Historically, contingent workforce management (CWM) programs have been led by one of two groups: procurement or human resources (HR). Each of these distinct enterprise functions brings a unique set of capabilities and strategies to the modern-day CWM program. And, even though the contingent workforce arena has undergone a “talent-first” transformation over the past several years, there are still critical pieces of traditional supply management competencies that are required to drive ultimate value. From the procurement perspective, there are several key approaches that this function has been taking to enhance its management of the non-employee workforce.
Interestingly, procurement’s top approach to improve its contingent workforce operations is to institute collaboration with the HR and HCM groups (73% of procurement executives cite this as their top strategy for improving their CWM programs). The Chief Procurement Officer (CPO) and the procurement team have made it a priority in recent years to be more agile in how they approach spend management; when it comes to category management, procurement desires to be a strategic force that can add long-term value. The opportunity at-hand for the procurement function is to become entwined in the more complex attributes of today’s staffing models; for example, procurement can be an ideal force in assisting with managing newer talent outlets like digital staffing channels.
Also, for too many years, the commodity-led focus of CWM kept organizations from unlocking the real power of the non-employee workforce; as times changed, however, the talent-first movement forced businesses to adopt more HR- and HCM-approaches. The collaboration between procurement and these groups not only translates into an effective balance of supply management and talent management, it also forms the groundwork for the forward-looking concept of “total workforce management (TWM),” which entails the centralized and standardized series of processes, strategies, and competencies for managing all types of talent, including both FTEs and contingent workers.
Similarly, the efficiencies and visibility derived from the utilization of core CWM solutions, like MSPs and VMS platforms, are an effective means to automate key CWM processes. They can also drive intelligence and insights into the non-employee workforce and harness these solutions’ next-generation functionality (in the case of VMS, AI and machine learning) to ultimately enhance the overall contingent workforce program.
Procurement’s “SOW Conundrum”
Ardent’s definition of “contingent labor” includes three distinct categories: traditional temporary labor (via staffing suppliers and vendors), “self-sourced” / “directly-sourced” talent such as independent contractors and freelancers, and “complex contingent labor,” which includes professional services and statement-of-work (SOW)-led projects. Nearly 70% of procurement teams are prioritizing SOW management and services procurement over the next 12 months as a way to improve the overall CWM program. SOW and services represent perhaps the most intricate of contingent labor due to its propensity for detailed project management, milestone- and delivery-tracking, and the spend/supplier management components required to control the (typical) millions of dollars funneled annually into this CWM sub-area.
Ardent’s research has discovered that only 48% of businesses today have centralized the management of the SOW/services category to fall under the overall contingent workforce program. This indicates that, as far as evolution takes the world of work into new and exciting territory, there are still core and traditional CWM attributes that many enterprises have not yet mastered. However, while less than half of companies today currently manage SOW and services within their contingent workforce program, nearly 40% of businesses expect to integrate it into CWM within the next two years.
Although this contingent workforce category may seem like a daunting task to manage, the truth is that the vast majority of uncontrolled non-employee labor spending lies within SOW and services. From IT and legal services to maintenance and accounting, there are possibly dozens (even hundreds for larger organizations) of service types that are being engaged and leveraged across nearly every function across the greater organization. A failure to control this spending keeps many CWM programs from realizing their true value.
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