Leveraging contingent workers and technology to combat HR budget squeezes
By Sam Smith, President Global Client Delivery, Magnit
A skills shortage coupled with the cost-of-living crisis and the current economic landscape is a recipe you might find in a book called ‘HR Disaster’. It is no shock to say that there is currently huge pressure on businesses to cut costs, particularly in ever-strained HR departments. With a study from Personio finding that 55% of HR departments say they have already seen budgets being cut or are expecting them, identifying a solution that can save money and improve efficiency is vital.
Increasingly, firms are beginning to turn to contingent workers, those who aren’t employed or on the payroll, to reduce costs and make their workforce more agile and better equipped to deal with market conditions. With 29% of all workers in the UK expected to be contingent by 2030, businesses are realizing the positive impact these workers can have on reducing costs.
The rise of contingent workers
Contingent workers provide significant benefits, both direct and indirect. First and foremost, businesses can adopt an on-demand approach to managing outcomes. By leveraging the flexibility of a contingent workforce whilst often not having to pay the costs associated with full-time employees, significant cost savings can be realized. As well as this, with a contingent workforce, businesses can easily scale their workforce up or down as required, adapting to market fluctuations. This flexibility enables organizations to optimize their resources and manage workload peaks. Furthermore, tapping into a contingent workforce enhances the core pool of permanent employees by introducing specialized talent on a project or temporary basis.
Additionally, is the indirect cost-saving impact these workers can provide when it comes to getting critical skills into the business when needed. Without the option of contingent work, businesses will either have to look to bring in full-time employees, with the associated hiring costs mentioned previously, or have to rely on training within. The training of current employees is often very expensive and although important, cannot often be justified if the skills needed are temporary. If companies can get these skills from the available contingent workers, who often have a vast array of skills and experience, this can save on training costs and also improve overall efficiency, again with a positive impact on cost savings.
According to Statista, the number of temporary workers in the UK has risen by 200,000 since January 2020. This increase has allowed companies all over the UK to access to a wider range of skills and expertise, without the long and often pricey recruitment process, providing a critical function in a particularly difficult economic time, and ultimately reducing financial pressure on the company.
The prevalence of contingent workers in the economy is not just a trend but rather highlights a fundamental shift in the way that businesses are choosing to operate. And while this is becoming the norm in the tech sector, the rest of the economy needs to embrace it as an opportunity too.
Leverage available solutions to maximize potential
Managing a contingent workforce comes with its own set of challenges. These challenges can include complex onboarding processes, tracking of time and attendance, managing compliance and regulations, and ensuring effective communication with the workers.
Fortunately, having a Managed Service Provider (MSP) that harnesses technology can help businesses overcome these challenges. Contingent Workforce MSPs often come with a wide range of technology-based solutions, such as a Vendor Management System (VMS) that can help businesses to get a holistic view of both their own workforce, but also the wider business landscape. A VMS allows companies to streamline the management of their contingent workforce with software that can manage bill rates and benchmark data sets allowing them to streamline overall processes, reduce administrative burdens, and automate repetitive tasks. When times are tough, every second and every penny counts so automating and streamlining routine administrative work, can have a significant effect on reducing costs and increasing productivity, freeing up staff to focus on more impactful efforts.
However, these service providers do not solely rely on technology, and can often act as a partner – a human counterpart that can be brought in to help with decision-making processes and provide support on a whole range of business problems. These experts can look at your business and provide a tailor-made solution specific to your needs to ensure the best outcomes.
Businesses can benefit hugely from using contingent workers to address HR budget constraints and provide flexibility. However, to effectively manage this workforce to fully harness its potential, it is essential to effectively utilize technologies that are supported by expert insights, such as those provided by MSPs. By taking these steps, companies can save money and allocate HR resources to more strategic endeavors.