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Contingent labor is here to stay. The U.S. Government Accountability Office reports that more than 40% of the US workforce identify as contingent laborers. This is a 30% increase cited from a 2006 report released by the federal government. The numbers demonstrate an upward trend in the growth of this sector.

As companies today try to shift from an employment as lifetime marriage model to a more purchase and utilization of services as required type of thinking, contingent workers will continue to be a very significant part of many organizations’ human capital management (HCM) solutions.

Contingent labor comes in many different guises. Some see themselves as contractors or project workers. Many are lifetime soloists or consultants who sell their skills going from project to project. Others can be labeled as statement of work (SOW) workers, who labor on well-defined deliverables. Irrespective of what your organization calls them, they have one thing in common; they are not full time employees (FTEs).

The successful utilization of contingent labor requires a certain rigor — a methodology and attention to detail that drives successful outcomes. Aberdeen research demonstrates that Best-in-Class organizations understand this. They see the necessity of managing, deploying, and tracking their utilization of contingent workers for effectiveness.

Top performers understand the importance of compliance to federal labor and tax policies 58% more than All Others (71% vs 45%). This action needs to be top of mind early on in the process, as it is vital to the successful deployment of the contingent workforce. The bottom line is that there is no good reason for your organization to be out of compliance.

Aberdeen research also demonstrates that Best-in-Class organizations are 33% more likely than All Others to recognize the importance of carefully tracking spend across the organization (48% vs. 36%). Top performing organizations keep careful tabs on the overall spend on their contingent workforce.

It should be noted that Best-in-Class organizations are 50% more likely than All Others (48% vs. 32%) to provide goals for contingent labor. This practice, though eminently obvious, is not always observed. This oversight can be costly, because it is difficult for an organization to measure the effectiveness of their contingent workforce in the absence of goals for measurement.

Should an organization wish to see costs spin out of control, they need look no further than a lack of standardized processes that apply to statement of work (SOW) contingent labor. With companies often dependent upon multifaceted relationships such as partner organizations and interdepartmental politics, changes to deliverables, and scope creep, the utilization of standardized practices protect the organization from cost overruns and chaos.

To learn more, read the full report.

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