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In a recent article, we talked about the differences between two approaches to working with AoR providers: consolidation and specialisation. Each way of doing things has its own advantages and disadvantages, and it’s important to carefully evaluate your company’s needs before you decide on one or the other.
In this article, the third in our series on using AoR services in North America, we’ll take you through some of the most important things to consider as you make this decision for your business.
Want to find out more about the function and benefits of AoR services for North American businesses? Head back to the first article in the series to learn everything you need to know.
AoR consolidation or specialisation: Key factors to consider
Every business is different. And if you’re looking to simplify your independent contractor engagements by working with an AoR, it’s important to choose a solution that will meet your needs.
Here are a few things to keep in mind as you choose between AoR consolidation and specialisation:
Business size and complexity
First, you’ll need to assess the size and complexity of your business, as this can impact how well different solutions will work for you. For example, large, complex businesses with multiple locations often have very complex and fragmented operations. That means they could benefit from simplifying things with a consolidated AoR solution.
On the other hand, smaller organisations with simpler HR needs may be better suited to a specialised AoR solution. This allows them to outsource the parts of their independent contractor engagement processes that they need to while continuing to manage everything else in-house. It can also make operations more flexible and allows you to effectively build your own solution by combining services from multiple providers.
Geographic scope
It’s also important to consider the geographic scope of your operations — and specifically the countries and regions where you hire contractors. If you operate in multiple jurisdictions, it may be a good idea to opt for a consolidated solution that ensures compliance with labour laws, taxation and other regulations in all of them.
On the other hand, specialised AoR providers may have very in-depth knowledge of the rules and regulations of a particular region or country. You may decide to work with a different AoR in each location to ensure compliance.
HR expertise and resources
The level of HR expertise and resources that you already have in-house can also have an impact on your decision. For example, if you’re currently lacking in capabilities, a consolidated AoR solution could help to relieve the administrative burden on your team.
However, if you’re mostly managing your needs in-house and only need support in specific areas, a more specialised solution could be appropriate. This allows you to outsource the specific functions you need help with, without spending lots of money on a global solution.
Cost considerations
Of course, you’ll also need to evaluate the potential cost of each solution before you can decide on the right one for you. And there’s no simple answer here, because each option has its advantages.
With a consolidated AoR solution, the upfront investment in infrastructure and service fees tends to be higher. However, these solutions can deliver significant savings over time by streamlining and standardising processes. The number of contractors in your programme also makes a difference, as costs per contractor will likely be lower the more you have.
On the other hand, AoR specialisation tends to come at a higher cost because of the level of specialist knowledge this type of provider can give you. However, the upfront costs are usually lower. This solution also allows you to be more flexible in the way you spend your money since you can simply outsource the parts of your processes that you need to while managing the rest in-house.
Risk management and compliance
You also need to consider the level of risk management and compliance support you’ll need. If your needs are extensive, a consolidated solution might be the best way to ensure compliance with labour laws, taxation and regulatory requirements across your organisation.
While specialised providers can also provide compliance support, they may require more oversight. You’ll also need to carefully select vendors to ensure they’re equipped to ensure compliance. This can get particularly challenging if you’re working with multiple providers.
Strategic alignment
Most importantly, any workforce solution you choose should be aligned with your overall business objectives. You should think carefully about whether AoR consolidation or specialisation better supports your strategic goals.
For example, for a company planning an aggressive expansion, a consolidated solution might make things smoother as you expand into new markets and seamlessly integrate new contractors into your solution.
As well as thinking about your current needs, you should conduct thorough workforce planning to make sure the strategy you choose will still be aligned with your strategic goals 3–5 years from now.
Choosing the right AoR provider for your business
Whatever type of AoR solution you opt for, you’ll need to find a provider that can help your business achieve its goals. Here are a few things to consider when you’re shopping for AoR providers:
- Cost-efficiency: Using an AoR comes with both direct and indirect costs, and you’ll need to consider both of them before you commit to a provider. Direct costs include service fees and payroll processing fees, while indirect costs might include training, infrastructure costs and HR/admin time.
- Operational efficiency: One of the biggest reasons to engage an AoR is to make your operations more efficient. You should ask the provider about their average time to hire, and for stats on the speed and accuracy of HR processes like payroll (for example).
- Compliance and risk management: Ensuring compliance with local and national regulations is one of the main reasons for engaging an AoR, so it’s vital to make sure they’re capable of meeting your requirements. Before engaging an AoR, ask them about the employment checks they run as standard, how they ensure compliance with labour laws and other regulations, and what they do if they discover a mistake.
- Quality of service: Whether or not an AoR’s current clients are satisfied with their service is a good indicator of what they’re like to work with. You can start by looking for testimonials and case studies on the AoR’s website. However, if possible, you should go further by reaching out to their existing clients or looking at opinions on independent review sites and forums.
- Long-term sustainability: When you work with an AoR provider, you need to ensure their solution will help you to meet your business goals. However, it’s not just about your current needs — you should also think about how your business will grow and adapt over time. You should ask AoR providers about their ability to accommodate growth and react quickly to market changes and other external factors.
The right choice for your organisation
Every business is different, and no one AoR provider is right for all of them. Before engaging an AoR, you should carefully consider whether they have the right knowledge, experience and resources to meet your needs.
At CXC, we’ve been providing a range of workforce solutions (including AoR services) for more than 30 years. And we can provide these solutions in more than 100 countries worldwide — including many in North America.
If you need to engage independent contractors, we can help you to do so compliantly and easily, with no additional burden on your team. We’ll work with you to build the solution that works for your organisation, whether you just need to outsource certain functions or want us to take on your entire contingent workforce.
Want to learn more about what we do? Speak to our team to get started.
