Contingent Workforce Management – Choosing the Right MSP Model

CONTINGENT WORKFORCE GROWTH

The pre-pandemic contingent workforce headcount for the average company was around 43%.  Most companies now utilize contingent workers as part of their workforce and include them as an integral part of their workforce planning.  Mid-way and further on into post-pandemic world, it’s expected that there will be further growth in this part of the workforce.  The level of growth may be impacted by economic situations, potential continued lockdowns and volatility of traditional hiring models.

Catapult back to the global financial crises in 2008 and that number was considerably less at around just 10-12%. Step forward a year to 2009 and that number increased to 17%, reportedly the highest amount of growth for contingent workforce (or non-employee) adoption in the history of (recorded) business.

The incredible growth of this sector of the workforce can be narrowed down to a few key reasons .

  • The contingent workforce enables better workforce planning and aligning the talent and skill sets with company projects and goals.
  • The explosion of technology in hiring and talent management makes it easier now more than ever to engage on-demand talent.
  • Significant cost savings can be realized when compared with more traditional models of engaging talent.
  • Greater financial flexibility can be experienced with the use of contingent workers in an organization.

While the benefits of utilizing a contingent workforce model are clear, the management of such a workforce also comes with its own unique set of challenges.

CONTINGENT WORKFORCE MANAGEMENT CHALLENGES

A company’s workforce probably generates the highest expenses for the business.  Because of that, companies are always looking at ways to reduce those overheads and so turn to the contingent workforce as a way of managing cost efficiencies.

Hiring contingent workers is only just the beginning.  Managing a contingent workforce program is much more involved and is the reason more companies are turning to third party providers or HR Outsourcing companies to manage their program.

Contingent workforce program management is time consuming and if not implemented properly can end up costing you more.  With tax intricacies and variances in each state or country (if running a global program), worker classification and compliance checks should be an essential part of any program.

Download and read our case study to learn more about how CXC helped an international energy and finance company transition global employed contractors to CXC management and payroll, resulting in a 12% decrease in contractor fees, ensuring proper classification of global self-employed contractors and conduct compliant background screenings allowable by local in-country law.

KEY AREAS OF PROGRAM FOCUS

The key areas of focus for a contingent workforce program should be:

  • Quality
  • Efficiency
  • Risk
  • Cost

The program should manage all aspects from finding the talent, onboarding, ongoing management, centralized invoicing and payroll, reporting, analysis, compliance management and currency management and conversion if running a global program.

HOW TO ENSURE THE MAXIMUM BENEFITS FROM YOUR CONTINGENT WORKFORCE MANGAEMENT PROGRAM

You will know the success of your program implementation by the benefits it produces for your business which include better access to talent, reduced costs, a better bottom line, greater efficiencies of processes and more consistent process across your entire organization.

To fully realize these benefits, companies outsource the management of their program to a managed service provide (MSP).

In the following, we analyze 3 different types of programs

1 – Vendor Neutral MSP

A vendor-neutral MSP can tailor a vendor management program specifically to your business and workforce needs.  Being vendor neutral, there are no obligations to any other staffing vendors, tech companies or other providers.

This type of MSP can be more transparent when it comes to pricing and offer more visibility to their clients.  While they do allow for more competition, too much competition could leave suppliers not wanting to compete. It’s important to ensure they get to know your business and your unique requirements.

2 – Master supplier/vendor

As the title suggests, the master supplier/vendor MSP program is the one stop shop for the entire program management and provides all the aspects directly to the client for engaging contingent talent. The provider assumes the overall responsibility, with all requisitions and orders going directly to the master supplier, to be filled directly or sub-contracted out.

This model offers simplified billing, however as there is only the one supplier, there may be a lack of competition, resulting in less choice.

3 – Hybrid program

In the hybrid program approach the MSP uses some of the functions from both the vendor-neutral and master supplier models as their contingent workforce management strategy.

The organization would then engage a single provider for some services but multiple providers for others.

This type of engagement may offer greater flexibility to the organization and the ability to shop rates, but it does increase the touch points.

CONCLUSION

There are pros and cons to each different type of contingent workforce management strategy.  Knowing which program is best for you is key.  Correct program implementation and management will ensure the overall program success for your organization.

Contact us today to learn more about the different types of managed services provider programs and the significant benefits to your company’s contingent workforce management strategy.

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