Cutting the Cost of Your Contingent Workforce 

The contingent workforce has grown considerably over the last twenty years and is set to grow from $87 billion to $164 billion dollars by 2018 in the U.S. alone. There are many reasons why companies choose to increase their number of contingent workers, but reducing their costs often comes at the top of the list for companies looking to improve their bottom line. However, despite cost cutting being a major factor, many companies don’t make the most of the cost saving opportunities available to them.

Here are a few things you should take a look at when you try reducing your contingent workforce costs:

Increasing Workforce Visibility  

21% of Fortune 500 companies cannot estimate their company’s annual contingent workforce spend. As Peter Drucker famously said “If you can’t measure it, you can’t manage it”.  You can improve your visibility by centralizing your contingent workforce management.  By using a workforce management system, or vendor system, you can track your contingent workforce and their various suppliers.  This can work like a reporting system that you can use to see (and show your bosses) what is being spent, as well as where and why.  It can also be helpful to standardize agreements and processes with staffing suppliers and individual consultants.

Self Sourcing Contingent Workers 

You can dramatically cut costs by self sourcing temporary workers. Rather than using staffing suppliers which can become costly, we recommend sourcing your own workers and using a service like Emergent to employ those workers, which can save you both time and money while ensuring you remain compliant.   As well as recruiting through job boards and social media, you can save money by creating a database of company alumni and previously utilized resources to draw upon as and when you need them. This will prevent you getting desperate for temporary help and ending up being held to ransom by a temp staffing supplier at the last minute.

Beware Burden Mark ups 

Staffing suppliers make a lot of money by charging hidden costs that are hard to decipher. These can be anything from payroll taxes, worker’s comp, employer taxes, etc. While the majority of costs are necessary by law, it’s worth taking a closer look at your staffing suppliers’ bill and asking questions about those charges. Emergent handles burden markups differently than most staffing agencies. We stop charging clients for state unemployment and federal unemployment insurance costs as soon as the maximum tax has been reached – most staffing suppliers keep charging for those taxes, using them as a hidden profit center.

Understanding Contingent Workforce Compliance 

A crucial risk of the contingent workforce is co-employment and mistakes can be costly. If co-employment occurs, then your  company can be held liable for the wrongdoings of the other employer (i.e. the staffing company). Such occurrences can be if the staffing company does not pay their taxes while managing your worker, then you as the client can be held liable for those taxes.  Other issues, such as contractor misclassification can also land your company in trouble with the Department of Labor and the IRS.

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Jill Stoppard is a Staffing and Human Resources industry researcher and blogger for emergent.com. Emergent helps companies that use and supply contingent labor (temporary, contract, consulting and project-based workers) reduce cost and risk by employing the contingent workers they recruit. 

The Emergent family of companies is one of North America’s largest employers of contingent labor and is one of California’s largest employers by number of W-2s with over 475,000 sent in 2011. Check out Jill’s Contingent Workforce Industry News and Trends Blog at www.emergent.com/blogs or e-mail her directly for help and advice regarding reducing the cost and improving compliance of your contingent workforce at jstoppard@emergent.com

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