Contingent Workforce Management: Shifting to Better Technology Solutions

Every organization is going through some type of transformation in response to today’s realities and to prepare for the future of work. Technology plays a critical role in helping organizations through this change. As companies reevaluate their talent and workforce technology, contingent workforce management must be part of the equation. According to Aptitude Research, 44% of companies invested in new talent technology in 2020, and one in four companies plan to increase that investment in the future. Companies want innovative solutions that will improve efficiency, effectiveness, and the overall user experience. 

Unfortunately, many companies still rely on old-fashioned solutions to manage their contingent labor. Last week’s blog addressed how companies are shifting ownership of contingent workforce management from procurement to HR. This week, we will discuss how companies are making a change to solutions that provide better visibility, greater engagement, and reduced costs.  

Current State: What are Companies Using?

Despite advances in contingent workforce management technologies over the past few years, we found that 71% of companies still rely heavily on antiquated solutions and even manual processes like Excel spreadsheets to manage their flexible workforce needs. The primary system many companies use to support contingent workforce management is a Vendor Management System (VMS). These systems are transactional and designed to help organizations stay compliant.

They don’t provide visibility, simplify the experience for busy managers, or support total talent management efforts. Companies use a VMS to remain compliant and automate aspects of contingent workforce management, such as procuring, managing, and analyzing contingent labor. But the truth is they are only managing a small fraction of that contingent spend and often don’t capture SOW workers, independent contractors, freelancers, or other non-employee labor.

When companies feel frustrated with the limitations of these systems, the tendency is to go out and find another VMS without exploring alternative options. This cycle creates more dissatisfaction and little value. We found that one in two companies are looking to replace their provider in 2021, and only 29% of companies are satisfied with their existing provider.

The major challenge with the VMS is that these systems were designed for procurement professionals rather than HR. They solve tactical business challenges but fail to address the challenges of the modern workforce, including total talent management, diversity and inclusion, and candidate engagement. Fortunately, companies today have better options. Next-generation solutions can provide more visibility, flexibility, and a great experience without compromising compliance. 

Future State: What Should Companies Consider?

Companies unhappy with their current VMS or contingent workforce management strategy should consider their unique requirements and look for future-centric alternatives. With nearly 50% of companies looking to replace their VMS, consideration should be given to providers with deep domain expertise in a flexible workforce and a simple and engaging experience for both managers and workers.

The top reasons that companies move away from their VMS include demonstrated ROI, product capabilities, customer support, and price. It is interesting to note that providing value (through ROI) and product capabilities are more important to most organizations than finding a more affordable option. Companies want to understand the costs and benefits of these solutions and consider how these solutions can support their current and future needs. 

The next generation of contingent workforce solutions gives companies better insights and visibilities and improves the worker experience. Unlike the VMS, which is only designed for the employer, today’s solutions consider the individual worker and allow them to manage their profile, own their data, and allow them to consider redeployment opportunities. 

Companies shifting their technology away from a traditional VMS to next-generation solutions see improvements in how they manage their contingent workforce. These solutions can help companies scale rapidly, improve visibility, mitigate risk, and provide an improved experience for both employers and workers. The future of contingent workforce technology comes from providers looking to disrupt this market by offering one unified platform to source, engage, and pay non-employee workers and measure and manage spend. 

The final blog in this series will take a closer look at visibility. 

[Webinar] - Total Talent Management is the Key to the Future of Work

Join Utmost's COO and co-founder Dan Beck and Aptitude Research founder Madeline Laurano on June 8, 2021, at 10 am PT | 1 pm ET for a discussion on how companies are starting to think critically about how they source and retain talent, talent strategy ownership, technology needs to support total talent management, and what components of visibility are required to make better business decisions.