A growing number of enterprises are turning to external labor to meet business needs, reduce costs, and navigate a challenging labor market. In fact, 86% of executives say effective management and orchestration of external contributors is critical to their organization’s performance, according to the 2022 MIT SMR-Deloitte Future of the Workforce global survey by Sloan Management Review and Deloitte referenced in Deloitte’s article Managing the extended and connected workforce.
However, that same study finds only 33% of organizations feel sufficiently prepared to manage external contributors. One reason why is lack of visibility. When contracting resources, most enterprises have little if any visibility into the work activities being done on their behalf. It doesn’t have to be that way. Automated workforce analytics solutions enable companies to achieve visibility and transparency when working with outsourced partners, creating a number of transformative advantages.
The Historic Approach to Managing External Labor Contracts
Let’s consider the traditional approach to managing external labor contracts—the way things are usually done. Most commonly, enterprises rely on managed service providers (MSPs) to provide weekly timecards that document the hours worked by the MSP’s resources. These timecards reflect workers’ self-reported time and are generally submitted via a vendor managed software (VMS), such as Coupa, SAP Fieldglass or Beeline. Managers within the enterprise are expected to review and approve these timecards but have little means to accurately and consistently validate true hours worked. Without transparency into the work performed, these managers are unable to identify gaps in self-reported time and actual work time being invoiced. They are also unable to spot mistakes that could lead to faulty invoices and overpayment.
In other words, enterprises are forced to operate within a one-sided, “trust me” marketplace – a reality MSPs are well aware of. Too often, suppliers take advantage of clients’ control point weaknesses, submitting unverified self-reported timecards to their clients and invoicing at the highest levels contractually allowed.
Other types of external labor contracts – for example, when enterprises partner with vendors to perform project-based or capacity-based work – lead to similar challenges: lack of visibility leaves customers with no clear way to dispute supplier requests for change orders. With 45 percent of large IT projects running over budget and 7% over time, according to a study by McKinsey and the University of Oxford, this can be a consequential challenge. While a project might creep out of scope or take longer than planned for many reasons, one common factor vendors aren’t keen to explore is that supplier-provided resources are underperforming.
For more on the advantages of leveraging an external workforce capacity management solution, including advice for choosing the right solution for your business, download “The Data Advantage: An Enterprise’s Guide to Improving External Labor Capacity Management with Workforce Analytics,” a white paper by Sapience.
A Better Way: Greater External Labor Visibility Creates Profound Advantages
Now let’s shine a light on a better way: a data-backed approach to managing, planning and negotiating with external labor partners. An automated workforce analytics solution such as Sapience transparenSEE® allows users to track and quantify work performed by external labor to achieve true visibility, unlocking valuable insights.
The advantages of deploying an external labor capacity management solution include:
Cost savings
Surface data insights on discrepancies to inform negotiations with suppliers and achieve massive cost savings. Sapience transparenSEE® customers typically realize savings and/or rebates of 30% or more in as little as three months.
Business intelligence
Access insights to help you understand the true return on investment (ROI) of your external labor.
Fairer negotiations
Improve your ability to negotiate effectively with your partners, with unbiased data and insights about the realities of work performed.
Project efficiency
Ensure suppliers are providing the right workforce, meaning they have matched the right worker and skills with the right tasks, to drive project efficiency.
Clarity in decision-making
Reliable data increases the accuracy of your forecasting and improves planning, as well as your ability to choose the best supplier/external labor provider for your needs.
Reduced risk
Easily validate who has access to critical or sensitive applications and identify potential security risks so you can implement stronger compliance controls, as needed.
By deploying a single SaaS platform, enterprises can transform their approach to utilizing and managing external labor partners and reap a multitude of benefits.
To learn more about workforce analytics, as well as Sapience transparenSEE®, be sure to download a copy of “The Data Advantage: An Enterprise’s Guide to Improving External Labor Capacity Management with Workforce Analytics,” a white paper by Sapience.
We also invite you to schedule a no-obligation demonstration.
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