Skip to main content

Rethinking Contingent Workforce Management

Talent acquisition specialists agree that contingent workforce management (CWM) has become more relevant than ever in the past years. In the wake of the COVID-19 pandemic, more and more companies have been increasingly relying on contingent workers’ services to meet short-term labor demands, fill gaps in their workforce or add specialized skills for specific projects.

While the pandemic accelerated certain aspects of this phenomenon, the contingent workforce has been steadily growing for a decade and will continue to do so. McKinsey estimates that 70 percent of executives are planning on hiring contingent workers in the near future. In fact, by 2030, 80 percent of the workforce is expected to be independent.

In order to stay competitive, organizations should rethink their approach to contingent workforce management. According to Harvard Business Review, in 2023, “savvy organizations will (…) embrace ‘quiet hiring’ as a way to acquire new skills and capabilities without adding new full-time employees.” HR specialists suggest a strategy that prioritizes hiring contingent workers who bring in specific and highly demanded talent when facing the need to cut costs. This enables companies to enhance internal capabilities and solve temporary staff shortages to increase the overall flexibility of the workforce.

With 77 percent of CEOs seeing the availability of key talent as the biggest threat to their business, now is the time for organizations to rethink contingent recruiting and get ahead of demand concerning contingent labor sourcing.

Ending siloed workforce management and increasing agency for HR teams could be a good starting point. Big companies are estimated to allocate up to 30 percent of procurement to the contingent workforce. However, current management methods cannot simply be scaled up to meet the growing needs of this segment. The whole worker ecosystem should be integrated under a unified approach that maximizes the potential of every person —not just the permanent employees.

Therefore, many organizations are adopting a total talent management strategy that allocates contingent workforce management to HR teams instead of procurement. With this move, TA and TM teams gain more visibility and can better manage the skills of the temporary workers.

This article will examine the pain points associated with current contingent workforce planning methods, introducing the benefits of adopting an alternative, holistic approach that facilitates total talent management. It will also provide a high-level overview of ROI-driven best practices for optimizing contingent recruiting that can yield benefits such as increased flexibility and consistency, reduced costs and better-integrated processes for organizations. Let’s jump in.

Contingent Workforce Management Lacks a Human Touch

Traditionally, the processes for procuring contingent workers differ significantly from those used to hire permanent employees. These relationships are typically seen as a single spend category where procurement takes the lead, often with no involvement from HR. As a result, temporary workers usually skip the usual due diligence and onboarding steps carried out by recruitment professionals during the hiring process.

This can have a negative impact for a wide variety of reasons. Firstly, skipping the typical screening process might result in hiring people who aren’t a good cultural fit for the organization. Secondly, treating these workers as numbers rather than individual employees will likely have considerable implications for businesses trying to attract the best candidates amongst their talent pools.

Current contingent workforce processes are merely transactional, with limited steps to engage external employees. This will no longer be good enough in a competitive labor environment, where the strongest candidates can be selective when deciding who to work for.

As the contingent workforce is very fluid, ensuring workers don’t become disengaged and can be easily rehired for future projects is vital. Ultimately, the talent companies manage to hire influences business success: those hiring top-performing contingent workers will likely have a competitive advantage.

The True Costs of Managing Contingent Labor

Generally, there is no centralized process for hiring contingent workers. Due to the fragmentation and silos between different business units, current contingent workforce management methods are often inefficient, inconsistent and expensive.

Ironically, one of the primary reasons organizations create contingent hiring programs is to drive cost savings. But at the moment, it is nearly impossible to quantify any savings delivered. The sourcing costs of hiring contingent workers are often much higher than those associated with permanent employees. This is primarily due to agency fees incurred.

More and more companies are outsourcing temporary employment programs to keep up with the growing demand for contingent professionals. Lack of centralized management and the use of preferred supplier lists further increases these costs.

The Dangers of Lacking Visibility

Under current processes, leadership teams often lack visibility and control over a considerable proportion of their workforce. Nearly 60 percent of all contingent labor is unaccounted for in financial planning, forecasting and budgeting. This is particularly shocking when you consider that companies are spending up to $270B globally on contingent workers. Without a clear overview of total talent within your organization, how can you even begin to address personnel planning?

In order to achieve breakout performance in today’s competitive landscape, companies must be able to react to market changes in an agile fashion. This includes adjusting human capital within the business to meet changing demands. However, optimizing your workforce is nearly impossible if you lack visibility over your total talent supply.

Lack of visibility between business units and poor processes and reporting are important obstacles in the way of hiring the contingent talent needed to keep the flexibility of the workforce. A CWM solution like Avature can help organizations analyze valuable real-time cost and performance data, which in turn will drive better insights and prompt strategic decision-making.

Time for Change: A New Approach To Contingent Workforce Management

Considering all of these factors, it’s clear that the time has come to adopt new methods for hiring contingent workers. Moving ownership from procurement to talent acquisition is the most effective way to make this change. Companies should invest in a strategic contingent workforce solution built specifically to meet the needs of contingent workers rather than relying on limited vendor management systems (VMS solutions).

The organizations that do so will likely enjoy increased efficiency, reduced costs and improved candidate quality. In addition, they’ll be able to address changing human capital demands efficiently and flexibly, thanks to increased visibility. The following are some of the best practices we suggest they follow.

Develop a Robust Talent Network

Organizations should streamline their sourcing efforts by directly hiring contingent workers. Gone are the procurement department spreadsheets and paper-based workflows of yesteryear. Instead of receiving contingent candidates from agencies or over email, hiring managers can leverage a platform that allows them to quickly request resources for specific projects, approve processes and choose candidates from one centralized solution.

Additionally, with a platform that includes a self-service Content Management System (CMS), organizations can build beautifully branded portals (i.e., talent networks) that act as candidate magnets, keep talent pools engaged and encourage the best workers to come back in the future and apply for new projects or positions.

Thanks to the ability to create profiles, apply directly and set minimum requirements for availability and compensation, organizations will find candidates empowered with a degree of buy-in typically reserved for the traditional labor force.

Perhaps, most importantly, this empowerment doesn’t only extend to contingent workers – a modern SaaS solution can empower different business units (i.e., HR and procurement) to use candidate preferences and skills as match parameters to advertise and promote relevant projects.

Accenture, active in over 120 countries and 40 industries as one of the world’s largest professional services organizations, achieved 20 percent savings per contractor hired by working with Avature to develop a direct sourcing contingent labor strategy.

Looking to modernize their contingent worker sourcing workflow while matching the strategic, meticulous and detail-oriented mentality of today’s top contingent candidates, Accenture and Avature combined forces to create the Contractor Exchange Marketplace and obtained the following results:

  • Candidates can now quickly filter, search and apply for the contractor role of their choice, all while receiving a comprehensive, sustainable and targeted recruiting experience focused on engagement and re-engagement.
  • Rather than bidding au revoir to top-tier candidates once projects are finished, Avature allows Accenture to optimize their contingent workforce management workflows by tagging and re-engaging the best consultants via their talent network portal, even as they are offboarded.
  • With over 100,000 portal users and 500,000 visits since the marketplace portal launched in March 2018, Accenture now has an effective, GDPR-compliant external sourcing solution built to meet the demands of contingent recruiting in the digital age.

Humanizing Sourcing Communications When Hiring Contingent Workers

Now, more than ever, organizations must focus on developing effective and value-driven sourcing communications when managing contingent workers. Remember, the goal is to build a relationship with them – to engage, nurture and keep them coming back to your talent network or marketplace for more.

Several contingent workforce management strategies are available for organizations to utilize in their efforts to convey their initial value proposition. One of them is value, which has to manifest in the form of empathic, concise and compassionate communications – something beyond the industry standard for a “feeler” email or introductory LinkedIn message. Communication strategies need to be adjusted to this audience.

Successful contingent recruiting will hinge on an organization’s ability to humanize and diversify the substance and delivery of its candidate messaging. In this respect, a robust contingent workforce management solution goes a long way.

The right platform can, for example, empower an organization to engage in genuinely personalized contingent worker communications at scale, moving beyond first/last name variables to industry, project and expertise-specific personalization.

With projects few and far between, communication campaigns should focus on providing contingent workers with curated content about company culture, shared experiences of other contractors, D&I stories and skills development opportunities. At the same time, strategic social media messaging can raise awareness and extend organizational reach.

Those organizations that preserve the human touch in communication efforts will be well-positioned to grow their talent networks with top-tier candidates.

A Tailored and Seamless Experience: The Deloitte Story

Deloitte Australia has achieved many milestones since implementing Avature’s CWM technology to hire contingent workers, such as reduced costs, faster time to fill, better communication with candidates through personalized and automated notifications, plus easier onboarding, offboarding and redeployment of contractors for new projects.

Their Open Talent Network has helped them source and hire experienced contractors without the intervention of third-party agencies, thus streamlining the process and encouraging workforce agility and flexibility. Without any proactive promotion, they have already gained 5,000 members in just one year and can now complete a contract hire in as little as 24 hours.

“It’s as much about engagement as it is about management. We’ve tried to put ourselves in the shoes of a potential contractor and make the process as simple and refined as possible,” says Ben Ryrie, Digital Innovation Manager at Deloitte Australia.

Avature Is Here To Help

Companies can bring transparency to their contingent workforce spend and management by adopting a total talent management approach that aligns the contingent workforce management processes with those of permanent employees for a holistic view of their talent. Moving contingent workforce management to talent acquisition teams powered by best-in-class HR software will prepare organizations for the challenges ahead and ultimately deliver astounding results.

Discover the elements of contingent workforce sourcing in greater detail as well as additional best practices for implementing our cutting-edge approach to contingent workforce management in our free e-book, Leveraging a Total Talent Strategy.