Disruption Is Coming to Contingent Workforce Management

The global pandemic and events of the past year have accelerated Investment in contingent labor. Companies looking to fill critical skill gaps, increase flexibility, and improve diversity are turning to alternative work arrangements. According to a new study by TLNT and Aptitude Research, 80% of companies are leveraging contingent workers. 

The contingent workforce umbrella is expanding beyond temporary workers to include on-call workers, independent contractors, scope-of-work (SOW)-based projects, and freelancers. Both employers and workers see benefits in a more flexible model with less risk. And while the shift to contingent is not a new phenomenon, companies must examine what is broken to develop deeper insights and a more effective framework. They must reconsider the ownership, fee models, and partnerships that they have in place. 

Join the study’s author, Aptitude’s Madeline Laurano, on Apr. 1 for an interactive webinar, “Contingent Workforce Management: You Have Better Options.” Meanwhile, below are some research-based recommendations for reevaluating contingent workforce management at your organization. 

Shifts in Ownership

The lack of clear ownership is a fundamental problem facing many contingent workforce programs. Talent acquisition does not always have visibility or expertise on the use of contingent labor, and procurement often relies on antiquated tools and strategies.

Sure enough, 35% of companies are shifting their ownership this year to reduce overall costs. When asked how doing so, 43% are shifting from procurement to HR, and 24% are shifting from procurement to a shared model.

This strategic shift from procurement to HR will enable companies to have a more holistic view of talent and create visibility into both contingent and permanent hires. To that end, organizations shifting ownership from procurement to HR should foster greater collaboration between the functions to facilitate clear communication during this transition. 

Shifts in Fee Models

Currently, over 40% of companies rely heavily on a bill-rate model in which staffing firms manage the costs and employers have limited control over how much they spend on contingent labor. 

However, 58% of companies are not happy with this model and question if they are “doing it right.” Excessive fluctuation from different staffing agencies are an indication of uncontrolled spend and dissatisfaction with the process. Which likely explains why 41% of companies are planning to shift their fee models this year — except many do not have the expertise to move to a pay rate model that provides more control but requires more work. 

Organizations shifting to a pay rate model will need to consider consolidating budget tracking, having more consistency in rates and developing negotiation strategies to avoid excessive markups. By taking control of the spend on contingent workers, companies will have greater visibility and more confidence in their approach. 

Shifts in Technology

Investing in technology and service providers will help organizations with reporting, maintaining costs, and staying compliant. Unfortunately, companies have relied on the same solutions when considering technology for managing their contingent labor, including vendor-management systems (VMS), managed service providers, and workforce and talent management systems.

The traditional solutions that support contingent workforce management are cumbersome, costly, and often unrealistic for most companies looking to rapidly scale. And while the contingent workforce technology landscape has changed over the years, most companies are still not aware that there are better options to identify and engage contingent workers. The reliance on traditional tools has prevented transformation in an industry that is in desperate need for change.

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The VMS remains the bread and butter of contingent workforce management, so it’s notable that 1 in 2 companies are looking to replace their provider in 2021, and only 29% of companies are satisfied with their existing provider. 

Fortunately, companies have better technology options, including talent marketplaces to connect workers with employers, contingent solutions to improve visibility, and providers looking to disrupt the contingent model and offer better solutions and experiences.

Organizations have access to better technology options today and should consider next-generation contingent workforce solutions. These solutions can help companies scale rapidly, improve visibility, mitigate risk, and provide an improved experience for both employers and workers. What’s more, the future of contingent workforce technology comes from providers looking to disrupt this market by offering one platform to source, engage and pay non-employee workers, and measure and manage spend.

Ultimately, what’s clear is that as companies look toward the future of work and talent acquisition transformation, contingent workforce management is ready for disruption. 

Read TLNT and Aptitude’s full research report, “The Future of Contingent Workforce Management.”

And register for the webinar on Apr. 1 here: “Contingent Workforce Management: You Have Better Options.”

Madeline Laurano is the founder of Aptitude Research. Her primary focus over the last 12+ years has been on the talent management market, specializing in talent acquisition. Her work helps companies both validate and reevaluate their strategies and understand the role technology can play in driving business outcomes. 

Prior, Madeline held research roles at Aberdeen, Bersin by Deloitte, ERE Media, and Brandon Hall Group. She is co-author of Best Practices in Leading a Global Workforce and has been quoted in The Wall Street Journal, The Boston Globe, Yahoo News, and The Financial Times. She is a frequent presenter at industry conferences including the HR Technology Conference and Exposition, SHRM, IHRIM, HCI’s Strategic Talent Acquisition conference, GDS International’s HCM Summit, and HRO Today.

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