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The global workforce is reshaping itself before our eyes. The “gig economy” now accounts for up to 12% of the world’s labour market — much higher than previously estimated, according to the World Bank. And in 2022, the global gig economy generated an eye-opening $3.8 trillion in revenue, as reported by Staffing Industry Analysts.
As businesses adapt to this new reality, they’re confronting a hurdle: a lack of visibility into their contingent workforce spend. It’s a problem costing millions, yet it often goes unnoticed. Why? Because the solution isn’t always obvious. But there is a solution, and it centres around Statement of Work (SoW) management.
First, let’s look at the state of play. Professional services make up a staggering 45% of an enterprise’s total workforce expenditure. Yet, only 30% of Chief Procurement Officers report having visibility over most of this spend.
Dale Hampshire, Page Outsourcing’s Senior Business Development Director, puts it plainly: “Many organisations think they know what they’re spending on their contingent workforce, but when we dig deeper, we often find that it’s two or three times that amount. This hidden spend is scattered across different departments and budgets, making it nearly impossible to manage effectively.”
Eliminating this blind spot can lead to a range of positive outcomes that directly impact your compliance, bottom line and operational effectiveness.
Just to remind ourselves, a SoW is a document that defines the specific services a supplier will provide to a client. It outlines the work activities, deliverables, timelines and payment terms for a project or service. It also maps the price to be paid and the parameters that the supplier needs to achieve to obtain the scheduled payments. This mitigates overrun and budget issues during the engagement. It also benefits the supplier, who understands exactly what needs to be done and by when.
For modern workforces, where agility and flexibility are vital, SoWs matter more than ever. They allow organisations to bring in specialised skills for specific projects without the long-term commitment of permanent hires.
Integrating Statement of Work services into your workforce management strategy can yield significant benefits. Let’s start with visibility. Bringing SoW management under one roof gives you a bird’s-eye view of your non-permanent workforce. Who’s doing what? For how long? At what cost? Suddenly, these questions have clear answers.
Then there’s cost control. With better visibility comes the ability to identify redundancies, negotiate smarter deals and make sure you’re getting value for money. It’s not a small change either — some organisations have seen their costs drop by 18-21% after bringing SoW into the fold.
Statements of Work also strengthen governance and compliance. With a solid SoW framework, you reduce the risk of worker misclassification, and everyone knows exactly what they’re supposed to be doing.
There’s a financial benefit, too. SoW-based services provide investment and budgeting flexibility, allowing companies to undertake large capital projects without drastically affecting their current period’s profit and loss statement.
While the benefits of SoW management are clear, implementing it isn’t always smooth sailing. One of the most common issues is rogue spend. This occurs when individual departments or managers engage contractors or services outside the established procurement channels. It’s often done with good intentions — to get work done quickly — but it can lead to increased costs and compliance risks.
Another challenge is the misclassification of contractors under SoWs. Sometimes, contractors are squeezed into a Statement of Work when they should really be classified as temporary workers. This might be done to get around budget restrictions or to speed up the hiring process. However, it can open the organisation up to significant legal and financial risks.
Cultural resistance to change can also be a stumbling block. Implementing a centralised SoW management process often requires a shift in how departments and managers operate. Some may resist, seeing it as an additional layer of bureaucracy rather than a tool for efficiency and cost savings.
While these challenges can seem daunting, partnering with experienced SoW management experts can help you turn all these obstacles into opportunities for workforce optimisation.
Implementing an effective Statement of Work management starts with understanding your current situation. This is where data discovery becomes essential. Dale Hampshire explains:
“Our data discovery process is a game-changer. Within a matter of weeks, we can provide full visibility of an organisation’s non-permanent workforce. We look at everything from payroll systems to building access records. It’s not uncommon to find that a company thinking they have 500 temporary workers actually has 1,200 people with access to their buildings. This kind of insight is crucial for both cost management and security.”
Technology integration is another critical aspect. A robust Vendor Management System (VMS) can centralise your SoW data, making it easier to track, manage and analyse. The right VMS can transform SoW management from a daunting task to a streamlined process. By providing clear categorisation guidelines and automated checks, a VMS can help ensure that workers are correctly classified as either SoW-based or temporary employees. This not only improves compliance but also helps organisations avoid potential legal and financial risks associated with misclassification.
Change management and getting key people on board are equally important. Clear communication about the benefits of SoW management can help overcome cultural resistance. Involve key people early and provide training to ensure a smooth transition.
The power of Statement of Work management in today’s workforce is clear. It offers:
When challenges arise, the right approach and tools can overcome them. Page Outsourcing can help you on this journey, providing expert guidance and tailored solutions to meet your organisation’s unique needs. Get in touch today to learn how we can help you unlock the power of SoW management.
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