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, that helps businesses respond swiftly to changing market conditions without the need to hire permanently.
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.
Contingent labour offers cost efficiency, access to specialised skills, and workforce flexibility. Businesses can scale their teams quickly without long-term financial commitments, while HR and Talent Acquisition teams can manage fluctuating hiring needs and address skill shortages more effectively, reducing both risk and costs.
Managing a contingent workforce is increasingly complex for organisations. Ensuring compliance, overseeing diverse skill sets, and coordinating across multiple suppliers demands substantial time and resources, often driving up costs. As contingent teams grow, maintaining efficiency and visibility becomes even more challenging, highlighting the need for streamlined processes to manage this vital part of the workforce effectively.
Challenges of managing a contingent workforce
While a contingent workforce offers flexibility and cost savings, managing these workers requires careful consideration. Many businesses struggle with compliance, onboarding, integration, and management of suppliers, areas where our solutions provide valuable support.
Compliance
Managing compliance for contingent workers is complex, particularly given the distinct regulations that apply to this workforce. Monitoring contingent workers to ascertain whether they are operating under the same or similar conditions as permanent employees involves regular compliance checks and ongoing monitoring.
Accurate worker classification (e.g., contractor vs. employee), proper tax management, and upholding worker rights present significant challenges, especially for global organisations navigating diverse labour laws. Failure to correctly classify contingent workers can lead to substantial fines, tax penalties, and potential legal action.
Onboarding
The onboarding process for contingent workers can vary greatly in terms of structure, depth, and quality compared to permanent employees. However, effective onboarding is essential to help contingent workers quickly assimilate into your business, requiring a tailored onboarding programme specifically for them.
By covering the basics such as role requirements, company culture or training on the systems they may need to use, contingent workers will quickly feel part of your business and be enabled to contribute immediately. Doing this effectively demands time and resources.
Communication and visibility
A frequent challenge for businesses is maintaining effective communication and visibility of their contingent workforce. Managing communication and collaboration in contingent workforce management can be difficult due to the time and resources needed to handle payroll, contracts, compliance, and tracking across a dispersed workforce.
Limited visibility into workforce data hinders effective planning. Without real-time insights, managing resources and ensuring compliance is challenging. Fragmented data from multiple vendors complicates cost tracking, performance, and engagement. Coordination between HR, procurement, and agencies adds complexity. Gaps in visibility can affect forecasting and risk management, leading to inefficiencies and compliance issues.
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.
Contact us today to learn how we can help you optimise your recruitment strategy and achieve your business objectives.