Temporary and contract labor is one of the fastest growing line items on corporate operating statements. Worldwide, companies will spend an estimated $300 billion dollars this year. For a company with 50,000 employees, contingent spend can soar to at least $150 million annually. One would think that corporate spend of this magnitude is closely controlled not only by HR and procurement, but also at the C-level. We have found this is simply not true.

Recent Taleo Research Findings

In a recent survey conducted by Taleo Research, 21% of Fortune 500 companies could not estimate their company’s annual U.S. contingent labor spend. Additionally, 33% could not report which, if any, department holds primary responsibility for minimizing their contingent workforce risk and liability. Another 50% of the Fortune 500 didn’t know if their company has ever defended itself against a contingent labor lawsuit. Clearly, organizations have the opportunity to improve contingent workforce practices with a focused interest on this line item—because the risks and bottom line savings are significant.

Reduce Risks and Reap Rewards

Contingent workers are a component of virtually every company's workforce. If not managed properly, the negative repercussions for HR executives can include expensive lawsuits, revenue leakage, non-compliance issues, and other risks. The good news is that proper contingent workforce management provides an opportunity for control. It is imperative that HR executives create an effective contingent workforce strategy and consider solutions to offset risk issues and deliver substantial cost savings.

Five Keys to Success

Consider these points before planning and executing your contingent workforce management strategy and solution:

1. Employ a 100% Vendor-Neutral Strategy
   Some solution vendors come with complicated relationships and hidden agendas. Investigate for any preferred supplier relationships between contingent vendors and labor providers that can reduce performance quality and increase your bottom line costs.



2. Deploy a SAS 70 Certified Solution
   To mitigate risk and hidden costs, look for a SAS 70 certified partner. SAS 70 is the internationally recognized AICPA standard for Sarbanes-Oxley Section 404 compliance.



3. Achieve Control at the Process Level
   Inconsistent contingent processes leak revenue across an organization. Achieve control against maverick spend and enforce competitive practices down to the transaction and process levels with a consistent system.



4. Connect HR, Procurement, and Hiring Managers
   To deliver high quality service to your internal clients, you need to create a process that keeps everyone in the loop. Connect HR, procurement, and hiring managers directly to a single source for contingent workforce transactions and information.



5. Find a Partner with No Conflicting Interests
   Ideal partners are unaffiliated with staffing firms and do not fulfill job requisitions. Managed service providers or software solutions offer deep contingent process reengineering expertise, a comprehensive CWM approach, and onsite program management.

Millions in Savings

After implementing a contingent workforce strategy and solution, a Fortune 500 financial services organization generated nearly $2 million in first-year savings. These results aren't atypical—quite the opposite. In fact, Taleo Research studies show the impact of improved contingent workforce management processes and practices can lead to cost savings of at least 20%. Savings are generated from better negotiated supplier rates, control of maverick spending, risk avoidance, and consistent enterprise management of the contingent labor process.

One can see the positive impact that recurring savings of this magnitude can have on an organization's bottom line. HR executives can't afford to turn away from an investment in the area of contingent workforce management—especially one that can turn into an area of continued ROI and improved business performance.