Over the past decade, the main performance metric used to gauge the overall effectiveness of a Contingent Workforce Management program has slowly shifted from cost savings to talent quality. However, in the past two months the priority has reverted back to spend management. The COVID-19 pandemic has caused massive financial losses to companies around the globe. To reduce expenses, businesses significantly downsized their workforces. In many cases, contingent workers were the first to go.
PwC research indicates that approximately 80% of executives expect COVID-19 to decrease their company’s revenue and/or profits this year. Seventy-five percent expressed concern about the effects on operations and liquidity. Several of PwC’s data points indicated continued challenges ahead. The research indicated that 82% of CFOs are now focused on cost-cutting, and 67% may either defer or cancel planned investments.
As businesses now enter an uncertain recovery period, they are taking steps that increase their agility while finding ways to recover financial losses. Research conducted by Ardent Partners stated that at the start of 2020 nearly 80% of organizations professed “the desire for an agile culture” as its top priority regarding talent and work. While the objective has remained constant, the strategies for achieving agility have changed. To encourage refocus on cost savings, companies are leveraging innovative tools and strategies such as direct sourcing and digital staffing. There is a surge in the engagement of independent contractors and there is a movement to convert previously full-time positions into contingent headcount, accelerating the growth rate of the contingent workforce movement. These actions attempt to eliminate sourcing fees, onboarding and training costs and payrolling expenses.
As the percentage of non-employees increase, there is a corresponding growth in the demand for contingent workforce management (CWM) services such as Employer of Record/Payrolling services, Independent Contractor Management and Managed Services Programs. In evaluating potential CWM vendors, emphasis has shifted to cost-savings capabilities such as pay and bill rate management, deployment of cost-savings technologies, extended payment terms, and guaranteed/predictable cost savings.
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