9 min read
Most enterprise business services already run on a blended workforce. Freelancers, independent contractors, consultants, and temporary staff sit on project teams across IT, marketing, finance, and even the executive bench. In a lot of organizations, contingent labor is one of the largest categories of third-party spend you have. This trend is likely to accelerate. According to research by Korn Ferry, contingent workers are expected to rise to above 60% of the workforce in the United States by 2060.
That leaves you with a question worth answering clearly: who owns this workforce, and how should you manage it? In this article I want to walk you through how I think about contingent workforce management from end to end, what it actually covers, where the ownership tension sits between procurement and HR, and the one shift in mindset that I believe separates a managed program from a fragmented one. I will be candid about where I think most teams get it wrong, because I made some of those mistakes myself earlier in my career.
What is contingent workforce management?
Contingent workforce management is how you source, engage, pay, and oversee the people who work for your organization but are not permanent employees. That population includes freelancers, independent contractors, consultants, agency temps, and statement-of-work service providers. The aim is to give your business flexible access to the right talent while keeping cost, compliance, and performance under control.
A contingent worker is anyone you engage on a non-permanent basis to deliver a defined scope of work, rather than to fill a standing role. The distinction matters in practice, because you manage contingent talent against deliverables and outcomes, not against headcount and hours.
What makes this its own discipline, distinct from traditional HR, is that contingent labor behaves differently. It moves faster, it flexes up and down, and it carries a different set of legal and commercial risks. HR is built to attract, develop, and retain permanent employees. Your contingent workforce needs its own controls, its own technology, and, ideally, its own owner within your procurement organization.
Why this matters more now than it used to
The shift toward flexible talent is structural.When I spoke with Mathias Linnemann, Co-founder of the contingent workforce management platform Worksome, on the Art of Procurement podcast, he was blunt about it:
"The rise of the contingent workforce is a very real thing, and it's not a COVID thing. It has been happening for years. It's happening for various reasons, but the primary one being that a lot of people are seeking a work life that is more flexible, more free."
Two forces sit underneath that. The first is demographic. As experienced people leave the workforce and fewer qualified workers come in behind them, demand for talent runs ahead of supply. The second is preference. More skilled professionals are choosing freelance and interim work because it gives them flexibility, variety, and control over the projects they take on.
The result is that a growing share of your most important work gets done by people who are not on your payroll. In some industries that share is already past half. The uncomfortable implication is simple: if a meaningful portion of your workforce is contingent and nobody owns the strategy for it, you have a gap, and it is costing you in ways you cannot currently see. You can hear the full conversation in the episode Closing the Gap Between Talent Supply and Demand, which is also where the cost framework later in this article comes from.
The five things you have to get right
Managing a blended workforce well comes down to getting five connected activities right. None of them stands alone, which is part of why the category is hard to run from a spreadsheet.
- The first is sourcing and engagement. You acquire vetted talent through the right mix of channels: direct sourcing into your own talent pools, staffing agencies, managed service providers, and freelance marketplaces. The strategic question is not only where the talent comes from, but whether you can see the full value chain and understand the markups attached to each channel.
- The second is onboarding and offboarding. You integrate workers quickly, with the equipment, system access, and project context they need to be productive, then offboard them cleanly to protect your data when the engagement ends. Speed matters more than people expect. Highly qualified workers will not wait through a slow, manual onboarding, and a clunky experience costs you both time and the talent itself.
- The third is compliance and risk mitigation. You enforce correct worker classification to avoid misclassification penalties and co-employment exposure, and you meet local, regional, and international labor laws. This is where unmanaged flexible labor creates the most risk, and where good process and technology earn their keep.
- The fourth is cost control and spend management. You track budgets, process invoices, and keep rate consistency across the program. The real objective here is transparency: knowing who you hired, where you sourced them, what you paid, and whether the markups were justified.
- The fifth is performance oversight. You evaluate workers against defined deliverables, scope, and milestones rather than hours logged. Outcome-based oversight is what keeps the program focused on value rather than activity.
The table below pulls the five together as a quick reference you can come back to.
|
What you manage |
What it covers |
Why it matters |
|
Sourcing and engagement |
Direct sourcing, staffing agencies, managed service providers, freelance marketplaces |
Determines talent quality, speed, and cost transparency |
|
Onboarding and offboarding |
Equipment, access, project context, clean exit |
Protects productivity, experience, and data security |
|
Compliance and risk mitigation |
Worker classification, co-employment, labor law |
Prevents penalties and legal exposure |
|
Cost control and spend management |
Budgets, invoices, rate consistency, markups |
Turns spend into something you can see and govern |
|
Performance oversight |
Deliverables, scope, milestones |
Keeps the program focused on outcomes, not hours |
Who owns the contingent workforce, you or HR?
This is the question most organizations have not settled, and in my experience it is the one that decides whether you have a program or a mess.
HR teams are typically built around the permanent workforce. They measure it, they buy technology for it, and they work to attract and retain it. Your contingent workforce, meanwhile, often grows in size and importance faster than the permanent workforce, yet it sits outside that focus. So procurement steps into the gap, and brings real discipline to it, but usually from cost, process, and risk perspectives.
The best outcome I have seen is a deliberate partnership. You make sure the right technology and commercial structure are in place so hiring managers can access excellent talent through approved channels and the organization buys efficiently. HR owns the talent strategy: who you want to attract, why, and how to give contingent workers an experience good enough that they want to work with you again. Mathiasargued that in many companies HR has been slow to step into owning the freelance workforce, procurement has filled that gap and often done it well, and what is still missing is the two functions agreeing that they now have one blended workforce to manage, not two separate ones.
Contingent labor is often the biggest bucket of addressable spend you have, so it is tempting to treat it as a savings target and chase a few points off the rates. That is procurement-centric thinking. Your business needs the talent, and if you will not pay for it, you will not have it, which is a far bigger problem than a missed rate reduction. The opportunity is to treat contingent labor as a driver of business outcomes, with cost savings as one result among several. If your instinct is still to manage this category the way you would manage a commodity spend, I would gently push you to reconsider. It belongs much closer to the heart of how the business gets work done. The same shift in posture shows up across the profession, and it is part of the broader move from cost control to value creation that I keep coming back to in the 7-Step Strategic Sourcing Process.
How you actually save money, without cutting rates
When I talked this through with Mathias, he laid out a way of thinking about cost optimization that I have held onto, because it reframes savings as a byproduct of running the category well rather than the goal that limits it. There are three levers, and they work together.
The first is to buy smarter and more directly. You reduce your dependence on intermediary suppliers by building direct talent pools and using technology to match and source talent. Before you hire externally and more expensively, you check whether you have already worked with the right person before. You understand the markups in your supply chain, and you decrease your reliance on the channels that add cost without adding value.
The second is to automate the process. You compress hiring, contracting, onboarding, compliance, and background checks into a fast, real-time flow. Mathias shared a number from across Worksome's client base that stuck with me: finding and onboarding a single contractor took an average of 28 process steps before automation, pulling in HR, hiring managers, legal, and IT over many weeks. Cutting that down to roughly eight or nine steps strips cost and time out of every one of those functions at once.
The third is to improve talent quality. Better sourcing and faster onboarding give you access to better people, who work on more important projects and produce greater value. This is the lever people forget. When the process actually works, the quality of the work goes up, not just the speed of the hire.
The throughline is that your savings come from operational excellence. You buy more directly, you automate the workflow, and as a result you find better people. Rate compression is not the strategy. It is, at best, a small and fragile piece of one, and leaning on it tends to cost you more in talent than it ever returns in dollars.
Why you need a Contingent Workforce Management System
You cannot strategize about something you cannot see. When your contingent spend is scattered across suppliers, agencies, and individual hiring managers, there is no reliable view of who you hired, what you paid, or how the program is performing. You are effectively flying blind on one of your largest spend categories.
A contingent workforce management system, sometimes labeled contingent workforce and SOW services software and often paired with or run by a managed service provider, consolidates hiring, contracting, billing, compliance, and reporting into one platform. That consolidation is what makes strategy possible. With the data in one place, you can finally answer the questions that matter: where your talent actually came from, whether the markups are transparent, whether you have a direct talent pool to draw on first, and where you should scale the program up or down.
A good system also gives you the fast, low-friction hiring experience that keeps strong people from walking away mid-process, while handling classification, contracts, payroll, and background checks compliantly in the background. If you are at the point of evaluating technology and providers, the Art of Procurement Contingent Workforce and SOW Services solution category is a sensible place to start your research.
Where I would start
If you are building or fixing a contingent workforce strategy, here is the order I would tackle it in.
- Start by getting visibility. Consolidate your contingent spend and engagement data so you can see the full picture across channels and hiring managers, because everything else depends on it.
- Then settle ownership. Agree explicitly with HR on how the two of you share responsibility, so the workforce is owned as one population rather than falling between two teams.
- Next, fix the process. Map the steps it currently takes to find, contract, and onboard a worker, then automate aggressively to compress that path.
- After that, build direct talent pools. Then you have a place to check for proven, previously engaged people before you go back to market. Finally, manage to outcomes, evaluating the program and the workers in it against deliverables and value, not hours and headcount.
None of this requires you to treat contingent labor as a cost problem to be squeezed. It asks you to treat it as a strategic capability to be built, and that is the shift that turns a fragmented spend category into a genuine source of competitive advantage.
The bottom line
Your contingent workforce is no longer the place you plug gaps in a permanent team. For a growing number of organizations, it is where some of the best talent lives and where a large share of the important work gets done. Managing it well means giving it a clear owner, the right technology, and a process built for speed and compliance. Get those in place, and the cost savings follow as an outcome of running the category with operational excellence, rather than as the goal that caps how good your talent can be.
