What is SOW Spend, what is its importance and where does it fit inside the contingent workforce ecosystem?
Contingent Labor, represents all forms of Human Capital that is non-permanent in nature, inside any given organization. It comes in the form of temporary employees, independent contractors, consultants and freelancers. Additionally, this form of human capital is typically sourced either directly, or through third party service providers, such as pure staffing agencies or specialized service providers.
What organizations often forget, is that these workers are not exclusively sourced under time and material (hourly rate) engagements. Instead, they are often packaged, and hidden, inside agreements known as a Statement of Work (SOW).
Organizations looking to truly optimize their contingent workforce management programs, need to ensure that all non-employee workers are visible, managed and accounted for. Depending on the maturity of your contingent workforce management program and objectives, it may be the right time to build or expand your program to centralize and manage your Statement of Work (SOW) engagements for contingent labor.
Achieving total contingent workforce optimization:
HCMWorks, with its long standing knowledge of services procurement, can help you manage your total human capital spend. We help you build a comprehensive contingent workforce strategy to gain full visibility into your entire non-employee human capital base.
By developing a comprehensive SOW strategy you ensure an end-to-end human capital solution of contract controls, management of supplier performance and population, strategic sourcing, reduced spending, compliance, improved security and risk mitigation.
Having full visibility in your entire contingent workforce with SOW spend management will allow you to maximize productivity, make informed hiring decisions, and see performance issues ahead of time before they affect your bottom line.
“The HCMWorks team was the foundation in the implementation of a contingent workforce managed solution which extends from the hiring process to the payment of consultants. For more than 5 years, our partnership with HCMWorks enables us to effectively meet our objectives in accessing a large talent pool, all while controlling our costs.”
"Having had HCMWorks and their team of professionals supporting our contract resources over the past four years has been a pleasure. HCM experts continue to provide solid and consistent resource management, procurement and administration and we appreciate the efforts that they successfully offer. Having them on our team is a huge asset!"
"I've been working for almost 10 years with the HCMWorks' team and I hope to continue for another 10 years. Professional and passionate are few words that best describe this team. They offer excellent overall service and are always available for any inquiries. Their knowledge of the market makes them an asset for the business. I would not hesitate to recommend them."
Statement of Work (SOW)
With ‘Services Procurement’ being one of the largest indirect spend categories for organizations, a large portion of your total spend is going into these different forms of labor. To have a truly effective contingent workforce management, SOW spend needs to be included.
Managing SOW spend is much different to a traditional contingent labor spend (time and material).
It's important to understand how the SOW landscape differs from traditional temporary labor (staff augmentation). There are many different types of SOWs, with many responsibilities across different parties. It's therefore important to establish a viable framework from the onset, for the successful management of Statement of Work engagements for all organizations.
HCMWorks will support you in differentiating your approach to managing SOW spend versus traditional temporary labor spend (time and material staff augmentation).
VMS technology platforms offer a strong foundation to support the successful management of SOW spend.
Concurrently planning, selecting, designing and implementing a strong SOW management program with technology requires a knowledgeable partner who has successfully done it before.
Many, if not all, large corporations finding themselves with a recurring need for the improved management of Statement of Work (SOW) services. As a result, we are seeing an increase in organizations bringing their Statement of Work (SOW) spend into their contingent workforce programs through a VMS technology platform.
HCMWorks will help you formalize a strategy to bring Statement of Work (SOW) spend into your contingent workforce program with the help of the most compatible VMS technology platforms.
Less rogue spend, misclassification and hidden staff augmentation:
Often Managers will use a SOW as a vehicle to circumvent formal contingent workforce program policies in place: such as tenure restrictions, use of approved vendors, rate card restrictions. This results in higher bill rates and increased risk and happens more than most organizations realize, representing a large spend loophole.
Moreover, SOW serves as a way for suppliers to repackage bulk staff augmentation, without accepting any of the additional risk involved in a traditional SOW (considering the defining characteristic of a valid statement-of-work agreement).
Formal SOW management will reduce your liabilities, increase security, optimize productivity and protect your organization both now and in the future.
A Statement of Work is a document designed and prepared to detail work activities, expectations, timelines, deliverables and payments for the work required. Technically not a legal contract, a SOW makes sure both parties understand what is expected and required. If not managed consistently and effectively, organization do not truly derive these intended benefits and sometimes increase risk exposure.
HCMWorks’ Statement of Work (SOW) services are 100% vendor neutral, and with no hidden agenda
If you are interested in learning more about our SOW management solutions or discussing your approach to SOW, speak to one of our contingent workforce advisors, and we’ll be happy to help!
Independent contractors, freelancers, and contract workers are a valuable source of high-quality talent but managing dozens, if not hundreds of IC contracts, invoices and more, is a full-time job for several of your people.
Learn how to simplify, streamline and reduce the complexity of managing your freelancers, consultants and contract workers.
Last year at HCMWorks we wrote an article about a study by The Economist that found the demand for contingent workers would skyrocket over the next five years, with more than 61 percent of top bosses expecting the use of contract labour to increase.
The report surveyed executive decision-makers at 210 US and UK companies with at least 2,000 employees, finding that contingent workers account for more than a fifth of the workforce at over half (58 percent) of those businesses. A figure set to grow over the coming years.> Read More
The contingent workforce is always changing. Whether it’s the growing pool of workers, new methods of sourcing talent, changing workforce laws or optimizing your contingent workforce management program, there is always something new to learn and implement.
Making sure your organization stays on top of these changes is a crucial element of ensuring your contingent workforce is consistently optimized so that it can maximize results for your business.> Read More
Organizations have significantly increased their use of contingent workers over the past decade, helping to compete with rising labour costs, improving access to top talent and adapt to rapidly changing market conditions.
In fact, new Ardent Partners research shows that 41.5 percent of the average enterprise’s total workforce is considered non-employee, which includes temporary workers, independent contractors, professional services, gig workers and freelancers.> Read More