As an interlude to our ongoing “13 for 2013” series of best practices in contingent workforce management (click for Part One, Part Two, Part Three), I wanted to discuss something that we in the analyst industry often forget when we create, write and develop research in any given space: a “How did we get here” article that traces the actual evolution of the specific process or application area or in this case, the evolution of a key spend category.
Starting here we’ll dive into a history of contingent workforce management and take a deeper look at just exactly how we got to where we are in the evolution of how organizations across the globe manage their contract talent. In the future, we’ll tackle travel and expense management and events/meetings management. Please contact me if you’re interested in a similar article on other categories.
1990s. While certainly not a “golden” era in contingent workforce management, the foundation for the evolution of the space began with business’ growing need to supplement their existing workforce with “temps,” as they would be called for years to come. During this period, Managed Service Providers (MSPs) and Vendor-on-Premise (VOP) solutions would come to fruition as ideal outlets to improve cost savings on outsourced spending. The late 90s also saw the first seedlings of Vendor Management System (VMS) technology arise out of the framework of e-procurement systems. The first of many high-profile cases involving mismanagement of independent contractors comes to light.
Early 2000s. MSPs and VMS solutions become prevalent outsourced platforms to manage day-to-day operations for contingent workforce management. With the web as a viable groundwork for what future technology would become (i.e. the cloud), these solutions, specifically VMS offerings, would transform what organizations could do in regards to taking proactive measures in managing their staffing suppliers and agencies, as well as gaining a respectable level of intelligence into spending and vendors within the contract talent arena.
Mid-2000s. With contract talent representing a sizable portion of the average organization’s total workforce, the focus for the vast majority of organizations remained pointed at driving cost savings within this complex spend category. Procurement and strategic sourcing strategies (and software) were the favored options to consolidate staffing suppliers and reap cost savings through better mark-ups and superior sourcing intelligence. Some MSP and VMS solutions partner together, enabling end-users to reap the rewards of both offerings. The first rumblings of a union between human resources and procurement divisions occurs within some organizations.
Late 2000s. An economic downturn hit and thrust the world into a full-on, official financial recession. Companies that once relied on full-time equivalents (FTEs) could not maintain both a healthy financial standing and a pre-recession payroll. Faced with an all-too disheartening mantra of “doing more with less,” those organizations, in the midst of a crisis, turned to contract talent and a more project-oriented focus within their businesses. The average organization saw their contract labor levels rise to new heights, forcing them to invest more planning and budgeting into this key strategic spend category. Independent Contractor Engagement Specialists (ICES) gain prominence as a point solution for engaging and managing independent contractors, offering payrolling and relationship barometers to help organizations avoid the risks and pitfalls of this slice of the contingent workforce. Many organizations realize the true value of enabling both procurement and HR with opportunities to manage all facets of contract labor.
Early 2010s. The “contingent workforce umbrella” is born, and utilized as an all-encompassing term used to describe the contemporary aspects of what is now considered to be “contract talent,” such as traditional temporary labor, independent contractors, SOW-based projects and professional services. MSP and VMS solutions evolve as their category evolves, assisting organizations in gaining visibility into agreements, projects, services, utilization, spending and suppliers. The world of business intelligence crosses over into contingent workforce management as the vast majority of VMS software companies tout revamped analytics and reporting as a draw to their platforms. MSPs continue their consultative approach to the industry and help end-users find the right balance of FTEs and contract talent, while offering guidance in managing SOW-based labor. ICES platforms continue their strong presence in the IC engagement / management marketplace. Procurement capabilities and competencies are looked upon to solve the woes of managing SOW-based projects and services. Spend management solutions begin to realize just how important services procurement is to their suites.
The future? Well, let’s just say that this space can go in multiple directions. Stay tuned for Ardent’s thoughts on the which way the contingent workforce management industry is headed.
