Published : June 12, 2024

Optimizing Contingent Workforce Management with MSP Expertise

Nowadays companies are increasingly relying on a contingent workforce to maintain flexibility and adapt to changing demands. A contingent workforce, comprising freelancers, consultants, and independent contractors, offers numerous benefits but also presents unique challenges. Here’s when MSPs come In. Leveraging the expertise of a Managed Service Provider can significantly enhance the management and optimization of this workforce. This blog explores the role of MSPs in managing contingent workers and provides best practices for optimizing contingent workforce management. 

The Contingent Workforce as a Strategic Asset 

A contingent workforce consists of temporary, or contract workers hired for specific projects or periods. These workers provide companies with the ability to quickly scale their workforce up or down based on demand, making them ideal for businesses with seasonal fluctuations or project-based work. By utilizing a contingent workforce, companies can access specialized skills and expertise without committing to long-term employment contracts. 

By 2050, it is estimated that 50% to 75% of the U.S. workforce will consist of contingent workers. 

The challenges in managing a Contingent Workforce

Managing a contingent workforce comes with several challenges, including: 

Sourcing and Onboarding

Finding and onboarding the right talent for contingent roles can be a significant challenge due to the need for specialized skills and the temporary nature of the work. This process often requires extensive time and resources to ensure that the contingent workers are a good fit for the project and can quickly integrate into the organization’s workflow. 

Compliance and Contract Management

 Managing compliance with labor laws and regulations is complex, especially when dealing with a diverse and geographically dispersed contingent workforce. This includes ensuring proper classification of workers, adhering to local labor laws, and managing contracts to avoid legal pitfalls and financial penalties. 

Performance Tracking

 Monitoring the performance and productivity of contingent workers is challenging due to their temporary status and varied work arrangements. Without the right tools and processes, it can be difficult to track their contributions, provide timely feedback, and ensure they meet project goals and deadlines. 

Administrative Burden

 The administrative tasks associated with managing a contingent workforce, such as payroll, benefits, and compliance documentation, can be overwhelming. This burden often falls on HR and procurement teams, diverting their focus from strategic initiatives and potentially leading to inefficiencies and errors. 

What is the role of MSPs in Contingent Workforce Management? 

An MSP plays a crucial role in managing a contingent workforce by providing a comprehensive solution that addresses the challenges mentioned above. MSPs offer access to a vast network of pre-screened and qualified contingent workers, streamlining the sourcing and onboarding process. They also handle contract management and compliance, ensuring that all legal requirements are met. Additionally, MSPs provide valuable insights and analytics on workforce trends and performance metrics, enabling companies to make informed decisions. 

The market is projected to grow at a compound annual growth rate (CAGR) of 13.6 percent from 2023 to 2030. 

How MSPs Help in Managing the Contingent Workforce 

Access to Talent

 MSPs have extensive networks of qualified contingent workers, enabling companies to quickly secure the right talent for their specific needs. This rapid sourcing capability allows businesses to fill skill gaps efficiently and maintain operational continuity, especially during peak periods or for special projects. 

Streamlined Processes

 MSPs handle the entire lifecycle of contingent workforce management, including sourcing, onboarding, contract management, and compliance. This comprehensive management reduces the administrative burden on internal teams, allowing them to focus on core business functions while ensuring that all processes are efficient and compliant. 

Data-Driven Insights

 MSPs leverage advanced data analytics and reporting tools to provide valuable insights into workforce trends, performance metrics, and areas for improvement. These data-driven insights help companies make informed decisions, optimize their workforce strategies, and achieve better outcomes in terms of cost efficiency, talent quality, and overall workforce performance. 

Successful implementation of managed services can reduce IT costs by 25-45 percent and boost operational efficiency by 45-65 percent. 

Best Practices for Optimizing Contingent Workforce Management 

To optimize the management of a contingent workforce, companies should consider the following best practices: 

• • Leverage Recruitment and Market Insight: Utilize the expertise of Managed Service Providers (MSPs) to gain deep insights into the labor market. MSPs can help identify the best talent by analyzing market trends, competitive rates, and emerging skills, ensuring that your organization attracts and retains top-tier contingent workers. 
  • Harness Labor Market Potential: Understand the full potential of the labor market to tap into the right talent pools. This involves analyzing data to identify where the best candidates are located and what skills are in demand, allowing your organization to strategically source talent that aligns with your project needs and business goals. 
  • Utilize VMS Expertise: Implement Vendor Management Systems (VMS) to streamline the management of contingent workers. A VMS centralizes data, automates administrative tasks, and provides comprehensive visibility into your contingent workforce, enhancing operational efficiency and compliance. 
  • Adopt New Technologies: Embrace advanced technologies such as AI, machine learning, and automation to improve the management and performance tracking of contingent workers. These technologies can enhance recruitment processes, ensure compliance, and provide real-time analytics for better decision-making. 
  • Seek External Perspective: Partner with MSPs to gain an external perspective on your workforce management strategies. MSPs bring specialized knowledge and experience, helping to optimize your contingent workforce program by providing strategic insights and best practices that may not be apparent from an internal viewpoint. 

Leveraging the expertise of an MSP can significantly enhance the management and optimization of a contingent workforce. By providing access to talent, streamlining processes, and offering data-driven insights, MSPs help companies overcome the challenges associated with managing contingent workers. For businesses looking to optimize their workforce management strategies, partnering with an MSP is a valuable investment. 

Workspend takes a refreshingly different approach compared to many second-generation MSP programs, which often underperform due to a focus on merely sustaining accounts with minimal effort. Committed to constant improvement, Workspend employs a data-driven analytical approach to ensure greater transparency and accountability, ultimately saving you time and enhancing the effectiveness of your contingent workforce management year after year. Looking ahead to our upcoming second blog, we’ll delve deeper into the shortcomings of underperforming MSP programs and explore how innovative approaches, like those offered by Workspend, prioritize continuous improvement and data-driven decision-making. Stay tuned for more insights on optimizing your contingent workforce management journey.