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What is a SOW and Who Needs One?

Oct 27, 2019, 1:47:33 PM

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What is a SOW or “Statement of Work” and why should those responsible for contingent workforce management be aware of this particular type of engagement? This article will provide a brief primer on the SOW, including what it is, how it works and how it can be a very effective arrow in your contingent workforce management quiver.

The Staffing Industry Analysts lexicon defines SOW nicely, rightly clarifying that it is both a document, “that captures the work products and services, including, but not limited to: the work activities and deliverables to be supplied under a contract or as part of a project timeline” as well as a type of worker class that is applied to finite, project-based work activities.  

The SIA definition continues, “In contrast to a typical temporary or contingent work arrangement which is billed based on time worked, SOW agreements are sometimes billed based on a fixed price deliverable or for hitting specific milestones.” It is for these fixed-price deliverables-based projects that an SOW service provider is most relevant to a contingent workforce management strategy.

For example, consider a hypothetical supermarket chain that is implementing a new, automated checkout system across hundreds of outlets. The rollout will require the deployment of self-checkout kiosks built using computerized scanners, point of sale terminals and information systems to track inventory. For this market chain, it would be far more costly to hire full time, hourly workers (both at the management level and the functionary level) for the rollout which is planned to take only nine months. It would also be more complicated to hire temporary workers to achieve the goal as they would all require specialization and training in order to deploy the new systems and management of teams of temps would add operational complexity to the administration of the project (project being the operative word).

Instead, this supermarket chain elects to engage a SOW service provider with a proven history of expertise in automation systems, information systems and other core competencies critical to efficient roll out of this specialized, but finite project. The SOW provider works with the hiring organization to gather all the business requirements and other relevant information. They produce a Statement of Work (SOW) document that enunciates the requirements, timelines, milestones, time, materials and other important project parameters. If engaged, the SOW provider then sources the talent/team it needs to deliver according to the SOW project plan. The price to complete the entire kiosk roll-out project is set at the outset of the SOW.

At the conclusion of the project, the supermarket chain has been able to meet their project timelines and the work is executed by experienced SOW project workers under the management and guidance of the SOW provider. There is minimal compliance, tax or regulatory risk as the workers involved are employees of the SOW provider, not the supermarket. In short, the SOW provides a means to address complex projects using non-employee labor and is one of the most efficient, effective ways leverage contingent labor to address large projects.

Of course, in working with clients nextSource is aware that many projects are not quite as straightforward; they tend to involve numerous subprojects, each of which can differ in terms of staffing, pricing structures, internal “owners”, and acceptance criteria. Stay tuned for future blogs that explore the complexities of managing SOW-based project teams. Does your organization have some important projects on the horizon that may require contingent labor to address? To learn more, view the replay of the webinar, “The Basics of SOW” or visit our website to read more about SOW.

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Topics: Blog, Statement of Work, Procurement Services, temporary staffing, Independent contractors

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