Technology Helps Meet Challenges of Managing Contingent Workforce

​When Andreas Hettwer was looking for more insight into how his organization was recruiting, paying and managing the compliance of its contingent workforce, he turned to next-generation technology for help.

Hettwer, group procurement category director for Capgemini, a technology services consulting company based in Paris, knew that finding the right contractors at the right price in the right geographies was key to keeping his company competitive. Capgemini operates in more than 50 countries and frequently hires independent IT contractors and engineering services experts to stay agile.

Achieving that desired level of visibility into the external workforce wasn't possible with the company's existing human resource information system (HRIS) or talent acquisition technologies, so Capgemini opted to deploy SAP Fieldglass, a specialized contingent workforce management system.

"We needed more insight into metrics like how long it was taking us to hire contractors as well as contractor performance, pay and tenure across our different geographies," Hettwer said.

The new platform allows Capgemini to manage the entire lifecycle of contingent workers, from sourcing to onboarding, invoicing and more. He said another key benefit of such technologies is the ability to create a global rate card for external workers, which classifies role and skill sets by country.

"It helps us reduce large variances in contractor rates and achieve more standardization," Hettwer said. "The platform also gives us a clearer view into the tenure of our contractors, which provides more insight into how they're performing."

Navigating Technologies for Contingent Workforce Management

Capgemini's challenges around managing its external workforce are shared by many HR and procurement leaders around the world as the use of contingent workers continues apace. A Government Accountability Office report found that up to 40 percent of the U.S. workforce now consists of contingent workers, and an Oxford Economics survey discovered 83 percent of global executives report an increase in their use of contingent labor to meet business objectives.

But at the same time that organizations are finding more value in the use of contingent workers, many also believe they're falling short in how those workers are being managed. Only 9 percent of companies in the Sapient Insights 2020-2021 HR Systems Survey believed they were "excellent" at managing gig or contingent workers, while 17 percent said they were "poor" at managing that segment of the workforce.

"There's been an expansion in the types of contract workers as well as more of them being engaged globally, which adds greater complexity with regard to legal concerns, compliance and pay issues," said Stacey Harris, chief research officer and managing partner of Sapient Insights Group in Atlanta.

To help meet those challenges, organizations are increasingly turning to technologies like vendor management systems (VMS), Harris said. A VMS is designed to manage external vendors and statement of work relationships where organizations might, as one example, hire consulting firms to conduct a project and provide their own experts to execute it.

"In larger organizations, a VMS has traditionally been managed by procurement, not HR," Harris said. "But today the new challenge around contingent workers is integrating that VMS and its data with core HR, talent and collaboration technologies."

Other technologies exist beyond the traditional VMS to manage the contingent workforce. Specialized systems like SAP Fieldglass and others are built to manage the entire contract lifecycle from request for proposal to closure or renewal of contracts with external workers. HR and recruiting leaders also increasingly find gig workers directly through technology platforms like Upwork or Fiverr that post the resumes and work portfolios of freelancers and connect them to clients.

One of the biggest challenges for HR leaders when choosing among this patchwork of management technologies is addressing data security issues tied to which contingent workers will have access to which internal systems and documents, Harris said. "Depending on the status of the contingent worker, a contractor may not be given company equipment but might require access to a common set of productivity tools or shared files, for example."

A contractor might also need access to a technology like an internal learning management system for basic training that organizations might legally have to provide on certain topics to remain in compliance with laws. "But at the same time, that company might be legally restricted from granting access to any training that could be deemed developmental in nature," Harris said.

Such complexities around permissions, distinguishing between full-time employees and contractors, and data security can't be resolved with just a new VMS or other contingent workforce technology platform, said Sheryl Herle, a talent management analyst with Sapient Insights Group.

"It requires a whole new way of thinking about the configuration of all of an organization's software systems," Herle said. "It isn't just one platform being impacted but a whole ecosystem of HR, talent and shared collaboration tools to be considered."

Katy Tynan, a principal analyst specializing in the employee experience for Forrester, a research and advisory firm in Cambridge, Mass., agrees that the expanding variety and volume of contingent workers present a unique oversight challenge for HR leaders.

"Once you expand into that hybrid model where you're using a variety of external workers as well as full-time employees, you suddenly don't have the same visibility into things like labor costs in a cohesive way," Tynan said.

Although no single software solution yet exists to adequately encompass the total workforce, Tynan said new contingent workforce technologies represent an advance in that direction. "You don't have visibility into everything, but these kinds of platforms bring you a step closer to a total workforce management strategy," she said.

Adding External Workers to Core HR Platforms

While there has been growth in technologies designed to help recruit, track and manage contingent workers, more providers of traditional HRIS and enterprise resource planning (ERP) platforms—historically designed only to manage data connected to full-time employees—are considering expanding their systems to include external workers, experts say.

"With the contingent worker becoming ubiquitous, more software companies are beginning to design their systems with the external worker or third-party access in mind," Harris said.

Managing the permissions and experience a contract worker has with an organization is ideally best done with the same core technology system used to manage full-time employees, Herle believes. "A great example is setting up a contractor in an organizational chart or user hierarchy with an ERP system, allowing for inclusion as needed but also exclusion when legally required," she said.

Value of Seamless Integration

Until more providers of HRIS and ERP systems adopt such changes, organizations will need to rely on good system integrations to meet growing challenges around managing external labor. Brett Gerber, senior manager of defense and security talent acquisition for Boeing, said one of the biggest benefits of the contingent workforce management platform he uses is how well it integrates with other parts of the aerospace company's HR technology ecosystem.

Gerber uses a system from vendor Beeline to manage contingent labor that his organization employs across multiple countries. "We can configure the system for local currencies as well as local labor regulations in regard to time entry and invoicing of our contingent workforce," he said.

The system integrates seamlessly with most local HRIS platforms Boeing uses around the world as well as with back-office invoicing systems.

"It also integrates with identity management systems for badging and security for external workers," Gerber said. "Having all of the supplier data housed in one place on the platform allows us to really control and configure data feeds to all of the right places."

Dave Zielinski is a freelance business writer and editor in Minneapolis.