Contingent Workforce Program

Companies implement contingent workforce programs to manage non-permanent workers in a more organised and efficient way. These programs are important for several reasons. 

One is workforce flexibility. Companies can adjust the size of their workforce based on project requirements, seasonal demands, or changes in business conditions without the challenges that come with hiring or reducing full-time employees.

It also helps organisation to access specialised skills. Contingent workers can bring in specific expertise that is not available within the organization. This allows companies to meet short-term or highly specialized needs without the obligation of a permanent employment relationship.

As the business environment continues to change quickly and competition increases, having access to a flexible and skilled workforce through contingent arrangements has become a practical approach for many organisations.

A successful contingent workforce program typically includes several essential elements:

Vendor Management System (VMS)

A VMS is a software platform that helps companies manage staffing suppliers, monitor worker assignments, track spending, and maintain visibility over their contingent workforce activities.

How does a vendor management system support a contingent workforce program?

A VMS supports a contingent workforce program by centralising the management of staffing suppliers, worker assignments, timesheets, and costs. It standardises processes, improves visibility through reporting, ensures compliance with legal and company requirements, and helps control spending. By streamlining these activities, a VMS allows organisations to manage their contingent workforce more efficiently, reduce risks, and make informed workforce decisions.

Talent pools and direct sourcing

Companies often build internal databases of pre-screened contingent workers. This reduces dependency on external staffing suppliers and helps fill roles faster with already vetted talent.

Compliance and risk management

Ensuring that workers are properly classified (as employees or independent contractors) is crucial to avoid penalties. A strong program puts in place clear processes to manage this classification and meet legal requirements.

Reporting and Analytics

Regular reporting provides insights into workforce costs, worker performance, supplier effectiveness, and other important metrics. This helps companies make informed decisions and continually improve the management of their contingent workforce.

Companies can manage their contingent workforce through several service models, depending on their size, goals, and internal capabilities. The main service models include:

1. Managed Service Provider (MSP)
   An MSP is a third-party company that manages the day-to-day operations of the contingent workforce program. It handles tasks such as supplier management, worker sourcing, onboarding, compliance, and reporting, usually through a Vendor Management System (VMS). The MSP acts as an intermediary between the organization and staffing suppliers.
2. Internal MSP
   In an Internal MSP model, the company creates its own internal team to perform the functions typically handled by an external MSP. This team manages staffing suppliers, monitors worker performance, ensures compliance, and runs the program using internal resources and tools like a VMS. Companies that want full control over their workforce program and have the resources to support it often choose this model.
3. Employer of Record (EoR)
   An EoR legally employs contingent workers on behalf of the organisation. The EOR is responsible for payroll, benefits, taxes, and compliance with local employment laws, while the workers perform services for the organisation. This model is often used for independent contractors or when hiring in countries where the company has no legal entity.
4. Self-managed Program
   In this model, the company directly manages all aspects of the contingent workforce without outsourcing to an MSP or EOR. The organisation sets up its own internal processes, manages suppliers, ensures compliance, and often operates its own VMS.

Choosing the right service model depends on several factors, including the organisation’s size, geographic reach, budget, internal expertise, and specific workforce needs.

• Large organisations with complex, global operations often benefit from an MSP approach to manage different regional and functional requirements.
• Companies with strong internal HR and procurement teams might prefer building an Internal MSP to keep full control over their contingent workforce program.
• Organizations expanding into new countries without legal entities typically use an EOR model to hire and manage workers quickly and compliantly.
• Smaller companies or those with less frequent contingent hiring may choose a self-managed approach or partner with a master vendor for simplicity.

Careful assessment of current needs, future growth plans, and available resources is key to selecting the model that best supports your contingent workforce strategy.

Integrating a contingent workforce strategy provides advantages that go beyond simply adding flexibility to hiring. It helps businesses manage resources more effectively, control costs, access specialised expertise, and reduce potential risks in an uncertain economic environment.

1. Flexibility
A contingent workforce program allows businesses to adjust the size of their workforce depending on project needs and business priorities. Companies can bring in additional workers during busy periods and scale back when demand slows down. This flexibility makes it easier to respond to changes in the market, seasonal shifts, or unexpected new projects without the long-term obligations that come with permanent hiring.

2. Cost efficiency
Using contingent workers can help reduce costs typically associated with full-time employees, such as benefits, retirement plans, and other long-term commitments. Businesses can better control overhead expenses by aligning staffing costs directly with project demands. This approach helps organisations allocate their budgets more efficiently, especially during periods of lower activity.

3. Access to specialised skills
Contingent workers often have specific skills and experience that may not exist within the permanent workforce. A structured program makes it easier for companies to find and engage these specialised professionals when needed. This ensures that businesses can complete specialised projects successfully without needing to hire long-term employees for short-term requirements.

4. Risk management and compliance
Managing a contingent workforce through a structured program helps businesses comply with employment regulations and reduce the risk of misclassifying workers. Proper classification, tax reporting, and adherence to local labour laws are critical to avoiding legal and financial penalties. A clear framework also provides better oversight of contracts, worker documentation, and supplier practices.

While contingent workforce programs offer flexibility and access to external talent, many organisations face real difficulties when trying to manage these programs at scale. These challenges can lead to inefficiencies, increased costs, and compliance risks if not properly addressed. Below are key problem areas, why they matter, and how companies can overcome them.

1. Worker classification and legal risk
Many companies struggle with correctly identifying whether a worker should be treated as an employee or a contractor. Misclassification, especially across different jurisdictions, can lead to audits, fines, back payments of benefits, and reputational harm.

Regulations around worker classification vary widely by country or even region. HR and procurement teams may lack the legal expertise to apply these rules correctly, especially when hiring at speed.

To avoid misclassification, companies must develop internal classification guidelines in partnership with legal experts. Where resources are limited, consider using an Employer of Record (EoR) like CXC or third-party compliance service that specialises in contractor management. These services can handle employment obligations while ensuring adherence to local labour laws.

2. Poor visibility across the workforce
It’s common for companies to lose track of how many contingent workers they have, what roles they are filling, or even where they are working. This lack of visibility can result in overspending, duplicated efforts, and compliance gaps.

When different departments engage contingent workers independently, often without centralised tracking or approval, visibility disappears. This is especially problematic in large or global organizations.

To avoid such issue, companies must implement a Vendor Management System (VMS) to centralise all contingent workforce data, from requisitions and worker details to time tracking and billing. A VMS can also generate real-time reports, helping leadership make informed decisions and avoid unnecessary costs.

3. Inconsistent processes and disjointed management
Without standard processes, onboarding times vary, quality of hires fluctuates, and rate inconsistencies create tension with suppliers. Some teams may bypass standard procedures altogether.

In decentralised environments, different business units or regions may have their own ways of managing contingent labour. This creates inefficiencies and increases the risk of errors.

To overcome this, companies must standardise key processes such as onboarding, rate negotiation, and performance review. If using an MSP or building an internal program, ensure that policies are clearly communicated and enforced across the organization. Provide training and support to local teams to ensure alignment.

4. Supplier management complexity
Managing too many staffing suppliers without structure can lead to inconsistent quality, varied rates, and administrative burden. Some suppliers may underperform yet continue to receive assignments.

Many companies onboard suppliers informally or add new ones to meet urgent needs without long-term strategy or performance monitoring.

What can companies do? Organisations can streamline their supplier base by creating a preferred supplier list and evaluating vendors using agreed-upon performance metrics. Use a VMS or MSP to help coordinate communications, enforce contract terms, and manage renewals based on supplier performance.

5. Data security and access risk
Contingent workers often require access to internal systems, data, and tools. Without proper controls, this introduces risks related to data breaches, IP exposure, and system misuse.

Temporary workers may be onboarded quickly, sometimes without full alignment between HR, IT, and security teams. Offboarding steps are frequently missed or delayed.

To overcome this, companies must coordinate closely with IT and security teams to create clear access protocols for contingent workers. Automate provisioning and deactivation of system access through identity and access management tools. Treat offboarding as a critical compliance step, not just an administrative task.

6. Disconnection from company culture
Contingent workers can feel isolated or excluded from the larger organisation, especially when treated as outsiders. This can lead to lower engagement, weaker collaboration, and a lack of accountability.

While maintaining legal boundaries, involve contingent workers in relevant team activities, provide clear project context, and ensure respectful integration into workflows. Strong onboarding and communication practices make a difference in how these workers perform and collaborate.

7. Unpredictable costs and budget challenges
Costs associated with contingent labour can be difficult to predict and control, particularly when spread across multiple departments. This can lead to budget overruns and limited visibility for finance teams.

When spend is not centralised or tracked closely, rate variations, scope creep, and extended assignments can go unnoticed.

To avoid this, establish cost controls by requiring central approval for contingent roles and tracking all spend through a VMS. Define standard rates and regularly review assignments to prevent unnecessary extensions or hidden costs.

Implementing a contingent workforce program involves more than hiring flexible workers. It requires careful planning across areas such as talent sourcing, compliance, payroll, and workforce visibility. At CXC Global, we specialise in building customised contingent workforce solutions using different service models to meet our clients’ specific needs. The following examples show how organisations have benefited from structured programs supported by CXC.

1. Managed Service Provider (MSP) model to improve visibility and direct sourcing
Boeing was operating a large-scale contingent workforce across multiple countries but lacked consistency in how these workers were managed. The company found it difficult to maintain visibility over spend, ensure compliance, and coordinate supplier activity.

To solve this, CXC implemented a Managed Service Provider (MSP) model, supported by Beeline’s Vendor Management System (VMS). This provided Boeing with a centralised view of its contingent workforce program, including tracking by business unit and location, unified onboarding, and consolidated invoicing. Regular supply chain audits ensured adherence to local labour regulations. 

In Poland, a direct sourcing strategy was introduced, enabling Boeing to hire over 130 Global Navigation Analysts more efficiently. This approach improved candidate quality, reduced time to hire, and provided a better experience for hiring managers.

2. Employer of Record (EoR) Model for global payroll compliance
The University of Western Australia (UWA) needed to engage international academic and research staff but lacked legal entities in many of the countries where work needed to be done. This raised concerns around tax compliance, employment classification, and payment practices.

To address these concerns, UWA partnered with CXC to implement an Employer of Record (EOR) model as part of their contingent workforce program. Through this arrangement, CXC served as the legal employer for workers based in Brazil, India, Malaysia, and Singapore. 

The solution ensured correct worker classification, tax registration, compliant employment agreements, and payment in local currencies. CXC also managed statutory leave entitlements, termination procedures, and intellectual property protections. UWA received consolidated invoicing in AUD, allowing the university to maintain visibility and control over global staffing without needing to establish local legal entities.

3. Integrated workforce management using MSP for cost control and governance
RELX was experiencing rising costs associated with its contingent workforce, along with inconsistent practices across departments and limited control over supplier engagement.

When RELX partnered with CXC, they implemented a Managed Service Provider (MSP) model supported by a Vendor Management System (VMS). This allowed RELX to standardise its contingent workforce program across all business units. 

With greater visibility, the company gained improved control over onboarding, contractor time tracking, expense management, and supplier performance. The program supported both PAYE and Limited Company (LTD) worker models. As a result, RELX benefited from streamlined payments, reduced supplier margins, and stronger governance, leading to annual savings of over £275,000 while maintaining compliance and building a more efficient, scalable workforce model.