Our world is changing, and the global pandemic has fueled the speed with which change is taking place. We're watching the impact of shifts in the economy, rapidly evolving technology, sudden climate changes, an aging population, and millennials reevaluating chosen careers – to name just a few.
For the public sector, this rapid change impacts everything from finding teachers to public safety officers and everything in between. Unfortunately, it is not as easy as identifying the needs of a role and bringing on the right full-time worker for the job. It’s also no longer attainable to fill every opening with a permanent worker, due to skills gaps, demographic shifts such as the retiring baby boomer generation, and regulatory mandates.
However, these shifts have created a significant opportunity for contingent workers. Temporary worker shortages, initially caused by the pandemic, have calcified in part due to the Great Resignation, further increasing the demand for external workers.
Organizations across industries dedicate 43% of their workforce spend budget to external labor such as contingent workers, contractors, and service providers, according to a recent survey by Oxford Economics. Approximately 74% of these say external labor is important to operating at full capacity and 74% report that these workers are important to reducing risk.
In my work with public sector organizations, I’ve seen agencies with multiple different roles filled by external workers. These workers are essential for government to meet their mission, with projects in IT administrative HR, public infrastructure, and public health.
A lack of workforce insight increases risk
For procurement organizations, managing so many external resources is complex. Many agencies rely on traditional procure-to-pay or source-to-pay solutions to manage contracts, statements of work, and purchase orders for contingent workers.
Yet these systems can’t provide the visibility needed to understand who works for you – or gain insight into their qualifications, certifications, or security clearances.
This gap can have dire consequences. A lack of visibility and control over your contingent workforce can compromise agency security, budgets, and compliance. In the Oxford Economics study, approximately 28% of public service executives report experiencing digital security breaches with external workers. Some 24% say they experienced unauthorized spend with their contingent workers, and 20% reported compliance issues.
Modern procurement delivers significant improvements
Clearly, it’s time to advance how public sector organizations manage their contingent workforce.
When COVID-19 hit, many agency executives thought they didn’t have time to implement more modern procurement technology to more effectively source and retain vital contractors.
Accuracy, reliability, and timeliness of external workforce data
Assessing contingent workforce rates
Identifying persistent skills gaps
External workforce oversight and monitoring
Contingent workforce engagements
Granular data increases safety and visibility
Successes like this are encouraging public sector organizations to embrace digital business network technology. They use the granular data provided to automatically recommend the right workers for a job, confirm their skills and certifications, and check their history and background. In countries that mandate COVID-19 vaccines or testing, the solutions can validate a worker’s health data in real time.
On the financial side, these networks go beyond simple data such as bill rates. They can help agencies ensure they record and track time sheets while also withholding and paying the correct taxes.
Collecting this data and making it instantly available to authorized users can also improve safety. If an incident or breach occurs, it can help executives take action – determining who was on site and recommend next steps.
Increased visibility and efficiency create value
The benefits can be significant. Many agencies experience increased visibility and control of their contingent labor spend. Real-time analytics can improve workforce planning, including tenure management and budgeting. Advanced networks offer the ability to use supplier metrics to measure KPIs and supplier performance.
Improved efficiencies throughout the source-to-pay process can reduce the cost of a contingent workforce and increase compliance with agreed-upon terms and rates. Organizations also find that these efficiencies often enhance contractor engagement, retention, and performance.
Together, these benefits help strengthen agencies’ accountability and transparency throughout the contingent workforce procurement process.
Los Alamos National Labs (LANL) for example recently changed the way it managed procurement and its contingent workforce. It needed to replace paper-based, time-consuming, manual processes with streamlined and automated digital workflows. LANL now uses an integrated, standardized technology foundation that would enable it to scale procurement operations quickly while also meeting the compliance demands of a highly regulated environment. They are now transforming the way they manage procurement and contingent labor processes, while still meeting strict security protocols.
It’s often said that every big achievement begins with a small step. Government organizations have the opportunity to take the necessary steps to proactively manage external workforce costs, compliance, security and quality of work.