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In today’s rapidly evolving business landscape, flexibility and adaptability are key drivers of success. For small to midsize organizations, managing a contingent workforce—temporary, freelance, or contract workers—can be a strategic advantage. Traditionally, contingent workforce management has been outsourced to third-party agencies like managed service providers (MSP). In fact, according to Staffing Industry Analysts, over 60% of enterprise companies engage MSPs to manage their CW programs. However, organizations are increasingly exploring the benefits of self-managed programs. This shift can offer greater control, cost savings, and tailored solutions that align more closely with business goals.

Why Small to Midsize Organizations Should Consider Self-Managed Programs

  1. Cost Efficiency: Outsourcing contingent workforce management to a third-party agency can be expensive. Self-managed programs eliminate intermediary costs, allowing organizations to allocate resources more effectively. This cost-saving can be particularly significant for small to midsize organizations operating on tighter budgets.
  2. Enhanced Control and Flexibility: Self-managing a contingent workforce provides organizations with direct control over their hiring processes, enabling them to respond swiftly to changing business needs. This flexibility is crucial for small to midsize companies that must adapt quickly to market dynamics.
  3. Tailored Solutions: Third-party agencies often use a one-size-fits-all approach, which might not align with the specific needs of smaller organizations. By managing their own programs, businesses can develop customized strategies that better fit their unique requirements and corporate culture.
  4. Direct Relationship with Talent: Building direct relationships with contingent workers fosters a better understanding of their skills and performance, leading to more effective workforce planning and deployment. It also enhances worker engagement and loyalty, which can result in higher quality work and increased productivity. Many leaders in the contingent workforce space have called this process “talent pooling” or the building of talent pools.  
  5. Data-Driven Decision Making: Managing a contingent workforce in-house allows organizations to gather and analyze data on worker performance, project outcomes, and overall workforce trends. This data-driven approach enables more informed decision-making and strategic planning.

Tools to Facilitate Self-Managed Contingent Workforce Programs

Implementing a self-managed contingent workforce program can be daunting without the right tools. Fortunately, several solutions can streamline this process, making it more manageable and effective.

  1. Vendor Management Systems (VMS): A VMS is a software platform that facilitates the procurement, management, and optimization of contingent workers. It provides a centralized system for tracking worker assignments, managing contracts, and monitoring performance. Key features of a VMS include:
    • Automated Onboarding: Simplifies the hiring process, ensuring compliance with company policies and legal requirements.
    • Time and Expense Tracking: Streamlines the management of timesheets and expense reports, reducing administrative burden.
    • Analytics and Reporting: Offers insights into workforce performance and spending, enabling data-driven decision-making.
  2. Employer of Record (EOR) Solutions: An EOR is a third-party organization that takes on the legal responsibility of employing contingent workers on behalf of the client company. This includes managing payroll, taxes, benefits, and compliance with labor laws. Benefits of using an EOR include:
    • Legal Compliance: Ensures that all employment-related regulations are met, reducing the risk of legal issues.
    • Payroll Management: Handles payroll processing and tax filings, freeing up internal resources.
    • Employee Benefits: Provides access to benefits packages, which can be attractive to contingent workers and help retain top talent.
  3. Direct Sourcing Platforms: These platforms enable organizations to source contingent workers directly, bypassing traditional staffing agencies. Direct sourcing platforms connect businesses with a pool of pre-vetted freelancers, contractors, and temporary workers. Advantages of using direct sourcing platforms include:
    • Access to Quality Talent: Provides access to a diverse pool of highly skilled and experienced workers.
    • Speed and Efficiency: Facilitates faster hiring processes by eliminating intermediaries and streamlining communication between the company and candidates.
    • Cost Savings: Reduces recruitment costs by eliminating agency fees and commissions.
    • Customizable Talent Pools: Allows organizations to build and manage their own talent pools, tailored to their specific needs and requirements.

Conclusion

For small to midsize organizations, self-managed contingent workforce programs present a compelling case. By taking control of their contingent workforce, these organizations can achieve cost savings, enhance flexibility, and tailor solutions to their specific needs. With the aid of tools like Vendor Management Systems, Employer of Record solutions, and Direct Sourcing Platforms, the transition to a self-managed program becomes more feasible and less daunting. Embracing this approach can ultimately lead to a more agile, efficient, and competitive organization in today’s dynamic business environment.

By leveraging these strategies and tools, small to midsize businesses can harness the full potential of their contingent workforce, driving growth and success in an increasingly competitive marketplace.

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