The Future of Contingent Labour – Predictions and Trends

We’re excited to announce the publication of the second half of the Spend Matters/Comensura research paper -- Contingent Labour Review: Key Procurement Priorities. Part Two -- Tomorrow’s Market and How To Manage It, is now available to download free here.

The paper combines input from contingent labour supply specialists, Comensura and Spend Matters analysis. This was informed by a series of interviews with senior procurement executives who are major users of temporary workers, to mine their knowledge and opinion of spend within this important category. Their views give us a forward-looking perspective of the market, alongside our own knowledge of the large managed service and software providers within the pharmaceutical, public sector, energy, food and drink, and travel/ transportation industries.

Part one looked at the market structure, maturity levels within it and made recommendations for senior procurement executives. In part 2, we look much more into the future for the contingent labour market, and make recommendations for procurement professionals so that they can get the most out of the considerable expenditure in this area. In this extract from the paper, we look at the future. We’ve included below just some of the forecasts and predictions you can see in the full paper.  (Quotes from our interviewees are given in quotation marks).

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The Future – Trends and Predictions

So how is the contingent labour spend category likely to develop, and what should procurement leaders be considering? Here are some predictions and consequent issues to be considered:

- Contingent labour will continue to be a major area of focus for organisations and procurement functions in most sectors – “this is and will be a very important spend category for the UK public sector.” That will be driven by the need for flexibility in the cost base as markets become ever-more dynamic.

- Firms will continue to see "reducing the use of interim staff" as a major opportunity area every time there is a cost-cutting initiative. Yet the underlying trends that have driven greater use of contingent labour in the economy as a whole seem unlikely to reverse, including the desire to reduce fixed costs. “Whenever FTE resources are squeezed, the business looks to the temp route.” Specialism, shortages of critical skills, the desire of firms to avoid fixed costs, as well as greater demand for flexibility from the workforce, particularly the more skilled and educated, all add up to future demand being strong.

- Technology will continue to become more powerful and easy to use and therefore more useful in driving effectiveness and risk management. Some more advanced organisations will look at using technology to support innovative approaches – running “internal agencies” for instance, growing their own contingent workforce, or using the new work intermediation platforms for instance. Forward planning and scheduling of labour demand will also be increasingly automated. “We are looking at scenario planning and resourcing models to help predict blue-collar contingent labour requirements.” 

- Procurement functions will have a fundamental choice - become more savvy and capable, or lose any grip they have on this spend category. In that case, line managers working to HR policies and using technology to manage their contingent labour needs will take over. In the smart procurement functions, there will be a focus on the true end-to-end value issues in the category. “Agency margin is a very small piece of the overall value equation.”

- The best procurement functions will work as the bridge between the market and internal demands, helping to match demand and supply in the optimum manner, making sure specifications are well managed, demand is questioned and controlled, and that the commercial details are of course appropriate. “We see contingent labour as an opportunity to show procurement in the best light – to demonstrate we can support the business and unlock innovation.”

Download the paper here and read about our other predictions.  

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