One of the added benefits of building a contingent workforce is their ability to reduce your human resource overhead. This enables businesses to be more agile and focus their resources on key projects and business functions, compared with an entirely permanent workforce. But with contingent workers, there are a set of hidden, often untracked, costs (in various guises) that can escalate if they are not managed.
Contingent workers: the cost-saving caseContingent workers are able to deliver significant value to businesses. It enables them to access top-talent and skills on demand, meaning businesses can access the talent they need, and pay for it only when it is required. As part of a global talent strategy, the cost-saving potential of the contingent workforce is evident. As well as reducing overall costs, bringing in contingent workers with specialised skills can bring significant productivity gains and expertise that can accelerate project progress. In order to maximise the opportunities from these workers, it is important to track both the tangible and hidden costs associated with them.
The tangible costs associated with the contingent workforceThe most visible costs associated with the contingent workforce are labour rates. However, organisations also need to manage increasingly complex billing rates from vendors, which often have many variables. While these costs are visible and stark, there are a number of more obscure costs associated with the contingent workforce. To understand the overall cost of a contingent workforce program, you need to consider some of its more complex, less visible elements.
The hidden costs of the contingent workforce
- Invoicing errors. Are you sure you are using the correct fees or are your vendors overcharging you? Tools like trueRATE in a vendor management system (VMS) like Beeline will help you quickly ascertain the true billing rates.
- Tenure management. Workers that are contracted for longer than necessary may be costing your business more than necessary.
- Statement of work mismanagement. Are you tracking key project milestones and adjusting the composition of your workforce accordingly? Are you using these project milestones for billing purposes?
- Contract notice period management. Are you getting enough notice from contingent workers?
- Time to fill roles. If you are missing key talent when you most need them, what is the impact of this on your projects/business?
- Rate benchmarking. What vendors are charging you the most? Can you use this to negotiate better rates with other vendors?
- Asset management. How long does it take to provide access to key assets and systems for contingent workers? Is this burden adding costs to other areas of the business?
- Compliance and tax regulation. Are you compliant with all relevant worker and tax regulations across the markets in which you operate?
It’s time to take controlMany organisations have very little visibility over their pool of external talent. Some are unable to see how much their business is truly spending on contingent workers and the management of the contingent workforce.
With these challenges in mind, having a vendor management system (VMS) simplifies your ability to track, visualise and use all the data generated by your contingent workforce. This will enable your business to stay on top of outgoings. It’s time for employers to take control and get the most out of their pool of external talent.
A Vendor Management System can identify all contingent staff that are engaged by your organisation and assists in creating a plan to help achieve complete compliance. It can also identify whether your organisation is engaging with your contingent workforce in the most efficient way. Each role carried out by a contractor is reviewed to establish whether there’s a better, more cost-effective way of providing that resource. A VMS helps to create a plan to help you enforce these changes, ensuring business continuity and delivery is maintained at every step. As the nature of the workforce is changing, if your business isn’t future-proofed, you’ll find your organisation lagging behind your competitors. A VMS can record, track and govern the use of contractors to ensure that you are taking advantage of these agile resources. To learn more about what a vendor management system can do for your company, download our free guide.