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Background
In 2017, this company partnered with CXC and an RPO firm to deliver a total workforce solution for sourcing and managing their contractors. Initially, they a simplified, consistent, and high-quality process for recruiting, selecting and managing contractors. Through closely engaging with all stakeholders, we delivered a complete outsourced workforce solution to meet their ongoing needs.
Through our extensive partnership, we learned that a significant cohort of contractors were being sourced through a statement of work (SOW) arrangement. Generally, an SOW defines the project or tasks to be successfully completed before payment is made.
However, for this client, and many others in the market, we saw workers engaged on a time-only basis and paid a daily rate regardless of whether or not they completed specific outcomes. This was because SOW staff do not appear as headcount, and cost allocation can be managed to different cost codes (generally procurement).
This led to a number of inefficiencies and risks, including:
- Identified talent being engaged and payrolled by SOW engagements at inflated fees
- Risk exposure around classification, background checks and payroll tax.
- Inconsistent experience for contingent workers due to multiple SOW suppliers being responsible for engaging talent.
- Time intensive and inconsistent SOW invoicing numerous invoices monthly, across multiple suppliers.
CXC’s account manager was able to identify these challenges and suggest an improved process.
CXC’s solution
We began by first determining which providers were legitimate SOW (that is, deliverable-based or consultancies) and what should be reclassified and put through our model.
We did this through a discovery audit incorporating:
- Identify – Worked with our clients to identify SOW providers.
- Review – Determined what was true SOW, using the following characteristics: predominantly permanent employees , company IP provided, training & specific technologies and management support & backup.
- Reclassify – Reviewed risks and advised the client. We then reclassified and engaged via CXC model.
That left a segment of contractors who were legitimate SOW. We have a dedicated SOW function that compliantly manages this kind of worker, made up of:
Results
Benefits for this client included:
Quality
- Improved, consistent candidate and hiring manager experience and the ability to retain and redeploy top contractor talent
- Consistent worker experience with a focus on engagement and worker performance
- Ability to introduce HR initiatives into the workforce including diversity
- CXC’s technology is built on the Salesforce platform, ensuring the highest level of data security, scalability and user experience
- Insights, reporting and automation to support the hiring manager’s workforce lifecycle
Efficiency
- Single invoice and outsourced payment for all contractors, SOW Pty Ltds and recruitment suppliers
- Visibility of total contractor workforce and real-time access to key metrics including spend, headcount and tenure
- Rapid implementation and deployment of people, processes and technology to underpin the contractor program
- A single IT platform for contractor onboarding, offboarding and time and expense management
- Single point of contact for all contractor inquiries including pay, early terminations, etc.
Cost
- Reduction in expensive SOW use through correct classification
- Consistency around supplier margins and oncosts
- Minimised rogue spend on contractors and increased accuracy of budgeting/forecasting for contract labour
- Indirect cost savings due to reduction in significant administrative and time waste for all internal parties involved
Risk
- CXC will engage, manage and payroll your extended workforce regardless of how the worker is sourced
- Protection from reputational and financial exposure related to contractors
- Introduction and consistent interpretation of background checking for all contractors
- Full adherence to all contractor regulatory and statutory legislation
- Best in class contractor risk management program, supported by partnerships including PwC, Deloitte, Australian Industry Group and RCSA
Whether you have global contingent workforce requirements or local, CXC’s solutions can save your organisation money. Contact us today.
