For years now, large multi-national organisations in North America have been busily implementing contingent workforce management programmes within their domestic operations. At Staffing Industry Analysts, we've been tracking these trends since 2004 through an annual survey of contingent workforce managers, as well as informal discussions with members of our Contingent Workforce Strategies Council. Global expansion of these programmes is now high on their priority list.
The trend has been unmistakeable. In 2004 barely 8 percent of large companies that we surveyed had a Vendor Management System (VMS) in place, and for most buyers in large organisations their role in managing contingent work (which by our definition includes temps, independent contractors, freelancers and other short term workers) was decidedly part time. In that year only 16 percent of contingent workforce managers surveyed spent a half or more of their time managing contingent labour, with the rest of their time devoted to various other duties, most often in human resources or procurement.
Today, most contingent workforce managers focus on that as their sole job. Additionally, our latest survey of 187 large buyers (companies with over 1000 employees) found 77 percent of North American staffing buyers had a VMS in place in 2013 and another 12 percent planned to implement one within the next two years. These large users of contingent labour are seeking benefits such as insights into contingent spend, performance metrics, and central ordering.
Managed Service Provision (MSP) is also popular among large North American buyers, with 71 percent of large buyers surveyed reporting they had an MSP in place. Another 6 percent planned to put an MSP in place in two years. An MSP is a company that takes primary responsibility for outsourced management of a buyer’s contingent workforce programme, and it is often used with a VMS.
Related: Workforce Solutions Ecosystem
The big question is what’s next? That is where we believe globalisation comes into the picture.
Our latest survey shows that the top priority for these contingent workforce managers is global management of their programmes. In fact, a majority (56 percent), of large North American multinationals surveyed plan to globalise their contingent workforce programmes over the next two years. While our experience indicates it may take substantially longer than that for true globalisation, the intent and direction are clear. For those staffing and recruitment firms who have not encountered VMS and MSP programmes or only seen it in a few places, now is the time to think clearly about your strategy. Will you participate? Will you avoid it? For some, even building your own capabilities is a valid option.
VMS and MSP are not the only trends with large buyers. Our latest survey also showed high interest in managing Statement of Work (SOW) consultants within contingent workforce programmes. SOW arrangements are often though not always implemented by hiring managers as a way to avoid having portions of a workforce fall within the purview of a VMS driven contingent workforce programme. Currently, nearly half of North American buyers (46 percent) plan to incorporate SOW workers into their contingent labour programme within the next several years. Also high on the priority list is attempts to manage contingent labour in a more strategic fashion. Another 46 percent of buyers are looking to incorporate contingent work into their strategic planning process in the future, a sentiment we believe reflects a desire to focus beyond reducing the cost of contingent work and onto using contingent workers more often as a source of competitive advantage for their business as a whole.
The precise implementation of these trends on a global basis will of course vary quite a bit with local market conditions. In much of the world, similar changes are being driven through the growth of Recruitment Process Outsourcing (RPO) arrangements that outsource both permanent and temporary recruitment. While all these trends are most common among large companies, we are also seeing evidence of their spread among mid-sized businesses and sometimes even smaller users.
The world of staffing and recruitment is quite dynamic. Forward thinking staffing firms should begin now (if they haven’t already) to set a strategy that will allow them to successfully steer through the changes ahead.
Article written by Barry Asin of Staffing Industry Analysts for the RCSA Journal March 2013. HHMC is an authorised business partner of Staffing Industry Analysts and an official Supporter of the RCSA.