In the face of today's economic challenges and unpredictable market landscape, the utilization of flexible workforce has become an essential strategy for organizations around the globe. The flex workforce, encompassing Contractors, Managed Service Providers (MSPs), and 1099 resources, offers a distinctive advantage, enabling companies to augment human resources without binding themselves to long-term retention commitments. Remarkably, the proportion of an average enterprise's contingent workforce has surged from 20% to 43%¹ over the past decade. This growth reflects the critical role of flexibility in swiftly scaling resources to meet evolving business demands—a crucial factor in achieving successful outcomes in the current environment. In the ensuing discussion, our focus will be particularly on the employment of contractors, examining their vital contribution within the framework of hyper-growth companies."

 

While the successful leverage of this flexible workforce model may stem from investments made by organizations over time, the rapidly shifting economic landscape emphasizes that it's never too late to implement or refine a functional flex workforce approach. The continuous evolution of this strategy, tailored to the unique needs and maturity of a given program, remains an essential component for navigating the complexities of today's market.

 

 

Design and success of flex workforce models rest on a combination of three main ingredients. (1) Lead time - How fast can the flex workforce be ramped up (2) Quality - How can we maintain an expected level of quality hires? And (3) Cost - Are we paying reasonable prices for these resources in line with the market rates? 

 

Oftentimes, even organizations with mature flex models struggle with one or more of these key areas. Whether you are a Business Unit “requiring” contractor resources (a.k.a. consumer) or a centralized team responsible for “providing” contractor resources (a.k.a. provisioner), implementing a nuanced approach addressing these key areas can drive significant value for your organization. BUs can drive close tracking of contractors by maintaining their own ‘Contractor Operational Response & Readiness’ (CORR) programs.

 

1. Lead time: In light of employers shift to less experienced talent in a tightening Labor market ⁵, rehiring of existing contract resources at the end of their current initiatives seems to be a logical choice. Followed by 87% of best in class companies,⁶ this simple process can be enabled by transferring contractors from one team to another at the end of their assignments. Organizations can bypass the need to hire ‘new contractors’ and instead utilize the ones that are already a part of the existing/shared pool of resources (a.k.a. SST - Shared Services Team) while addressing existing constraints such as performance issues, lack of visibility on the contractor pipeline, and tenure limit. To drive enablement, all (new) requests raised by hiring managers in a given BU should go through a localized CORR database instead of being raised as a net new request. Not only will this lead to a reduction in lead time but also enable hiring of existing CW resources through the Contract to Hire (C2H) process. 

 

2. Quality: Business Units can drive effective retention strategies for high performing contractor resources through rotation across initiatives and taking into account the tenure limit set by the organization. By providing performance feedback to staffing companies, companies can avoid co-employment risk while identifying and increasing the longevity of their high performing flexible hire. 

 

3. Cost: Organizations can achieve 40% higher year-over-year cost savings ³ by driving cost rationalization through closer management of  contractor resources and seamless information sharing. E.g. identification of cases where contractors have a higher Bill Rate (BR) than the MBR (Maximum Bill Rate) and wide variation between Bill Rate (BR) for contractors with similar skill set,  

 

The applicability and impact across these key areas may not be restricted to BUs (consumers) alone but can be leveraged by centralized teams responsible for provisioning contractor resources across the organization as illustrated in the graphic below.. 

 

 

 

 

 

Here are 5 simple steps for managing your contractor resources through the CORR framework.

 

 

Companies can drive a paradigm shift in their CW programs by driving the right balance between the growing need for flex workforce with risk and cost to enable a truly agile workforce. FTEs and CW resources can drive significant value to critical projects and initiatives  in-line with the direction that a majority of the organizations are planning or currently undertaking ⁴. These impacts, although substantial for organizations, will be even greater for hyper growth companies due to a need for quick ramp-up and ramp-down of resources to support their business needs.

 

Authors

 

Nikhil Parva - Is a former consultant from a global professional services firm.

Sougata Banerjee - Is a Managing Director at a global professional services firm 

 

References