This growing workforce has its own set of challenges. Technology can help.
By Madeline Laurano
The rise of the independent worker is arguably the most significant trend impacting today’s workforce. In fact, 27 percent of an average organization’s workforce is expected to be comprised of contingent labor by 2015. The definition of a contingent worker continues to expand creating a new set of challenges for managing this complex workforce. Traditional temporary labor workers, independent contractors, consultants, and statement of work (SOW)-based projects all full under this ever-growing umbrella.
As a result, leading organizations are investing in vendor management systems (VMS) to help procure, manage, and analyze this critical talent pool. A VMS can help streamline processes, increase visibility, and create greater efficiencies.
Why Should You Consider a VMS?
For starters, only one third of organizations have visibility into their contingent labor spend. Without this insight, organizations are unable to draw a connection between the use of contingent labor and the impact on organizational growth. Organizations are facing pressures to reduce costs and provide greater visibility across every area of contingent management including suppliers, projects, agreements, and workers.
Technology can play a pivotal role in helping organizations overcome these challenges. VMSs offer robust dashboards, deep analytics, and forecasting capabilities to provide organizations with the visibility and insight they need to make better decisions around their current and future talent needs. As a result, organizations leveraging VMS solutions have a distinct advantage, including greater compliance, productivity, and visibility.
- Compliance. Whether reviewing misclassification or insufficient levels of IC business insurance, maintaining compliance can be tricky for organizations leveraging contingent labor. Seventy-eight percent of organizations investing in a VMS are able to stay compliant compared to 68 percent of organizations not using a VMS.
- Productivity. Organizations rely on contingent labor to improve efficiency and contribute to organizational growth and productivity. Companies with VMS solutions were more likely to have their contingent workers meet pre-defined goals (67 percent versus 45 percent).
- Visibility. Creating transparency around contingent labor is critical for organizations looking to streamline processes and drive success. Organizations with a VMS are twice as likely to have visibility into their contingent labor.
What Should You Consider When Selecting a Provider?
The business for leveraging a VMS is there but, evaluating and selecting the right provider is challenging. In a crowded market, it can be difficult to identify key differentiators and select a system that meets needs. Unsurprisingly, only 36 percent of organizations are satisfied with their current provider. Aberdeen identified several differentiators to consider when selecting a VMS.
- Delivery model. As HR and procurement departments look to align more closely with the business, the cloud is becoming a compelling differentiator and a key factor in all enterprise technology decisions. In contingent workforce management, cloud computing and SaaS is the preferred delivery model for 36 percent of leading organizations.
- Integration. Integration can ensure a positive customer experience and better access to data. Integration typically includes existing systems of record, time keeping solutions, invoicing, and reporting solutions. Currently, more than 50 percent of organizations do not integrate their VMS and timekeeping solutions or do not know if they are integrated.
- Analytics. Custom, drill-down analysis and the tracking of ongoing and forecasted trends enables organizations to garner valuable intelligence about suppliers, usage, and effectiveness. It also improves overall budgeting and financial resource planning for future projects that will use contract talent. Thirty-seven percent of leading organizations use analytics or business intelligence tools to execute on decisions related to the future utilization of temporary labor.
As the contingent workforce grows in complexity, organizations should consider investing in technology to help acquire, manage, and analyze this critical talent pool.
Madeline Laurano is research director of human capital management for Aberdeen Group.