Contingent workforce management

Contingent workforce management plays a crucial role in today’s business landscape. It gives companies the ability to scale up quickly and bring in the right skills for specific projects. Companies have long relied on contingent labour – such as temporary, contract, and freelance workers – to maintain agility and boost flexibility.

This approach isn’t a new trend but a well-established hiring strategy. Contingent workforce management allows businesses to respond swiftly to changing market conditions without committing to permanent hires.

What is contingent workforce management

Contingent workforce management refers to businesses’ strategies, tools, and processes to manage a non-permanent workforce. This can include freelancers, consultants, contractors, temporary employees, and other contingent workers who are not part of the core workforce but are hired to meet specific business needs.

Effective contingent workforce management brings cost efficiency, access to specialised skills, and improved workforce agility. It allows businesses to scale teams quickly without long-term financial commitments, enabling HR and Talent Acquisition teams to meet fluctuating hiring needs and address skill shortages. When done well, contingent workforce management reduces both risk and operational costs.

However, managing a contingent workforce can be increasingly complex. Ensuring compliance, overseeing a wide range of skill sets, and coordinating across multiple suppliers requires significant time and resources. Maintaining efficiency and visibility becomes even more challenging as the contingent workforce grows, emphasising the need for streamlined and effective contingent workforce management processes.

Challenges of contingent workforce management

While contingent labour provides flexibility and cost savings, contingent workforce management comes with challenges. Many organisations struggle with compliance, onboarding, visibility, and supplier management—all areas where a well-designed contingent workforce management strategy can make a significant difference.

Compliance

Managing compliance within contingent workforce management is complex due to varying regional regulations. Monitoring contingent workers to ensure they are not treated similarly to permanent employees requires regular compliance checks and precise documentation.

Accurate worker classification (e.g., contractor vs. employee), tax compliance, and upholding worker rights present significant legal and financial risks, especially for global businesses. Classifying workers correctly can result in fines, tax penalties, and litigation. Effective contingent workforce management minimises these risks through structured, compliant processes.

Onboarding

Onboarding is a key part of successful contingent workforce management. Unlike permanent hires, contingent workers often receive inconsistent onboarding experiences, which can delay productivity.

A dedicated, streamlined onboarding programme helps contingent workers understand their role, the tools they’ll use, and your company culture, enabling them to contribute from day one.

Communication and visibility

Maintaining communication and visibility is another major challenge in contingent workforce management. Managing payroll, contracts, and compliance across a dispersed workforce demands substantial resources.

Lack of visibility into workforce data makes strategic planning difficult. Without real-time insights, managing risk and optimising performance becomes a guessing game. Fragmented systems and data silos across suppliers further complicate matters. Effective contingent workforce management brings these elements into one system for greater clarity and control.

Screening a candidate as part of a contingent workforce management service

Supplier management

Managing suppliers effectively is critical when dealing with a contingent workforce, yet it remains a pain point for many organisations. Businesses often struggle with fragmented supplier relationships, inconsistent terms, and a lack of standardisation in processes, leading to inefficiencies and increased risks.

Coordination between multiple vendors, each with their own processes and standards, complicates efforts to ensure consistency and reliability. Additionally, organisations may lack the tools and resources to monitor supplier performance effectively, resulting in misalignment between business needs and supplier capabilities. These challenges can lead to increased costs and difficulties in maintaining the quality and consistent flow of contingent talent into your business.

Approach to contingent workforce management

There are several approaches to effectively managing your contingent workforce. Companies typically choose one or a combination of the following options:

In-House Management

For organisations with fewer contingent workers, managing the process internally may be sufficient. This can include HR teams overseeing the hiring, management, and offboarding of temporary workers.

Managed Service Providers (MSP)

For organisations with a large contingent workforce, they may look to partner with an MSP. An MSP acts as an intermediary, handling every aspect of managing a contingent workforce—from hiring and compliance to vendor management and payroll.

Learn more about Managed Service Providers (MSP) with Flexhuis

MSP Models

There are three main MSP models for managing a contingent workforce: Neutral Vendor, Master Vendor, and Hybrid Vendor.

A Neutral Vendor model works with an approved list of preferred recruitment suppliers. It allows all suppliers to compete equally to provide candidates for your business’s talent needs.
A Master Vendor model prioritises talent supply through a single primary supplier, typically associated with the MSP. With its own talent pool, the Master Vendor can efficiently source the high-quality talent your business needs.
A Hybrid Vendor Model blends elements of both the Neutral Vendor and Master Vendor models, customised to meet specific hiring needs. Typically, a primary supplier handles frequently filled roles, while a broader pool of suppliers is engaged for less common or sporadic hires, balancing centralisation with flexibility.

How Flexhuis’ MSP solution can support contingent workforce management

Our MSP solution is designed to help you manage your contingent workforce with greater efficiency and effectiveness, while also providing a range of additional benefits, including:

Advanced technology

Flexhuis’ MSP solution offers the use of advanced technology to manage every aspect of contingent labour from ensuring compliance to providing full visibility [1] of your contingent workforce and cost centralisation. Implementing such technology in-house can be expensive and resource-intensive. However, an MSP solution offers a ready-made solution that saves both time and money.

Compliance

Our expert team ensures your contingent workforce is accurately classified according to local labour laws, tax regulations, and contractual obligations. We handle compliance so you can focus on your core business.

Onboarding

Flexhuis’ MSP solution also streamlines the onboarding process, offering tools that reduce the administrative load while ensuring workers are properly integrated and understand their roles. This allows businesses to get the most out of contingent staff from day one.

Communication and collaboration

The MSP solution helps to centralise processes and simplify communication between HR, procurement, and external suppliers. This reduces delays and ensures contingent workers are efficiently managed.

Leveraging current and future talent needs

MSP providers like Flexhuis specialise in partnering with organisations to meet both current and future talent needs. Through their extensive networks, they uncover alternative talent pools to meet future demand and then continually invest in these areas, which can be challenging for businesses to replicate on their own.

Vendor management

Our MSP solution focuses on streamlining supplier management by consolidating vendor partnerships, implementing consistent terms and conditions, and offering insights into supplier performance. This approach reduces administrative overhead, ensures greater alignment with business goals, and improves overall visibility into supplier contributions.

Diversity, equity, and inclusion (DEI)

MSP (Managed Service Provider) solutions can enhance Diversity, Equity, and Inclusion in organisations through various strategies:

Data-Driven Hiring: MSPs use analytics to identify biases in recruitment and ensure equitable hiring practices.
Inclusive Talent Sourcing: They help access diverse talent pools through partnerships with diverse job boards and networks.
Supplier Diversity: MSPs promote equity by working with minority-owned and underrepresented businesses in the supply chain.
Compliance and Reporting: They ensure DEI compliance and provide regular diversity reports.
Bias Reduction: They can revise processes, such as candidate screening, to minimise bias.

By implementing these measures, MSPs help organisations build more inclusive and equitable workplaces.

Ready to transform your recruitment process?

If you’re looking to improve workforce visibility, ensure compliance, and control costs our contingent workforce management solutions are the answer.

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January 14, 2025

Contingent workforce management

What is contingent workforce management

Challenges of contingent workforce management

Compliance

Onboarding

Communication and visibility

Supplier management

Approach to contingent workforce management

In-House Management

Managed Service Providers (MSP)

MSP Models

How Flexhuis’ MSP solution can support contingent workforce management

Advanced technology

Compliance

Onboarding

Communication and collaboration

Leveraging current and future talent needs

Vendor management

Diversity, equity, and inclusion (DEI)

Ready to transform your recruitment process?

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