U.S. companies continue to focus strategic in-house resources on value-adding and competitive advantage activities and outsource more and more services such as supply chain and payroll. In fact, experts estimate American companies spend nearly $2 billion on outsourced services. With competition as fierce as ever, firms must institute tight controls to ensure they get their money’s worth from managed service providers (MSPs) and other vendors.
Companies need to implement workflows and policies to ensure contingent workforce engagements and payments run through established, formal protocols to eliminate off-contract and other rogue spending. Rogue, or maverick, hiring of contingent workers not only drives up labor costs, it also undermines management’s ability to negotiate contracts, wastes time on account reconciliation, and increases transaction costs.
This is especially true in the case of contingent workforce management. Controlling spend on consultants, freelancers, and other agile workers can influence performance throughout the organization, from budgeting and planning to risk management and quality control. In fact, the bottom line expense for external workers is less important than how, with whom, and by whom those payables are made.
Here’s how to control maverick spend on contingent workers in order to maximize the return on investment in your workforce management program:
Controlling maverick spend in workforce management comes down to processes, oversight and compliance. Decentralized employees cannot be permitted to select the sources of labor on a case-by-case, transactional basis. If they are allowed to ignore negotiated contracts and other controls, they can introduce not only higher and uncontrolled costs but also lower service quality. Maverick spending deprives the organization of the opportunity to collect and scrutinize data regarding labor providers. This information – fulfillment percentages, worker quality, and other performance metrics – could provide insights into which vendors to trust and which relationships to expand. Strong control of maverick spend also allows management and oversight functions to concentrate on quality improvement and cost control rather than tracking down missing invoices, time sheets, and purchase orders.
Controlling rogue spend is a critical component to a comprehensive workforce management program. It is a prerequisite to expanding your contingent worker management operations in order to take advantage of the flexibility and complementary skills procurement agile workers bring.
Companies that are not confident in their ability to maintain control of maverick spend should look for an MSP that not only brings experience and expertise to external workforce management, but also fits the firm’s approach to total workforce solution. Metasys Technologies offers a range of services that deliver insights and solutions to organizations’ entire labor procurement and implementation processes. We can develop a customized managed service offering to help you through the entire procurement-to-pay regimen with a powerful platform, robust VMS technology, and the most knowledgeable experts in the industry.
Contact us today to take your talent strategy to the highest level.