Analysis: Contingent Workforce Cost Savings – Insights and Benefits

It’s fair to say that contingent workers cost savings is one of the key drivers for any contingent workforce management program. The use of contingent workers is a proven workforce cost reduction strategy when undertaken with caution, strategic consideration, and analytical insight.

But is the use of contingent workers as cost-effective as everyone claims it to be? How much money do temporary workers really save a company?

And how do companies that rely on contingent labour substantiate their savings?

It’s critical to evaluate the ‘true productivity’ of your contingent workers to understand the material contingent workforce cost savings. This is the output of goods and services produced per hour by these workers, divided by the input, which is the cost of employment per hours worked.

Cost-effectiveness depends not only on wages and benefits but also on productivity.

High-wage labour might be cost-effective if it’s also high output, whereas low-wage labour may not be if the output also is low.

As you can see, understanding how to optimise cost savings of your contingent workforce is critical for your organisation to be able to materialise savings, in the long-term.

Today, we’ve taken a review of blog posts and case studies on this topic. Our goal is to provide you with a comprehensive insight into the many factors that contribute to ensuring your contingent workforce is a commercially sound program for your organisation.


contingent workforce cost savings


Firstly, let’s take a look at the potential hidden costs of your contingent workforce.

As we have identified, the true cost of your contingent workers program is mostly impacted by factors that aren’t easily identified and therefore aren’t commonly addressed.

Key factors impacting the costs of your contingent workers, which may or may not be obvious include:

  • Invoicing errors: by using rate calculators across all your suppliers you’ll be able to establish the correct fee calculation for your contingent workers
  • Management of contract notice period: review and updating contracts so they’re always up-to-date
  • Worker classification or misclassification: making sure you have policies and processes in place to support the engagement of non-permanent workers into the correct model i.e. Contingent Workers vs State of Work vs Consultants
  • Mandatory leave (eg during holiday periods)
  • Asset management: a robust offboarding process will eliminate the loss of hardware, work tools and other company property utilised by your contingent workers
  • Rate benchmarking: making sure you benchmark external and internal rates and implement a standard rate card for your contingent workers.

Click here for full insights from this article.

contingent workforce cost savings


The concept of outsourcing key business functions isn’t anything new, right? Many Australian organisations have reaped the benefit of this business model, not only in the start-up phase but throughout the life of their organisation.

Managed with strategic rigour, outsourcing the management of your contingent workers has the potential to increase your organisation’s productivity and the quality of your output. Outsourcing the right functions to the right service provider can reap a huge range of benefits for organisations …both including, but also beyond, cost-cutting. It’s here that contingent workforce cost savings can be efficiently realised.

Here are the benefits we identified from outsourcing the management of your contingent workers:

  • Focus on your core business, not on managing your contingent workers: by outsourcing the management of your contingent workers, you’re enabling an external third party to take care of the nitty-gritty so you and your employees can get on with your organisation’s core function
  • Become more efficient. Increase visibility of performance and contingent worker spend
  • Remove the majority of the risk of engaging contingent workers. Self-managed programs run the risk of misclassification, amongst other contingent worker management risks
  • Let the experts make you look good: cost savings realised by outsourcing the management of your contingent workers will reflect positively on your department (be that Procurement or HR). The added value elements associated with outsourcing, as highlighted in this article, are clear cut and will only add weight to your positive internal brand

Click here for full insights from this article.

cost control contingent workforce


At CXC, we have a proven service model based on four key pillars, enabling us to manage our client’s contingent workers at the highest of industry standards.

These pillars are:

  1. Risk Mitigation
  2. Cost Savings
  3. Quality of Contingent Hires
  4. The efficiency of Contingent Workforce Management

Contingent workforce cost savings is a deal-maker or breaker for big business when it comes to managing contingent workers. And achieving tangible commercial benefits from taking contingent workers into your business is a key targeted outcome for any contingent management program.

The main considerations for cost control when it comes to contingent workforce management include:

  • Without a slick contingent workforce management program, your business will incur unnecessary associated costs including requisition, management, onboarding and offboarding, amongst other factors
  • These costs won’t be realised if your contingent workforce management program is best practice (like ours)
  • Think about the goals you set for the business taking on contingent workers. Were they to reduce headcount, reduce costs, achieve specific goals or project milestones in key departments?
  • The key means of managing cost explosion with contingent workers is to ensure:
    • Supplier rates are standardised
    • Pay rates are regulated
    • You’re able to efficiently manage demands of your time and can contribute to the program
    • You’ve eliminated paper-based invoices
    • Low time to productivity for these workers
    • Automated receipting
    • Overly reliant on external suppliers
    • Low or no invoicing errors

Click here for full insights of our Cost Savings pillar.

reducing agency costs of contingent workforce population


Working with an ASX listed investment bank and financial services company, CXC was able to achieve significant contingent workforce cost savings through the reduction of agency fees, and by establishing a robust structure around the contingent workforce program.

The client’s approach to managing their contingent workforce was inefficient, at times non-compliant, and way too costly – largely due to inflated and inconsistent pay structures and agency margins.

A number of strategies adopted by CXC for the client involved the following:

  • Support for the rate negotiation process and for contract extension and terminations
  • HR Business Partner advice and rate management
  • Online portals reducing manual processes, and processing errors
  • Indemnify ATO risk and co-employment concerns
  • Managing the intricacies around RPO payroll, PSL payroll and tenure management with a provider who is vendor-neutral

The outcome for the client included:

  • Annual cost savings in excess of $1.5M from direct payroll and 12-month tenure transition policy since program inception
  • Average cost saving of 5% per contingent worker, versus using a recruitment agency payroll service
  • Streamlined invoicing process with more detailed and accurate spend data

Click here to see the full case study.

As one of the world’s leading providers of contingent worker management solutions, CXC is well positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.

If you would like to find out more about how we can help please contact us here.