Freelance, contracted, and contingent workforce solutions are becoming more and more prevalent in today’s economy. It allows companies both big and small to outsource some of the work they don’t necessarily specialize in and have those tasks performed in a cost-effective and efficient manner. Overall, approximately $3.3 trillion is spent annually on non-payroll labor and 55% of contingent labor is unaccounted for. Learn more about the importance of indirect procurement below.
The growth in this industry is indisputable. Over the last five years the amount of money spent on these solutions has increased by 41%, and there were also 67% more workers hired for temporary work than the previous year. Between 30 and 50% of the entire workforce is now comprised of non-employees.
Contingent workforce management solutions helped one company in the financial sector achieve $100+ million in cost savings, attributable to visibility, competitive bidding, and rate card creation, according to a report from the Vendor Management System provider Fieldglass.
In another specific case study example, Cisco Systems saved over $33 million to date by competitively bidding SOWs (or statements of work) and identifying commoditized SOW. On top of that, today Cisco can: enforce the approval process, limit spending to pre-approved budgets, rate benchmarking available to all managers, ensure proper worker classification, enable contractor systems and facility access, and securely transfer data to Cisco BI tool for holistic reporting.
Outsourcing labor and now the new services available to manage these services has provided a plethora of benefits to business owners. For example, in 1995, sole proprietors spent 16.4% of their total expenditures on wages and salaries, as compared with 13.2% in 2011.
Recent trends indicate that contingent workforce solutions will continue to rise. America’s numerous staffing companies will hire more than 14 million temporary and contract employees over the course of a year, most of whom will work in a full-time capacity (76%), comparable to the overall workforce (82%).
Whether you’re a small business owner or the head of a multi-million dollar corporation, learning how to benefit from contingent workers and managed service providers is becoming an increasingly valuable asset in today’s marketplace.