The extended workforce has become an indispensable asset for organizations all over the world. It allows them to access highly talented workers, as and when they need them – meaning an organization can easily expand and adapt its workforce to adapt to a turbulent market.
Permanent employment costs are soaring, adding an even greater incentive. The Employment Cost Index, compiled by the U.S. Department of Labor, states that total compensation expenditure rose by an overwhelming 5.1% between June 2022 and June 2021.
For organizations concerned by this increase, their strategic response has been clear: use the more flexible, cost-effective form of workforce. The Staffing Industry Analysts (SIA) report that $4.4 trillion was spent on contingent labor in 2020. Notably, more was spent directly sourcing talent than through staffing firms.
Talent is clearly at a premium. But without the right talent, organizations are trying to move forward with their feet tied together. So, what gives? Do organizations continue to pursue a cost limitation strategy, whereby all ‘non-vital’ costs are eliminated? Or, as many are, should organizations look to optimize their costs, so they can continue to move forward and grow?
In this article, we will look at how organizations can optimize their spend, enabling them to maximize their ROI from their outlay on their extended workforce.
How to optimize cost for the extended workforce
Don’t pay over the odds: know the market rate
It is impossible to know whether you are getting a good deal without knowing the market rate. This is true regardless of whether you’re buying office stationery or acquiring specialist talent. But the murky world of talent pricing means that getting visibility of true market rates is very difficult. With access to that data, procurement would be in a better position to negotiate with prospective vendors.
Obtaining price visibility allows you to regain control, putting you in a position to truly scrutinize your expenditure. Using tools like Beeline’s Extended Workforce Platform, you can create market-rate cards for your colleagues to see and use. It will give you the ability to precisely track pricing across suppliers and locations – bringing you out of the dark, into the light.
Stay on top of complex SOW-based agreements
Large organizations use contingent workers in various ways. Statement of Work (SOW)-based services are one popular way to ensure each party is aligned clearly on deliverables, timescopes, and objectives. But without effective management, SOW arrangements can accrue unforeseen costs, most of which are hidden.
By making project progress, milestones, and deliverables visible, you can:
1. Verify that vendors have met mutually agreed milestones, to give you more control over invoicing.
2. Check the quality of deliverables against the agreed criteria.
3. Allocate costs to the most appropriate cost center, ensuring budgets are adhered to.
4. Track and manage pay milestones, meaning you only pay when you should.
Guided buying: enforce a procurement mindset
Talent is too important to just be purchased like commodities. To move quickly, the hiring team may be guilty of taking shortcuts and not following formal procurement policies.
With guided buying features provided by Beeline’s Extended Workforce Platform, it ensures the right information is surfaced at the right time. For example, when reviewing candidates, it can display the expected market rates for specific skills and levels of experience.
This all empowers your team to take informed buying decisions and follow your individual procurement policies.
Get cost-savvy with Beeline
Take control, get more visibility, and optimize costs with the world’s first Extended Workforce Platform – Beeline. To see how Beeline helps the world’s largest organizations enhance their performance, profitability, and effectiveness of their contingent programs, request a demo with one of our specialists.