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Will an Internally Managed Contingent Worker Program Work for Your Company?


It’s becoming an everyday occurrence: Businesses are hiring more and more freelancers, contractors and temporary staff — but they’re struggling to manage the process.

Contingent labor experts talk about how in today’s workforce there are companies that have as many as 50% of their workers from non-employee sources. So how do companies determine the best way to locate and manage those workers while keeping a focus on what matters to the company: visibility, cost control, compliance and productivity?

Some companies still rely on more traditional externally managed programs, but the tide is changing. Companies using a managed service provider (MSP) often benefit from the provider’s expertise and broad supplier networks, but there can be difficulties with employee buy-in, staffing supplier relationships and costs.

A 2017 Staffing Industry Analysts report showed that 33% of global companies are managing their contingent worker programs internally, and that number is growing. Companies are making that decision because they need results that they’re not finding with MSPs. They need a shift from the tactical toward more strategic support. Specifically, they need decision support built on data analysis that includes forecasting; this shift has to come with more sophisticated technology, more appropriate suppliers and more dramatic cost savings.

What to Consider Before Adopting an Internally Managed Program

Starting or shifting to an internally managed program is happening, in part, because companies have a need for greater visibility into spend and transparency into their procurement processes. But these programs can be complex, so decision-makers must ask the right questions. The most basic, perhaps, is: Does the company have dedicated staff ready to assume the responsibilities? Other questions to consider include:

  • Are those staffers trained or is a training program necessary?
  • Have workflows been established?
  • Is the company prepared to hold the supplier contracts?
  • Have compliance issues been addressed?
  • Are there global and local components to the program?
  • Have costs and controls been addressed?
  • Does the company have the appropriate technology, specifically VMS software, in place?

The decision about what technology to use is key for these programs, and it should be selected based on its specific capabilities as they relate to the program. Selecting a VMS provider could be the most important component of what may ultimately become a technology suite. As VMS platforms become more advanced, the data they collect, analyze and export is even more robust. Users are able to, without outside help, create detailed reports that allow them to closely monitor budgets, time-to-fill-metrics and other vital KPIs. These platforms are also able to integrate with other technologies like hiring clouds, HR systems, procurement tools and artificial intelligence platforms.

And while internally managed programs are popular with mid-market clients whose spend ranges from $5 million to $50 million, larger enterprise clients also are starting to look seriously at this option.

Regardless of the program size, to achieve success, every company needs to have a basic understanding of the industry as a whole, and they must also continually consider and evaluate their program objectives.

Another key factor is executive sponsorship. For a program to perform at optimal levels, the entire company needs to be on board. When employees see their leaders supporting the program and sharing the reasoning behind it, acceptance is stronger and more sweeping.

When to Enlist Outside Expertise

Once an internally managed program has been established, there will undoubtedly be bumps along the way.

Companies are finding they can solve these matters by integrating specific experts, thereby creating their own individualized contingent program management ecosystems. The reliance on having everything provided by a traditional MSP or staffing company is no longer the only choice.

By choosing their own team of experts, companies retain control over programs, ensuring the business culture and company goals remain in focus, calling on trusted partners like their VMS provider. Some technology companies are now offering cafeteria-style support options so companies can select only what they need, when they need it.

Consultants can advise companies on all manner of topics, from the basic to the highly specialized. And the need for consultants may ebb and flow, as the program evolves.

Common areas of support include invoicing, optimization of the supplier base, establishing SLAs and KPIs, educating program managers on supplier relationship management, and establishing program metrics and goals. True consultant partners will add value to the program.

Internally managed programs for contingent workers are proving to be the right choice for many companies. They offer opportunities to maintain a focus on business goals and corporate culture; to establish more strategic collaborations and long-range planning; and to more specifically target the company’s needs.

The key is finding the right partners to support the program and remaining willing to make changes as the program evolves.