Negotiation Brief: Contingent Workforce Management Services

Categories : Procurement Stages | Negotiate | Develop Business Requirements | Identify Suppliers | Set Strategy Published on : May 31 2017

By: ProcurementIQ Analyst, Michelle Hovanetz

Strategic Questions for Choosing the Right Supplier

In 2015, there were 44 million contingent workers in the United States, according to the most recent data by Staffing Industry Analysts. Growth in the number of contingent workers, which includes all workers that are not full-time employees of a company, has boomed in the years following the recession. Increased taxes, worker’s compensation costs and insurance expenses stemming from the Affordable Care Act have driven companies to reduce their full-time workforce as a way to cut costs and improve operational efficiency.

Contingent workers allow companies to scale their workforce according to seasonal demand trends and cyclical needs, lessening businesses’ fixed costs. Still, an increase in these types of workers can cause headaches for many employers. Poor administration and management of a contingent workforce can often lead to legal troubles and tax penalties. Employee misclassification, for example, is an especially frequent issue. As a result, many employers turn to managed service providers (MSPs) to oversee and optimize hiring, manage temp contracts and provide detailed employment analytics to achieve cost savings and streamline the process.

There are an estimated 3,500 suppliers operating in the contingent workforce management market. Despite the large number of suppliers, the market is highly concentrated among the largest providers. Allegis, ManpowerGroup’s TAPFIN, Adecco’s Pontoon and Randstad’s SourceRight are estimated to account for over half of all market revenue. In addition, concentration has been rising due to merger and acquisition activity over the past three years. Given the many providers available in the market, and the high concentration among a small few, buyers sometimes have difficulty choosing a vendor. To help make the selection process easier, ProcurementIQ has identified some key questions buyers should ask when selecting a contingent workforce management provider.

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