The contingent workforce continues to be among the fastest growing workforce segments with a projected increase of 23 percent through 2020, totaling an additional 631,300 jobs. Hiring contingent labor offers significant business advantages — reduced overhead costs as well as greater access to specialized skills while providing flexibility to meet business demands. The ability and impact of this workgroup to meet the current talent shortage for high-demand labor cannot be understated.
However, managing the contingent workforce is complicated from a process, technology and development perspective. With contingent labor playing a growing role in how work gets done, organizations require better overall processes, systems and reporting to truly understand the impact of contingent workers.
Organizations that put best practice methodologies in place can optimize their contingent services spend and procurement methodologies, resulting in the right talent at the right cost. Contract or temporary labor represents significant spend, yet many organizations rely on manual processes or disparate systems for managing the contingent and permanent workforces.
3 Reasons to Invest in a VMS:
Compliance, Efficiency, Business Intelligence
Organizations that spend more than $10M on contingent labor need to invest in a system to control spend, increase efficiencies and improve the quality and performance of contingent labor suppliers. Those who implement a contingent labor management system realize efficiency gains and visibility into this extended workforce, enabling them to better manage spend, compliance and risk. With the right solution in place, especially in a regulatory rich environment, organizations can create efficiencies across the entire process from the initial requisition to off-boarding of contract workers and improve the way they source talent to support business goals.
Vendor Management Solutions (VMS) are known for their ability to automate the many hiring, onboarding and payment processes involved with managing non-permanent labor. In addition to improved efficiency, a VMS also provides true visibility into this specialized workforce. Organizations can perform market rate rationalization and take advantage of optimization opportunities based on statistical data. Rather than using manual processes to generate rate cards, organizations can set market rates for specific job descriptions based on vendor guidelines or not-to-exceed rates to assist with spend management.
Compliance Management to Mitigate Risk
Managing the flexible workforce, especially on a global scale, requires navigating evolving regulations, stringent compliance requirements and varying sourcing strategies that can include multiple agencies or direct sourcing, as well as tracking the fulfillment of requirements. In the case of the contingent worker, it is difficult to track onboarding and off-boarding activities, such as ensuring new hires have completed a background screening or that onsite workers have required certifications and adherence to regulations such as the EU Temporary and Agency Workers Directive. In addition to increased risk, labor-intensive activities, such as tracking if a worker turned in the security badge at the end of their engagement, take resources away from more value-added pursuits.
Efficiency for Cost Savings
A vendor management system provides visibility and control through automation and best practices. As organizations seek to increase efficiencies in contingent labor management programs, an end-to-end approach offers measurable improvement and helps organizations achieve maximum value from their technology investment. Because everything is automated, it reduces the cost and complexity associated with time-intensive administrative activities and provides a full audit trail of documentation to demonstrate global compliance.
Business Intelligence to Drive Strategy
A robust VMS provides the business intelligence needed for informed decisions, risk management and strategic spending. Procurement and HR need visibility into costs and productivity by project, team, department, location and more to promote decisions that drive profitability. The right vendor management system provides total visibility into the flexible workforce and decision-support tools to better evaluate labor sources and improve effectiveness of contingent labor programs.
Moving towards Total Talent Visibility
As organizations seek to improve the effectiveness of contingent labor management programs, a holistic view of the workforce and strategies for optimizing spend is essential. Historically, there has been a functional and strategic disconnect in how temporary and permanent workers are managed, with HR responsible for the permanent workforce and contingent labor under procurement’s domain. Although not without challenges, the reward is total visibility into the entire workforce, providing the business intelligence needed for informed strategic talent decisions.
Moving to a solution that integrates information about permanent and contingent workforces provides visibility into total talent and allows organizations to more effectively source talents, control costs and manage a blended workforce. With a holistic approach, organizations gain access to detailed information about the workforce and decision-support tools to determine the best labor type
for a particular role (permanent or contingent) and execute the right sourcing strategy to procure the best talent at the right cost.
Visibility into the flexible workforce allows organizations to determine the talent they have and where there are opportunities to redeploy skill sets upon project completion. For organizations sourcing hard-to-fill positions or hard-to-find skills, this ensures top performers remain with the organization and that the company has access to the talent it needs to meet business requirements.
As the flexible workforce gains a more permanent place in how work gets done, organizations that continue to rely on disparate systems and processes for managing the traditional and flexible workforce can result in increased costs, exposure to risk and missed opportunities for competitive advantage.
A system that offers a streamlined, collaborative approach and more robust analytics can help organizations gain a more comprehensive view of available talent and associated rates to better manage its total workforce.