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Contingent workforce management best practices for 2025

CXC Global8 min read
CXC GlobalJanuary 21, 2025
CXC GlobalCXC Global

In 2025, many companies have moved away from the traditional labour model and adopted more flexible workforce strategies. And hiring freelancers, contractors and other contingent workers can have a lot of advantages for a business. 

But there’s no denying it: sourcing, onboarding, training, managing and paying those workers is a lot of work. Read our guide to contingent workforce management best practices to find out how to maximise the success of your contingent worker programme without overwhelming your team. 

What is contingent workforce management? 

Contingent workforce management is the practice of overseeing the non-permanent workforce, which includes freelancers, independent contractors, consultants, gig workers and temporary employees. It encompasses the entire process from sourcing and onboarding right through to offboarding and redeployment. 

Effective contingent workforce management streamlines the process of managing non-permanent workers, improving their experience of your organisation. The right strategy can help businesses to stay ahead of the competition by reacting swiftly to internal and external changes. Lastly, following contingent workforce management best practices protects your business by ensuring labour laws and tax regulations are adhered to. 

Challenges in contingent workforce management and how to address them

Here are some of the challenges you might face when it comes to managing your contingent workforce.

High workforce costs 

Most companies with large contingent workforces have set processes in place for sourcing new talent. But just because these things exist, doesn’t mean managers are going to use them. Managers sourcing and paying workers outside of official procurement channels results in significant tailspend — which quickly adds up.

To avoid this, encourage managers to stay within your official channels by ensuring they’re as streamlined and simplified as possible. Educating managers on the importance of using approved procurement channels is also key. You can learn more in our full guide to controlling tail spend in the contingent workforce. 

Compliance and risk management

Managing a contingent workforce comes with inherent compliance risks. For example, employee misclassification is an easy mistake to make —  but it can lead to serious consequences like fines, penalties, and severe reputational damage. 

Using a vendor management system (VMS) can help you to automate and streamline compliance processes while maintaining an audit-ready record of every transaction. If you want to take things a step further, consider working with an external compliance partner (like CXC).

Limited oversight and efficiency 

Many employers of large contingent workforces have little idea how many workers they’re employing, what they’re doing or how much they’re being paid. Not only is this extremely cost-inefficient, it can also be a major compliance risk.

Again, deploying a software tool like a VMS could be the answer. These tools allow you to keep track of all contingent workers throughout their journey with your organisation, and give you visibility into all aspects of your contingent workforce. They can also save you considerable time by automating key tasks and processes.

Access to talent 

A combination of demographic changes, reduced workforce participation and skill shortages in certain key industries mean that many organisations are struggling to find the talent they need in 2025. And this problem applies as much to contingent workers as it does to permanent staff.

There’s no one solution here. But ultimately, businesses can overcome the challenge by thinking outside the box when it comes to sourcing and selecting talent. That might mean:

  • Hiring from countries or regions where hard-to-fine skills are more available
  • Working with educational institutions to train and develop new talent 
  • Using skills-based hiring instead of relying on qualifications 
  • Considering candidates from less traditional career paths 

You can learn more in our full guide to managing talent availability challenges.

Issues with scalability and flexibility

Most organisations’ contingent workforce needs are not set in stone, but rather fluctuate throughout the year. And the inability to react swiftly to changes in demand can be a key disadvantage, because it leads to overspending and inefficient use of resources. 

To avoid this, employers should conduct thorough workforce planning. This means forecasting labour needs as accurately as possible to determine when and how contingent workers will be needed in the future. Making these predictions accurately ensures you’ll always have the people you need to meet your goals, and the flexibility to scale back when needed. 

Working with an experienced workforce solutions partner like CXC can help you to maximise flexibility and remain as agile as possible. 

6 more best practices for successful contingent workforce management 

We’ve covered some contingent workforce management best practices in the section above. Let’s take a look at a few more to give your organisation the best chance of success.

1. Set up structured processes 

If you don’t have full control over your contingent workforce management processes, you’ll likely see increased maverick spend, compliance issues and limited visibility. To avoid this, you should set up strict, defined processes for everything related to your contingent workforce — and ensure they’re followed.

For example, managers should only be able to source workers through approved channels, and must follow a consistent compliance process for each worker. You should also have defined processes for things like onboarding, training, performance management, payroll, onboarding, and more.

2. Establish clear communication channels

Establishing clear communication channels between workers, managers and your organisation is key to effective contingent workforce management. This ensures that workers fully understand their assignments and that managers are quickly made aware of any problems or concerns. Ultimately, this helps make workers’ experience of your organisation as smooth and positive as possible.

3. Streamline onboarding processes

The onboarding process is about providing workers with the tools and knowledge they need to become productive as soon as possible. But, while many companies spend a lot of time designing onboarding processes for permanent hires, contingent workers are often neglected. 

Developing a standardised onboarding process for contingent workers not only gets them quickly up to speed, but can also help them to feel connected to your organisation — encouraging engagement and retention. To ease the burden on your internal team, consider working with an experienced external partner (like CXC) to develop and manage your contractor onboarding process.

4. Track and recognise performance

Just like permanent employees, contingent workers benefit from regular feedback and recognition. Consider setting up a system for tracking contingent workers’ performance and rewarding excellent work. Not only does this lead to better outcomes overall as workers are encouraged to improve, it can also boost morale among your contingent team. Ultimately, this can result in higher levels of loyalty and engagement.

5. Conduct regular compliance audits

Most companies that hire contingent workers have compliance checks in place as part of the onboarding process. These allow them to verify each worker’s employment status, avoiding the risk of fines, penalties and reputational damage that comes with misclassification. 

However, because a worker’s status could change over the course of an engagement, it’s important to conduct regular checks throughout their time with your company. You may want to do this as part of a wider audit process that also considers things like tax compliance, labour laws and co-employment risks. Working with a compliance partner like CXC can help to facilitate this process, minimising your risk of fines, legal fees and other consequences of non-compliance.

6. Continuously monitor and adjust

Your contingent workforce management programme is unlikely to be perfect from day one. The important thing is to adjust and improve it over time, so each version is at least a little better than the one before.

To do this, you’ll need to carefully monitor your programme’s performance through key performance indicators (KPIs). These might be related to cost, efficiency, worker satisfaction or performance, for example. As you track these metrics over time, you’ll be able to see which aspects of your plan are working as expected, and which ones need improvement.

Building a business case for strategic contingent workforce management

Effective contingent workforce management can deliver a lot of benefits to an organisation — but it does come at a cost. Whether you want to bring on board an external partner, invest in a new technology solution or simply devote more resources to contingent workforce management, you’ll likely need buy-in from your organisation’s senior stakeholders. 

Here are a few tips to help you build a business case for strategic contingent workforce management:

  • Start with the pain points: The first step is to talk about the problems with your current system. You’ll need to do your research and come to the table armed with data, including hiring metrics, worker satisfaction scores and anything else that demonstrates the issues you’re facing. Of course, one thing leaders are particularly sensitive to is cost. If you can show that your current setup is wasting money, you’re likely to get their attention. 
  • Demonstrate the value: Next, talk about how strategic management will impact things. Be specific, and provide concrete data such as projected savings. If you’ve identified a partner that you want to engage or a tech solution you want to implement, ensure you have as much information as possible about their solution and how it will help your organisation. 
  • Identify key success metrics: You need to be able to show stakeholders that you’re serious about improving the outcomes of your contingent workforce management programme. That means identifying the key metrics you’ll track as you make changes. Make sure to share not only the metrics themselves, but also the KPIs you’ll use to define success. This builds in accountability, showing leadership that you’re committed to maximising their return on investment.
  • Be prepared for pushback: If company leaders are one thing, it’s resistant to spending money. They’ll likely have questions on why your contingent workforce management program needs more investment. Stay calm and ensure you answer questions as thoroughly as possible, referring back to the data you’ve gathered.

Your partner for strategic workforce management

Following the contingent workforce management best practices outlined in this article will give your contingent workforce programme a better chance of success. But there’s no getting away from the fact that managing a large contingent workforce is a lot of work. 

It requires a significant time commitment, as well as the knowledge and expertise to confidently handle compliance issues, conduct thorough workforce planning and invest in the right tools and technologies. 

If you want to get the most out of your contingent workforce without overburdening your internal team, consider working with an external partner like CXC. We’ve been helping businesses like yours to handle their contingent workforces effectively, efficiently and compliantly for over 30 years — so we like to think we know what we’re doing. 

Want to learn more? Get in touch with our team to get started.


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About CXC


At CXC, we want to help you grow your business with flexible, contingent talent. But we also understand that managing a contingent workforce can be complicated, costly and time-consuming. Through our MSP solution, we can help you to fulfil all of your contingent hiring needs, including temp employees, independent contractors and SOW workers. And if your needs change? No problem. Our flexible solution is designed to scale up and down to match our clients’ requirements.

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