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In Your Backyard and Mine: The Global Labor Challenge

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Given the nature of global labor and the continued rising tide of working with third parties – versus internal resources – to produce and deliver physical and virtual goods, it’s up to procurement to take a leading role in stewarding all of the business, political and PR challenges of managing service contractors and vendors around the world.

The market to address vendor and contingent worker issues is clearly booming. Worldwide, Staffing Industry Analysts suggest that growth in temporary staffing spend through VMS solutions is increasing at 28% while MSP adoption is increasing 23% globally, compared with a 9% growth in the overall global temporary staffing market (source: SIA, 2009-2010 figures). Yet success in this environment is not just a question of sourcing and effectively managing preferred staffing firms or managed services providers (MSPs) – or even deploying the best vendor management system (VMS) to automate managing the lifecycle of contingent workforce management and increasingly, statement of work (SOW) and project-based engagements.

Nor will supplier information management (SIM) applications or managed services ensure that suppliers will adhere to specific corporate social responsibility (CSR) standards including labor, health, and safety standards. Granted, the right set of technologies and enabling services will not only help save direct and administrative costs, but also significantly reduce overall business risk on a global scale.

Alas, the problem is so much greater than just preferred technology and services partners. Companies that manage global labor practices – whether their own, or multiple tiers down in the supply chain – must embrace a new philosophy that not only defines expectations and standards, but puts rigorous enforcement mechanisms in place. Moreover, organizations must lead by example not just with sticks, but with carrots, teaching their suppliers (and host countries) what is acceptable and what is not.

In this analysis, we further explore the new era of global sourcing – of talent, specific deliverables, and even business outcomes – and many of the challenges and responsibilities that come along with it. We also look the importance of considering cultural norms and localized standards for buying professional services and labor, be they in Europe or Asia, as well as the worldwide consequences when regional behaviors do not align with global standards and expectations.