workforce Management” report from research firm Ardent Partners.

Utilization of the contingent workforce brings a wide variety of benefits to a business, including:

  • improved business agility;
  • reduced labor costs;
  • the ability to bridge skills gaps;
  • improved talent acquisition;
  • and faster hiring times. 

Yet, despite these benefits, contingent workforce management is a complex employer responsibility that requires highly-strategic management and consistent processes. So, how do organizations manage their contingent workforce and drive ROI?

An effective contingent workforce management solution is the answer, whether outsourced or in-house! 

According to the Staffing Industry Analysts’ ‘Workforce Solutions Buyer Survey: 2020 Americas Results’, 84 percent of companies have experienced cost savings with managed services providers (MSPs) and 76 percent have seen savings with a vendor management system (VMS).

In this comprehensive overview, we’ve detailed all of the contingent workforce management solutions available to your business, so that you can choose the best solution for the specific needs of your organization.


What is the contingent workforce?

Contingent workforce management is the process of managing contingent workers, such as temporary workers, independent contractors, gig workers and freelancers.

Since staffing agencies are typically used to source contingent workers, a contingent workforce management program also includes all of the processes associated with managing vendors as well.

Due to both employment compliance regulations and the different processes involved, managing a contingent workforce requires a separate approach to the way in which permanent employees are managed. 

Contingent workforce management should be its own highly-strategic program that is planned, designed, built and implemented with your company’s workforce requirements and bottom line in mind.

When implemented effectively, a contingent workforce management program can help an organization to bring in talent quickly, address workforce shortage, reduce labor spend, improve talent acquisition efforts, enhance workforce quality and help build a more flexible workforce that drives business growth.


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What are the Challenges Associated with Contingent Workforce Management?

Contingent workforce management is a highly-strategic process. Yet most organizations (especially those with smaller contingent workforce volumes) don’t have the expertise, resources or time to implement an effective program.

Instead, companies tend to have an overreliance on manual processes and spreadsheets to manage their contingent workforce. Information is saved on sporadic documents across the business, and hiring managers have no standardized processes to follow when engaging staffing agencies and agreeing payments.

The result? The business has no real contingent workforce management program in place. Information is fragmented across the organization, giving team leaders no visibility or control over the contingent workforce process. 

Due to this complexity, and the lack of control and visibility that results from it, many businesses suffer from contingent workforce risks such as

  • A complete lack of visibility or control of the contingent workforce.
  • Rogue spending runs rampant throughout the business as hiring managers source staffing agencies on their own terms and pay their own rates.
  • Poor staffing agency performance that leads to low-quality talent acquisition, with no insight into where things are going wrong.
  • Compliance risks, leading to the misclassification or co-employment of contingent workers.

These risks are common for the vast majority of organizations. According to the Sapient Insights 2020-2021 HR Systems Survey, only 9 percent of companies believed they were “excellent” at managing gig or contingent workers, while 17 percent said they were “poor” at managing that segment of the workforce.

To make improvements, contingent workforce management solutions are essential. In the remainder of this comprehensive guide, we will explore some of the most common in-house and outsourced solutions that businesses can use.

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Outsourcing Your Program to a Managed Service Provider

One of the most common contingent workforce management solutions is the use of an outsourced managed service provider (MSP). An MSP is a third-party contingent workforce expert that takes on the entire responsibility of managing an organization’s contingent workforce program.

In an MSP agreement, the managed service provider will take on the responsibility of building, implementing, managing and continually improving a company’s contingent workforce program, with the aim of reducing costs, improving the organization's efficiencies, enhancing talent acquisition and better meeting compliance requirements. 

The MSP will take on tasks such as engaging and managing staffing agencies, standardizing contingent workforce processes, program billing, negotiating contracts, paying invoices, as well as reporting and analytics on program performance. 

When implemented successfully, outsourcing a contingent workforce program to an MSP can result in benefits such as: 

  • Improved contingent workforce quality
  • Regulatory compliance
  • The creation of standardized processes that drive program visibility and control
  • Ongoing cost savings
  • Effective management of staffing agencies

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Consolidate Your Vendors With Supplier Consolidation Services

One of the most time-consuming and frustrating aspects of managing a contingent workforce for many teams is the paperwork and processes associated with managing the staffing agencies that are utilized as part of the program.

Staffing agencies help organizations to fulfill their contingent workforce requirements, but managing them is time-consuming and complex. When done in-house it requires a huge amount of paperwork, mundane processes and a colossal number of contacts.

Your team simply doesn’t have time to manage, and contact, hundreds or even thousands of staffing agencies. This process only slowls your team down, and weighs on your contingent workforce program - making it more difficult to source temp and contract workers quickly.

When it comes to managing your staffing agencies, the 80/20 rules applies. The vast majority of your work (the 80 percent) is spent performing processes related to your staffing agencies, but this is only a minority of the work (the 20 percent) that makes your contingent workforce successful. So, why waste your time? 

With that in mind, it makes sense for organizations to outsource these processes to a third-party expert with repeatable and reliable processes.

Supplier consolidation services are an easy and tactical solution that differs from the highly-strategic solution of outsourcing an entire contingent workforce management program to a managed service provider.

With Supplier consolidation services, organizations simply outsource the paperwork and processes of managing their staffing agencies to an outsourced company. The result? Organizations are able to consolidate their vendors, meaning they have just one-point-of-contact.

Supplier consolidation services, include:

  • Onboarding new suppliers
  • Negotiating and agreeing contracts under client’s direction
  • Facilitating the onboarding of all resources
  • Ensuring vendor compliance
  • Overseeing time and approval
  • Consolidating all approved time into one invoice
  • Distributing funds to staffing agencies
  • Reporting and analytics

This saves businesses significant amounts of time and money, allowing them to focus on finding the right staffing agencies to meet their contingent workforce needs, instead of struggling to complete an overwhelming amount of paperwork and performing mundane tasks associated with managing their staffing agencies. 

Supplier consolidation services are easy to implement, allowing organizations to rapidly save time and focus on their core competencies.


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Managing Your Contingent Workforce In-House with a Vendor Management System

If you make the decision to manage your contingent workforce program in house, then it’s important to know just how complex implementing an effective program is. It’s all too easy to lose visibility and control over a contingent workforce, resulting in rogue spend that runs rampant throughout your business.

That’s because the vast majority of organizations, especially those with smaller contingent workforce volumes, manage their contingent workforce with manual processes and time-consuming spreadsheets.

This leads to data getting lost, information being recorded inaccurately, and no standardized processes across departments, with hiring managers engaging staffing agencies on their own terms and paying their own rates. 

When a contingent workforce is managed in this manner, there is no strategic program in place. 

That’s why the vast majority of organizations use a vendor management system

In fact, according to research from Staffing Industry Analysts, between 80 and 85 percent of businesses with more than 1,000 employees use a vendor management system to source and manage their contingent workers.

A vendor management system is a software application that automates all of the processes associated with managing a contingent workforce, as well as ensuring businesses have visibility and control over their staffing agencies and contingent workers.

By storing all contingent workforce data in one centralized database, a vendor management system provides organizations that want to manage their contingent workforce program in-house with the reporting and analytics functionality that drives continuous program improvement. 

It’s important to note that vendor management systems are used both by companies managing their contingent workforce internally, as well as to augment an MSP program.


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Outsource a Scaled-Back Program with an MSP Lite Solution

For some organizations a full implementation of a complex managed service provider program may be a little too much for their needs. In these cases, businesses can turn to a an MSP Lite Solution instead. 

MSP Lite programs are similar to an MSP program in that it’s an opportunity for businesses to outsource their contingent workforce program to an expert third-party with contingent workforce experience.

The difference is a MSP Lite program isn’t as complex as an MSP program. It doesn’t include the process slows, customized solutions and complex implementation that is associated with a full MSP program. 

In an MSP Lite agreement, a company simply carves out a piece of business for the service provider who then works with its own network of pre-approved staffing agencies to fulfill the company’s contingent workforce requirements. 

The MSP Lite solution partner essentially works as the primary contingent workforce supplier and the primary point-of-contact for the company’s contingent workforce. The service provider will manage all staffing agencies on the company’s behalf to ensure the program is helping the company meet its overall business goals. 

In addition, companies that work with a MSP Lite service provider will gain access to preferred pricing and bulk pricing benefits.


Do You Need Help Managing Your Contingent Workforce?

The contingent workforce brings organizations some fantastic benefits, from improved business agility, cost savings, filling skills gaps, easier and faster hiring, and the freedom to trial new skills and approaches. 

But only if you know how to manage this category effectively. 

Whether you are looking to manage your contingent workforce in-house or access third-party expertise, Contrax is a powerhouse of industry leading knowledge in contingent workforce and staffing agency management. 

Our experts have deep contingent workforce knowledge, a history of SOW program implementation and procurement experience in North America. 

That’s why we’ve developed a range of industry-leading contingent workforce management solutions, such as a managed service provider program, supplier consolidation services, vendor management system advisory and master vendor models, to drive improved results for your business.

By ensuring your business is able to better manage its externally-sourced contingent workforce program and strategically manage its staffing agencies, we can help you save money and significantly improve workforce quality!

Contrax is here to help ensure you maximize the ROI from your contingent workforce.

Definitive Guide to Contingent Workforce Management

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“Definitive Guide to Contingent Workforce Management”

As the use of contingent workforce grows, so does the importance of implementing a strategic program. To help your organization optimize its use of the contingent workforce, we’ve created this definitive guide to successful management.

The Definitive Guide to Contingent Workforce Management is a comprehensive overview of the contingent workforce and how to manage it. Download your copy today!