Many organisations are turning to contingent labour to cut costs and keep staffing levels flexible. The contingent workforce is projected to grow by 53% worldwide in 2023.
However, managing a contingent workforce comes with unique challenges. Businesses often need to hire contingent talent for peak periods, which means specialised skills have to be accessed on a short-term basis. Also, juggling multiple vendors, contracts, and budgets can be daunting for any internal talent acquisition team.
If you’re managing your contingent workforce, you know how difficult it can be to stay on top of everything from payroll and taxes to benefits and recruitment. Not only does this require a lot of time, but it can also mean lots of money spent on in-house staff, agency fees, and administrative costs. That’s why many companies choose to partner with a Managed Service Provider (MSP).
Although saving money is just one of the many benefits of working with an MSP, it’s important, especially given recent market slowdowns. To successfully identify these savings opportunities, companies must understand their internal processes, evaluate their current talent infrastructure, and recognise areas of improvement when sourcing contingent labour. Here are a few ways an MSP can help to quickly source, secure and manage the contingent workers you need, while realising significant cost savings:
An MSP can immediately save time and money by streamlining your contingent workforce operations. It handles payroll, taxes, analytics, compliance and more – all in one system of record, a Vendor Management System (VMS). Eliminating the need for multiple contracts brings consistency and savings to the supply chain process, with all suppliers under the same contract terms, rules of engagement, and delivery guarantees.
MSPs help benchmark rates, qualify candidates, and leverage supplier relationships to negotiate the best terms — incorporating fair and consistent rules of engagement into supplier agreements. Ongoing assessments of supplier performance and supply chain optimisation drive service improvement. Data from scorecards, surveys, analytics, reporting, and annual audits is regularly extracted and reviewed for comparative benchmarking across categories, spend bundling and volume pricing. Optimising spend with high-performing suppliers, training low-performing ones and holding agencies accountable for agreed-upon KPIs and SLAs are cost-saving tactics an MSP can deploy.
Process improvement and risk mitigation
An MSP heavily automates manual tasks like payroll processing and document management to reduce costs and ensure accuracy through data entry automation and compliance monitoring. Since an MSP programme manages all aspects of workforce management—including payroll, taxes, job classification, recruiting, etc.—businesses don’t need to pay for separate services or staff members dedicated solely to these tasks.
Automating your fulfilment process can reduce cost billing and eliminate invoicing errors caused by outdated and manual processes. Since an MSP provides comprehensive analytics and reporting capabilities, businesses can access real-time data. These insights can help them make necessary process improvements and better decisions regarding workforce needs.
Companies are turning to MSPs to avoid costly fines due to rogue spend and non-compliance with employment law. Using VMS reporting features can help audit recruitment processes, including POs, to identify mismanaged spend and risk exposure.
A consultative partner
An experienced MSP can comprehensively analyse all contingent labour costs, avoiding overspending and driving savings. Through advisory support, an MSP can help you uncover the hidden expenses related to recruiting and onboarding staff, reduced training opportunities, and erosion of organisational culture due to fluctuating workforces. Such safeguards can support your business by more accurately assessing contingent labour costs and ensuring better savings methodologies long-term.
MSPs stay ahead of the talent game by leveraging the latest contingent talent insights to help companies make informed decisions. This includes understanding the latest hiring trends, keeping up with technological advances, and staying abreast of labour market fluctuations. By offering this added value, MSPs can become trusted strategic advisors in the evolving world of work.
Working with an MSP means having an experienced and knowledgeable partner to help find the best possible pay rates from supplier agencies. An MSP can negotiate rates and discounts on your behalf to get the most value for spend. Additionally, an MSP’s experience coordinating long-term contracts allows to negotiate for discounts or other features that may not be available on the open market. These include tenure, volume, and prompt pay discounts, usually ranging from 4-6% on a 12-month engagement.
When managed correctly, an MSP can provide significant cost savings. If you’re looking for a competitive edge when hiring contingent workforce – reducing labour costs without sacrificing quality – investing in an effective MSP programme is the answer.
At Pontoon, we work with small and large organisations to create a tactical roadmap for hiring contingent labour through a structured methodology with strong programme governance. We collaborate with our MSP clients to determine their hiring objectives, risk management opportunities, and process improvements, focusing on cost savings.
Our MSP solution includes a variety of additional cost-saving methods to get the best talent for the best price. Let us show you how we can help your bottom line by unlocking the untapped potential from your contingent workforce spend.