VMS 101: How to Achieve Contingent Labor Cost Savings

Contingent workers are real game-changers for businesses! They offer access to top-notch talent and skills exactly when needed, and you only pay for what you use. When integrated into a global talent strategy, the cost-saving potential of contingent workers can be remarkable. This flexibility enables businesses to be super agile, directing their energy towards important projects and core functions. 

However, to make the most of these savings, keeping track of all the costs, even those sneaky hidden ones that often go unnoticed in your contingent workforce program, is crucial. That's why more and more procurement organizations are tasked with identifying ways to control their services spend.

Controlling spend starts with complete visibility of all your company's contingent labor. Industry analysts say at least 60% or more of companies' non-employee labor is "not actively accounted for in corporate budgeting, planning, and forecasting."
If you have complete visibility, you'll have other questions:

If you have complete visibility, you’ll have other questions:

• Are you paying the most competitive temporary labor rates for your industry, geography, and company?
• Are you maximizing your buying power from your suppliers?
• What is the cost of reducing your time to fill a particular position or project?
• What procedures do you have in place to mitigate risk?
• How is your company currently managing budgets and processing invoices?

In today's competitive talent landscape, lack of labor category management and growing contingent labor volume can result in you overpaying for your non-employee workers. Doesn't that defeat the original purpose of hiring a contingent worker? Without the right strategy and tools for managing this workforce globally, you'll spend more than you need on these resources.

On average, an organization that implements a vendor management system (VMS) solution to control spend saves around 10% to 15% of contingent workforce costs. Many companies see these savings in the first year of implementing a VMS or as soon as six months.

So what does this amount to? If your average annual contingent labor spend is $108+ million, that would equate to $10.8 million to $16.2+ million in yearly savings!

With so many opportunities for savings, consider exploring how a VMS could positively impact your organization, like reducing excess spend that often reaches into the millions!

For more information, download our complimentary VMS Fact Sheet.