What Type of Contingent Workforce Provider Is Right For You?

What Type of Contingent Workforce Provider Is Right For You?

According to a recent global survey of 2,715 executives, 83% say they are increasingly using contingent, intermittent, seasonal, or consultant employees. For companies looking to expand their contingent workforce, there are a wide range of talent sourcing models and partnering options to choose from. But what type of partner do you actually need to fit your needs?

Managing your indirect hires

With the world of business transitioning rapidly to flexible workforce models - i.e. combining increasing numbers of Indirect Contingent Workers, Independent Contractors and Freelancers into their workforce mix - the need to manage the hires your company takes on has become a hot topic.

Of course, companies have always hired freelancers to provide cover and for their specialist skills that weren’t commonly needed every day, week or year, but what we’re seeing now is something different. Companies are seeing a blend of indirect hires as a long-term and sustaining aspect of their workforce mix. In some businesses, contingent workers make up as much as 60% of their entire workforce. In the United States, staffing industry experts suggest the average contingent mix is somewhere around 35% of the total workforce.

The latest comprehensive report on the make-up of the U.S. labor market by the Bureau of Labor Statistics (BLS) estimated that 3.8% of the U.S. workforce, or 5.9 million workers, held contingent jobs.

Managing these contingent workers effectively requires companies to face up to significant updates to technology, training, and culture—and the management challenge is likely to increase as lawmakers and regulators sharpen their focus on the issue. 

The rise of the non-payroll worker promises businesses greater agility, access to talent, and cost control, but the challenges are large too - which is why many organizations are choosing to hunt out staffing industry and payroll expert partners. In this article, we dig deeper into the types of partner that exist and help navigate which type may be the best-fit for you.

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A Maturing Landscape of Expert Partners

As with most industries, no single operational model works best for everyone. As the contingent workforce industry has matured, various suppliers have emerged providing various blends of support services and technology to cater for a growing demand for contingent workforce hiring and onward management.

The common blend of building blocks that buyers look for are:

-     Indirect workforce payroll services

-     Purchase-to-pay service fulfilment

-     HR services

-     Governance and compliance

-     Background checks fulfilment and management

-     Hire to train and other forms of onboarding services

-     Operational management and support services

-     Technology ecosystems for hiring, interview management and scheduling, application processing, statement of work management

-     Indirect vendor channel operations and vendor management

-     Direct sourcing facilitation

In the next section, we provide our take on some of the more common constructs.

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Types of indirect staffing fulfilment partnerships

1. Payroll-Process-Outsourcing

As the term suggests, a PPO partner dedicates their existence to the provision of payroll provisioning for your full-time or contingent workforce. Often, they don’t care what type of employment contract or relationship that exists. Their job is to make sure people get paid the right amount, at the right time, while observing the legal compliance demands. Commonly, providers will facilitate submissions to government and compliance authorities and provide all of the technology and process understanding required to run payroll. Few companies want the hassle of running their own payroll, so finding an effective partner equipped to do it for you can make good business sense. But is it ‘enough’ for what you need?

2. Employer of Record (EoY)

Going a step further than PPO, you might be on the lookout for an Employer of Record (EOR). In essence, this is a third-party organization that hires and pays an employee on your company’s behalf and takes ownership of the related employment tasks. In this model, the EOR is the registered employer for the worker while your company maintains governance over the relationship, setting out decisions on projects, levels of compensation, role duties and termination. 

For organizations with global ambitions, another reward of having an Employer of Record is that you can legally and efficiently engage with overseas workers in a new territory without having to set up a local entity or risk violating local employment laws. But do you need a partner that has the ability not just to manage hires, but to find them in the first place?

3. Help with Hiring - Recruitment Process Outsourcing (RPO), Master Vendor and Direct Sourcing Facilitation

It may be that finding someone to manage hires once you’ve found them isn’t enough. Should you want a partner to support your entire hiring lifecycle from the very beginning - and find the talent you need - then perhaps these options are a better fit for you.

Recruitment Process Outsourcers (‘RPOs’) 

These are companies that offer to the on the task of managing your hiring process. ‘The Job’ these companies do it to take care of the hiring process on your behalf. While some companies cover both Full-Time AND Contingent Workforce needs, others specialize in one or the other. Expect RPOs to offer onsite or offsite operations, so you’ll need to decide if you’re looking for someone to operate from your premises or remotely. 

The benefit of an RPO is that you can measure (and pay for) results as the provider has the end-to-end responsibility of finding the talent you need. This means you can scope the RoI of your provisioning based on key metrics such as time-to-hire, cost-per-hire, etc. 

Most RPOs will supply their own technology and operate their own processes but increasingly, (because of data security and privacy concerns, not least risk of IP leakage) organizations are seeking more of a blended approach where the partner works with existing tech platforms and embeds their activities into incumbent processes.

Master Vendors

Ordinarily, RPO vendors don’t perform payroll or Employer of Record (EoR) services. If you’re looking for a supplier to do recruiting AND these services, then perhaps a Master Vendor relationship is what you’re after. Master Vendor arrangements come in various flavours but generally the scope of a Master Vendor is to manage the recruitment and management of your contingent workforce; probably working with tier-2 and tier-3 specialist staffing firms to fulfil your total 

Managed Direct Sourcing and Facilitation

One of the latest trends to hit the contingent workforce management market is the introduction of Direct Sourcing. One of the pitfalls of finding contingent hires are the weighty staffing vendor costs that increase the cost per hire considerably. 

Accepting that some contingent roles will be short term, having to divide the onboarding and sourcing costs across a small hiring term can result in eye-watering overheads. For this reason, more companies are looking to leverage their brand on social media platforms to offer temp and contract work through an online job board marketed on platforms like Facebook and LinkedIn. Most companies after a few years in business build up a good audience of potential workers (including alumni and people who’ve worked for or with the company), resulting in a ‘known’ community of potential contract workers. 

Having a third-party manage this activity can make sense because technology alone rarely creates a workable hiring engine. Having a partner that understands the ‘people’ aspects of the hiring process, that can support the administrative activities that come along with running Direct Sourcing as a program, can be a useful enrichment to your in-house capabilities.

4. Tapping into the Gig Economy - Next-Gen Vendor Management and HR Cloud Platforms 

New digital technologies - including Artificial Intelligence, chatbots, video, mobile computing, big data and blockchain - are transforming all aspects of recruitment. Can they totally displace the need for humans in the hiring and workforce management space? Probably not, but they can come close!

While tech tools have historically performed a role to support and enrich the activities of recruitment professionals in the back-office, today we’re seeing the end-to-end hiring process move online and become highly automated. Artificial Intelligence and chatbots are dramatically reducing the amount of ‘human-in-the-loop’ processing required to find and hire contingent workers. It’s well worth exploring how modern HR Cloud platforms (like Simplify VMS) can reduce or remove the need for roles in the hiring process, before considering a ‘human’ outsourcing solution. 

It may be that all you need to create an effective hiring and workforce management engine for your company is some built-for-purpose technology supplemented in a cost effective way by a outsourcing vendor that can offer you the ‘last remaining administrative bits and pieces your company can’t do itself.’

5. Enriching your Contingent Workforce Provisioning Agenda with Value-Adding Service Providers - From Background Check Compliance to AI-Enabled Virtual Hiring

In addition to the common forms of ‘partner relationship’ we’ve highlighted above, there are dozens of providers offering incremental value-adding services that can have a big impact on your hiring and workforce management.

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What We Think

The Contingent Workforce Recruitment and Management industry is not a new industry, but it’s been transformed over the past few years thanks to the remarkable potential of digital technologies to automate processes that once relied on people power to get jobs done. Tech innovation has created a plethora of different ways for suppliers to help you to get your contingent workforce hiring and management delivered in smarter, more cost effective ways.

With the dramatic shift towards flexible working happening in the market right now - not least because of the impacts of the global pandemic - there’s never been a better time to revisit your contingent workforce hiring and management fulfilment and determine how best to get the job done better with a willing partner that fits your business needs like a glove. Be confident that if you look hard enough, you’re sure to find a best-fit partner out there somewhere ready to help you.

Reach out to us and let us know what you think about contingent workforce management? Would you consider outsourcing? If not, why not?

Mahima Arora

Project Leader ( Recruiter)

3 年

Hello Erica, My name is Mahima from Priority Solutions, Ahmedabad. We are into Recruitment and Outsourcing services. Segment: Non IT & IT Please let us know, if we can work mutually on staffing requirement. Thanks & regards, Email: [email protected]

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Ian Tomlin

CEO and transformative strategist building positive habits for organizations committed to changing how they work | Author | #TheUWI Chair

3 年

Interesting read Erica, thanks!

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