CXC Global Asia

Why use Contingent Workforce?

Contingent Workforce Solutions are used in Asia to help:

Why-use-Contingent-Workforce_2

Source: In March 2015, CXC Global commissioned a third party research project on the key drivers for contingent workforce adoption in Asia.

Cost reduction

Cost reduction is the main cited reason the HR Departments report using Contingent Workforce Solutions because reducing cost is the net benefit of using any of the other listed benefits.

Increase workforce flexibility

The ability to hire “on-demand” highly skilled and compensated workers for a fixed duration is more cost effective than hiring the same skill level as permanent employees. By definition, the contingent worker is paid for fixed term assignments and does not permanently remain on the company payroll. Net benefit – Cost Reduction.

Access specialists for specific projects

Many times finding the exact skill set in the permanent employee talent pool to efficiently and successfully complete a project is difficult. By using a contingent worker, the specific niche specialist skill set and knowledge base can be acquired in less time and for less money than it would take to train an existing employee. Net benefit – Cost Reduction.

Simplify remuneration

In most countries, the remuneration regulations are different for permanent employees and for contingent workers. Adding to this complexity, many of the contingent workers are foreign workers with specific remuneration requirements.

Employing a permanent employee to keep current on continually changing regulations, overseeing compliant pay rolling and providing customer service can be a costly task. Net benefit – Cost Reduction.

Reduce administration of hiring and managing a temporary workforce

Contingent Workforce Solutions can be custom tailored to handle HR administration and functions as required. Solutions include; Visa and Work Permit assistance, contract negotiation, on boarding, mobility services, contractor care, country compliant payroll and off boarding. Dedicating at permanent HR employee to handle contingent workforce administration can be a costly task.  Net benefit – Cost Reduction.

Mitigate risk

Most Contingent Workforce Solution providers function as an Umbrella Company (UK definition) or Professional Employer Organization (PEO – US definition).  Under this business model the Umbrella Company or PEO employs the contingent worker directly thereby reducing if not eliminating the employment risk of the company/MNC directly hiring independent contractors.

It is interesting to note that only 9% of the Asian MNCs surveyed rate Risk Mitigation as a reason to use Contingent Workforce Solutions. In the United States, Europe and Australia, employment law is about 10 years ahead of Asia. With the stricter employment regulations in those regions, it is probable that a survey of those MNCs might rate risk mitigation as one of the top drivers for use of Contingent Workforce Solutions.

To mitigate risk, Contingent Workforce Solution providers should be compliant with country specific employment and payroll laws and cover their contingent workers with Professional Indemnity and Professional liability insurance. Net benefit – Risk Mitigation – Cost Reduction.

Learn more about contingent workforce

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