Contingent Labor Types: Levels of Formal Management by Spend Type and MSP Involvement

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Spend Matters research suggests that the majority of organizations have some type of formal process to manage project-based professional services (e.g., consulting firms), temporary labor (via staffing firms) and certain types of managed services. However, others also manage “lone wolf” independent contractors on one end of the scale and large BPO relationships on the other. The diversity of external labor types is significant.

Our survey data suggests that 68% of companies have a formal management program in place to manage staffing firms without MSP involvement, and 20% do not have formal management programs in place (12% did not respond to the question). Sixty-two percent have a formal process in place to manage statement-of-work-based projects and firms such as consultancies (28% do not have formal processes in place). Additionally, 61% have a formal program in place to manage niche managed services providers such as cafeteria, printing/mail, security, legal and marketing-related spend types based on services outputs rather than just billable hours alone (24% do not). And, 51% of firms have a formal process in place to managed business process outsourcing (BPO) providers compared with 29% that do not.

Across these spend areas, 48% have an MSP or related firm that manages the extended workforce (compared with 34% that do not). Forty-eight percent use an MSP that is also a staffing services firm (or is owned by one), while 34% do not.

When it comes to the management of independent contractors or freelancers, 43% of firms have a formal process compared with 38% that have not invested in the area. Perhaps most curious, only a small percentage of companies (16%) are working with freelancer marketplaces today such as Elance/oDesk, while 60% are not working with providers in this area yet (at least not on a formal basis).

This analysis is based on the Spend Matters research study, Applying Supply Chain Rigor to Contingent Workforce Management, which is available for limited period of time for free download, via the previous link, in the Spend Matters research library.

First Voice

  1. Marc Osofsky:

    Great survey. I’m surprised by the low level of usage of freelancer marketplaces. I think you are right that there may not be a centralized relationship with Procurement, but I would guess that many departments are using oDesk/Elance without Procurement’s knowledge.

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