In today’s rapidly evolving market, staying competitive requires businesses to continuously adapt their workforce strategies. Your contingent workforce plays a crucial role in maintaining agility and efficiency – but without regular audits, you risk falling behind. It’s not enough to have contingent talent — organisations must assess performance, compliance, and costs to stay competitive.
Why is this so critical right now?
Volatility. Uncertainty. Complexity. Ambiguity.
VUCA was an acronym created by Warren Bennis and Burt Nanus in 1985, in their book ‘Leaders: the Strategies for Taking Charge’. Both, American economists and professors, used the VUCA world to describe the geo-political situation at their time of writing. But it is an acronym that will still also resonate with plenty of us in 2025 – especially those Talent Acquisition, HR and Procurement teams tasked with trying to manage the fluctuating talent demands of organisations operating in volatile markets and uncertain economic conditions.
Knowns, unknowns and everything in between
When was the last time you audited your contingent workforce and your talent supply chain?
We are living in a world characterised by Volatility, Uncertainty, Complexity and Ambiguity. The greatest challenge is managing the unknowns. For HR and TA teams, maintaining an effective talent supply chain can feel overwhelming. Unknown quantities, hidden risks, and changing parameters at every step.
From umbrella companies and misclassification, to job descriptions, rates of pay and recruitment fees, there’s a host of reasons why transparency in your talent supply chain is a must-have.
If you do not have visibility over your vendors and the talent that they are providing, there are implications. These can range from financial penalties through to reputational damage.
Creating transparency in your contingent workforce
Auditing your contingent workforce and your talent supply chain helps you to build a clearer picture of the talent you are bringing into your organisation. There are numerous key areas where your Contingent Workforce Program should be delivering transparency, visibility and measurability, enabling data-driven decision making and more strategic workforce planning. For more and more organisations, contingent workers are playing a critical role in reducing skills shortages, plugging gaps in talent and ramping up productivity in the short-term, when required.
Cost and Quality Control
Your Contingent Workforce Program should incorporate the technology you need to establish a consistent framework through which you can manage vendors. Transparency in the talent supply chain helps organisations control costs and improve quality. Without transparency, companies may face increased costs due to over-reliance on recruitment agencies and a lack of incentive for Managed Service Providers (MSPs) to explore cost-effective alternatives.
Gaining a clearer picture of rates of pay, recruitment fees and other associated costs means that rates can be standardised, and processes can be harmonised. It not only enables organisations to identify areas for cost-saving, it also improves the candidate experience from initial interest through to onboarding.
Compliance and Legal Issues
Your contingent workforce needs to comply with tax regulations, worker classification, and other legal requirements – and in most scenarios, it is the employer’s responsibility to ensure that this happens. Misclassification of workers and lack of transparency can lead to significant legal and financial risks, including fines and reputational damage.
Working with a contingent workforce partner, like an MSP, provides the assurance that all of your contingent workers – no matter where they are sourced from – fulfil the right criteria for the role to which they are contracted.
Increased Efficiency and Speed to Hire
Improving processes and reducing costs also create opportunities to enhance time-to-hire metrics and the candidate experience. The faster organisations can move – particularly in an uncertain and ambiguous market – the better placed they are to respond to change, adapt to new challenges and secure the talent they need to grow the business.
Your MSP should be driving process improvement and cost-savings at every step in your recruitment process, utilising the talent supply chain effectively yet at the same time also identifying opportunity to source talent from beyond the preferred supplier list, in more cost-effective ways.
Umbrella Companies
Umbrella companies, often used in the talent supply chain for managing payroll and employment of contingent workers, can be clouded with uncertainty in how they operate, source and manage talent. This presents several issues that can impact both employers and workers:
- Umbrella companies can obscure the true cost of employment by including various fees and charges in their payroll management. This lack of transparency can lead to unexpected costs for both workers and the hiring company.
- They may not always comply with local tax laws and employment regulations. Issues such as misclassification of workers, improper tax withholding, and non-compliance with statutory benefits can lead to legal and financial penalties for the hiring company.
- Finally, the use of umbrella companies (often unknowingly, by some end-employers) can raise ethical concerns related to fair treatment of workers. Workers often receive lower pay or reduced benefits, such as lower holiday pay, lack of sick leave, and reduced pension contributions. This can lead to dissatisfaction and lower morale among contingent workers, potentially affecting their productivity and engagement.
How to manage your contingent workforce today
The current economic climate and labour market means that managing the supply of talent into your organisation can be difficult – especially when more and more organisations are relying on contingent workers to fill gaps quickly.
In these VUCA times, sourcing the right talent, at the right cost, at the right time, is essential. Working with a Managed Service Provider allow TA and Procurement teams to develop an end-to-end view of their talent supply chain, eradicating anomalies, removing underperforming suppliers and ensuring compliance, quality and cost control.
