fbpx Skip to content

Mastering Strategic Cost Savings in Contingent Workforce Management

Cost savings are a paramount concern for contingent workforce programs and for compelling reasons. These programs, which rely on temporary or non-permanent workers, play a pivotal role in modern business strategies. They offer flexibility, agility, and the ability to scale up or down swiftly in response to market fluctuations. However, managing a contingent workforce effectively can be costly, and expenses can spiral out of control without diligent cost-saving measures.


Cost savings directly impact a company’s bottom line. By optimizing expenditure on contingent labor, businesses can allocate resources more efficiently, enhancing overall profitability. Also, in this era of relentless competition, cost savings are essential for maintaining a competitive edge. Organizations that can deliver quality results while minimizing expenses are better positioned to thrive in the market.


Here’s how you can save costs within your contingent workforce programs.

Amplifying Hiring Options:

1. Increasing Access to Talent Pools: Traditionally, companies have relied on limited sources and locations for talent acquisition. However, by expanding the horizons and tapping into talent pools from diverse sources and locations, organizations can uncover candidates at desired price points. This strategy leverages the power of diversity and breadth in talent acquisition.


2. Increasing the Number of Suppliers: An unconventional approach, contrary to supplier consolidation, suggests that having more suppliers can stimulate healthy competition. This competition often translates into lower costs and more innovative solutions. It’s a shift from the old paradigm to encourage cost-efficient supplier relationships through diversity.

Hiring Remote or Offshore Candidates:​

The globalization of the workforce has opened doors to cost-saving opportunities. Organizations can achieve substantial savings by considering candidates from diverse geographical locations for roles that embrace remote work. By tapping into this global talent pool, businesses can explore alternative cost structures that may be more favorable. But, it’s crucial to adopt a strategic approach, taking into account factors like cultural alignment and time zone considerations to ensure seamless collaboration.

Direct Sourcing:

Direct sourcing involves building an internal capability to recruit talent without relying on external suppliers. While it sounds promising in theory, it’s not a one-size-fits-all solution. Direct sourcing works best for roles with repeatable positions and high-frequency hiring needs. It may require recruiting tools and technology investments, but many organizations partner with third-party providers to manage the process effectively. This approach can lead to substantial cost savings while giving organizations more control over hiring.

Hard Cost Savings Strategies:

1. Collaborative Supplier Negotiations: Engaging in open and collaborative discussions with suppliers can uncover valuable cost-saving opportunities. Companies can discover innovative solutions and build stronger, mutually beneficial relationships by seeking suppliers’ input and ideas.

2. Rate Cards: Establishing standardized rates for different job roles based on market data and historical usage ensures competitiveness and efficiency in talent acquisition. Rate cards simplify billing and provide clarity to both organizations and suppliers.

3. Publish Minimum and Maximum Rate Ranges: Instead of specifying a single bill rate, setting a range for each position allows suppliers to submit candidates within that range based on skills and qualifications. This flexible approach can lead to cost savings while ensuring quality.

4. Bill Rate vs. Markups: The debate between bill rates (final rates charged to the client) and markups (the difference between pay rate and bill rate) continues. While some prefer simple bill rates, others value understanding pay rates to identify cost-saving opportunities. Choosing the approach that aligns with your organization’s goals is essential.

Process and Compliance for Cost Savings:

1. Right Skilling: Accurately assessing job requirements, including seniority levels and skillsets, is crucial. Clearly defining job needs and considering different levels of seniority can prevent overpaying for rare skill combinations, resulting in more cost-effective hiring decisions.

2. Avoiding Complex Jobs with Rare Skill Combinations: Creating job descriptions that demand an unusual combination of skills, often referred to as “purple squirrels,” can drive up costs and hinder efficient talent acquisition. Simplifying job requirements can lead to significant savings.

3. Auditing Supplier Costs: Conducting periodic audits of supplier costs, even for a small percentage of the contingent workforce, can provide valuable insights into pay rates versus bill rates. These audits empower organizations to make informed decisions and optimize spending.


Discount Strategies:

Implementing discount strategies can further optimize contingent workforce management costs and maintain strong supplier relationships:

1. Tenure Discounts: Negotiating discounts based on a worker’s time on assignment incentivizes long-term engagements, benefiting both parties.

2. Volume Discounts: Offering discounts to suppliers who exceed spending thresholds encourages the supply of more talent, promoting cost savings.

3. Overtime Discounts: Negotiating discounted overtime-hour rates aligns bill rate multipliers with actual cost increases, ensuring fairness.

4. Early Payment Discounts: Suppliers may offer discounts for early invoice payments, providing potential cost savings. Opting for this feature can foster good supplier relationships.

Within contingent workforce programs, these measures contribute to financial stability and sustainability. They ensure that businesses remain agile and resilient in the face of economic uncertainty. Prioritizing cost savings in contingent workforce management is not just a financial strategy; it’s a strategic imperative that can make or break an organization’s long-term success.

Unlock your business’s full potential for cost savings by downloading our comprehensive ebook.

Share this article

Articles you will also like

The Rise of Specialized Hiring Marketplaces: What Companies and Professionals Need to Know

The rise of the specialized hiring marketplace is a response to the growing demand for...

5 Compelling Reasons to Introduce Specialized Supplier Management Solutions into Your Contingent Workforce

The first and most obvious benefit of using specialized supplier management solutions is the dramatic...

6 Strategic Ways to Plan Your Contingent Workforce

As we navigate this evolving landscape, it's crucial to understand how to harness the power...

Schedule a Demo

Talk with one of our experts to learn how Prosperix can help you build your own extraordinary workforce.


Total workforce management solution that joins technology and human expertise

Prosperix VMS Network
Accelerating Innovation in Hiring and Workforce Management

Prosperix VMS Network
Accelerating Innovation in Hiring and Workforce Management