The Economics of Contingent Labor

Ariba's -- and formerly FreeMarket's -- Justin Falgione wrote a great piece over at Supply and Demand Chain Executive that examines trends in contingent labor sourcing. As I've said before, I love it when the old FMKT GSO organization struts their supply market knowledge, given that it's been so under-marketed in the past. According to Justin, "Contingent labor (IT and other white-collar positions, as well as industrial and clerical positions) will incur continuous [upward] cost pressure throughout 2007."

To mitigate potential costs, he offers three pieces of advice: "1) Ensure that all contracts with contingent labor providers enable transparency to all mark-up components ... 2) Establish longer-term relationships with preferred providers to ensure proper leveraging of contingent labor volumes and a continuous flow of qualified candidates ... [and] 3) Implement management systems and other internal processes to facilitate proper contingent labor demand management. As the use of contingent labor remains high, these systems will limit the inflow of temporary workers to actual organizational requirements, and make sure that assignments remain within the intended timeframe."

Jason Busch

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