Contingent Labour Review: Avoid the “Back Bedroom in Blackpool” Syndrome!

We have a new research paper available for download - “Contingent Labour Review: Key Procurement Priorities -  Setting the scene for change”.

This is a paper where the word “research” really means something. It came from combining our ideas with half a dozen detailed interviews with senior procurement folk, each of whom had a particular knowledge of and interest in the Contingent Labour spend category. That included senior category managers and heads of Indirect Procurement, from organisations spanning pharma, the public sector, energy, food and drink, and travel/ transportation industries

We have taken their views on the procurement of contingent labour, in terms of both how they see current market and issues, and a more forward looking perspective, and combined that with our own thoughts. We ended up with quite a lot of material so Comensura, the sponsors of the paper, decided we should publish it in two parts – part 1 is out now, part 2 will follow fairly quickly. (Comensura is a specialist supply management firm that manages the supply of temporary and contractor labour into large organisations in the public, private and not-for-profit sectors).

In this short extract below, we look at the supply market and the world of MSPs and VMS's! But do read the whole paper for yourself - it can be downloaded here, free on registration.

 

Key Procurement Priorities: Setting the scene for change

Structure of the Market and Supply Chain Options

In its most simplistic process, the employing organisation can hire a contingent worker directly. The individual worker invoices the firm which pays them as a self-employed person. The next level of complexity comes when the individual is employed by a company; it could be their own, or one that they are a director of, or some sort of umbrella service company.

In the vast majority of cases, however, an "agency" acts as the intermediary between the worker and the organisation. Often the agency fulfils a number of roles; it plays a part or directly manages the recruitment of the individual, and then it then employs and pays the individual, handling much of the administration of the employment process, particularly managing legislative requirements (such as holiday or sickness pay for the individuals). In return for these services, it charges a fee in order to make a margin, usually calculated as a percentage of the base fee that is paid by the agency to the individual worker.

In recent years, two other players in this supply chain have emerged. Vendor Management System (VMS) firms provide software that helps the employing organisation manage the process better …

Then, a class of firm known as Managed Service Providers (MSPs) also play an important role for many employers. The MSP acts as the manager of the contingent labour requirement for the employer, negotiating with and managing the agencies (or individual contractors) on behalf of the employer. Contingent labour provision becomes in effect a service run by the MSP.

VMS systems can be used by the employing organisation, or by the MSP. Some MSPs have what is in effect their own proprietary VMS solutions; others buy those from the specialist VMS providers. One other point to note; the barriers to entry for the agency business are still low. It is therefore vital to check that firms really can do what they say they can. “We were using one agency that claimed global reach, but on investigation turned out to be one man working out of his parents’ back bedroom in Blackpool!”

Download the Paper now to find out how you can avoid the “Blackpool situation”!

 

First Voice

  1. Sam Unkim:

    Given that he sold out, to Capita for £67mill, you can bet he’s not in his parents back bedroom anymore.

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