Optimizing Contingent Talent Management

Optimizing Contingent Talent Management: Strategies for Risk Mitigation, Cost Efficiency, and Technology Integration

This is an AArete Profitability Improvement insight

As businesses adapt to the dynamic nature of the global workforce, contingent talent management has become increasingly crucial, yet also increasingly costly. Organizations are being pressured to modernize their workforce model utilizing a contingent workforce, while also meeting innovation goals, cost management pressures, and risk mitigation needs.

AArete has developed a strategy to let organizations deliver on their growth and innovation goals while also driving costs out of the organization. Our team has delivered substantial cost savings and optimized processes across a variety of organizations, driving financial stewardship and enhancing overall contingent workforce strategies.

For example, AArete’s involvement in a recent contingent talent management engagement resulted in $6.1 million in annual cost savings by implementing best practices in risk management, cost management, and technology integration.

The Situation: Evaluating Contingent Workforce Agility

AArete was engaged by a major financial institution to assist with enabling an agile $100 million contingent workforce program across North America by evaluating their current processes, developing a future state assessment, driving vendor and technology selection, creating an implementation roadmap, and supporting its execution. The client traditionally managed the program in-house, relied on manual processes across teams, and drove all vendor relationships and business reviews, ultimately identifying a need for more efficiency in its contingent workforce strategy, market-aligned rates, and enabled best-in-class technology utilization.

Proactive Risk Management

To fully realize the advantages of contingent workers, clients must balance a risk-averse contingent workforce strategy with one that attracts high-level talent. Leveraging third-party labor enables organizations to tap into a diverse talent pool with specialized skills, providing the flexibility to scale their workforce up or down based on business needs. With this, AArete works with organizations in prioritizing risk-averse management processes to avoid legal complications for clients modernizing their workforce. Recently, AArete examined the client’s compliance with labor laws, job classifications, regulations, and industry standards. In collaboration with the firm’s legal counsel, AArete delivered robust onboarding and offboarding future state process flows, clearly defined worker classifications, contract language driven by the client, and well-articulated contingent labor policies. Each element is an essential component of risk management in an industry-leading contingent workforce strategy.

Strategic Cost Reduction

A key objective in deploying an industry-leading contingent talent management program is also to manage costs that are associated with accessing strategic talent. AArete leveraged robust benchmarks and market insights to review the client’s Staff Augmentation spend data and historical cost assessments to support their contingent workforce cost reduction goals while enhancing areas of opportunity. AArete discovered the variances in bill and pay rates amongst the same roles and recommended the client adopt a not-to-exceed markup financial model. In AArete’s experience, this financial model is best achieved with a Managed Services Provider (MSP) and a Vendor Management System (VMS) to drive a bill rate within the VMS tool and achieve a key objective of realizing annual cost savings. During the MSP/VMS selection process, AArete identified several elements that were leveraged to achieve the target markup rates and contract model, including bill and pay rate management, markup management, growth rebate strategies, and program KPIs.

Transforming Contingent Talent Management with Technology

As contingent talent management programs require significant operational onboarding, the need for standardized and streamlined processes, enhanced customer experience, and robust insights becomes increasingly apparent. To address technology enablement, a key lever of deploying a best-in-class contingent workforce management program for our client, AArete took a three-pronged approach: current state assessment, future state vision and classification, and an implementation execution. Throughout the current state assessment, AArete collected information through stakeholder interviews, documented workflows, and data files. AArete identified the proliferation of technologies, absence of a centralized data management strategy, lack of visibility and data integrity risks, absence of standardization, and highly manual processes. Utilizing our experience, current state findings, and the client’s stakeholders’ input, we designed future state process flows to reduce operational inefficiencies, streamline and standardize workflows across all teams and heavy utilizers, drive program scalability, and improve organizational capability and capacity.

To enable a data-centric and nimble approach, AArete recommended that the client leverage a VMS tool to enable AArete’s findings and future state workflow design. By harnessing this technology, the client’s future state program would have a single source of truth, standardized fields supporting active resource management, and enhanced analytics and reporting. To drive this recommendation forward, AArete established a rapid implementation timeframe, which included MSP and VMS selection, design, deployment, change management, and training to achieve a steady state.

Achieving Sustainable Success

Over the course of our experience, AArete discovered several instances of varying markups and pay rates across similar staff augmentation positions that, once standardized through a not-to-exceed markup model, led to $6.1 million in annualized cost savings. Additionally, the team led the creation, evaluation, selection, and negotiation of an RFP for an MSP and accompanying VMS partner and project managed through a successful go live.

Throughout implementation, AArete reformed master services agreements across over 30 staff augmentation vendors. This resulted in stronger relationships with their suppliers, continued access to top-quality candidates, cost optimization, and transparency across contingent workforce strategies. AArete maintained frequent communication beyond the client’s go-live to identify stakeholders’ pain points and provide continued normalization support, including practical process improvement, cost optimization, change management, and user training to deploy their best-in-class contingent workforce program.