Today, contingent works form a significant chunk of the total workforce. Contingent workforce includes independent contractors, temporary employees, consultants and services providers. According to Ardent Partners, a research and advisory firm focused on supply management, the average contingent workforce will grow by nearly 30% over the next three years. There are two primary drivers for this change: flexibility desired by employers and flexibility desired by employees. Therefore, Contingent Worker spend is on the minds of most Procurement leaders. As a category, the Contingent Workforce poses a host of challenges:
- Tight coordination between Procurement and Human Resources
- Defined worker classification
- Defined and enforced tenure limits for contractors
- Non-standard terminology: One person's contractor is another person's consultant. Even senior managers struggle with the difference between a 1099 worker and a temp
- Coordination between Procurement & Recruiting. Temporary workforce is often a source pool for prospective full-time employees
- Hazy separation between an SOW-worker and Temp-worker
- Emerging market for tools and providers despite an estimated $100B+ global spend on a Contingent Workforce. Examples include VMS providers like Fieldglass (recently acquired by SAP) and MSPs like Adecco and IQ Navigator
- Global organizations face different regulation and cultural issues in countries outside the US
So what is a Procurement Leader to do? Here is our three-part prescription:
- No matter the size of your organization or the maturity of your Procurement department, start with getting the terminology right. At DocuSign, we did this by getting all the stakeholders together – Legal, HR, Procurement – in order to clearly define the various classes of workers and to publish the terms and definitions
- Estimate the size of spend on each category and define the problem(s) needing resolution. Given the fragmented nature of this category, it is likely to be a long list. We suggest that you prioritize the list and tackle the top 3-4 issues first. Assign an owner to each “problem” and monitor progress
- Establish a Contingent Worker Council. Invite senior representatives from Legal, HR, Recruiting, and Procurement to set the agenda and monitor progress
It will be an iterative process that will continue to evolve but the basics above should provide a good foundation. Of course, the order and timing of the steps above will vary depending on the situation.
Bottom line, think about how you are managing your Contingent Workforce today and will this be adequate going forward as this spend grows.
Anu Gardiner is the Senior Director of Procurement at DocuSign.
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