FMS_eBook

TABLE OF CONTENTS
Executive Summary
A Philosophical Change in Contingent Labor Use
Complexity Increases with the Growth of Contingent Workers
Four Talent-Sourcing Options
Genesis of the Three Acronyms
Apples and Oranges: MSP and VMS—and FMS
Under the MSP and VMS “Umbrella”
Contingent Labor Stakeholders
Evaluating the Options
Conclusions
1
3
7
9
12
15
17
20
30
38

Forty-‐two percent of companies plan to
expand their use of contingent labor in the
coming year. This concurrently creates
opportunities and challenges. Both expand in
scope and complexity depending on the
number of workers, size of organization,
number of individuals involved in the review,
approval, and management of labor, number
of departments using contingent labor,
industry segment, among other factors.
There is no lack of solutions for contingent
workforce management, and much confusion
exists around which solution—or combination
—is most appropriate for different business
scenarios. Historically, solution options have
revolved around two acronyms—MSP
(Managed Service Provider) and VMS
Understanding Your Contingent Workforce Management Ecosystem; The Meaning of Three Acronyms—VMS, MSP, and FMS | 1
(Vendor Management System)—with a third
acronym “interloper”—FMS (Freelancer
Management System)—making a recent entry.
As the risks and business outcomes are
considerable, it is important for organizations
to understand what each of the three
“acronym” solutions can and cannot do, and
for them to assess and evaluate which one(s)
are best matches for their business
requirements.
With this as the backdrop, this eBook aims to
assess the contingent workforce ecosystem,
examine the implications of FMS within the
broader picture of MSP and VMS, and propose
six criteria that organizations should
consider when evaluating FMS as an option.
EXECUTIVE SUMMARY

There is an evolution afoot in how enterprises view and use contingent labor. First and
foremost, the use of contingent workers is on the upswing. Consider this scenario. In
2009, contingent labor comprised 12 percent of the workforce.1 By 2012, it had
expanded to 16 percent, which grew another two percent to 18 percent in 2013.
This upward trend isn’t going to stop here. Conservative forecasts expect it to hit 20
percent by 2016.2 And while the growth curve is expected to ﬂatten over the long
term, rising to 22 percent by 2024, the continued percentage-expansion of contingent
workers is noteworthy.3
Yet it is much more than a “numbers” game. How organizations leverage and manage
their contingent workforce is becoming a strategic business lever. Until a few years
ago, enterprises approached contingent labor as a tac7cal exercise, one focused on
satisfying short-term outcomes and most often measured at the department level.
Now, with the maturation of the tools used to manage contingent labor, organizations
are shifting their focus to enterprise-‐wide outcomes, while expanding the
circumference of what is managed and measured.

A PHILOSOPHICAL CHANGE
IN CONTINGENT LABOR USE

The U.S. currently has more than 17 million
self-identified independent workers who are
predicted to increase by another 8 million by
2017. These workers generated over $1
trillion in income in the U.S. alone in 2013.
Source: “2014 State of Independence in America Report,” MBO Partners, 2014.
Several factors explain this surprising change in contingent labor. First, enterprises
lose flexibility while incurring costs—often substantial—during economic downturns
when they find themselves with full-time staffing ratios at virtual full capacity. And the
implications of layoffs extend beyond just financial; layoffs create organizational angst
and churn while having a detrimental impact on brand reputation.
Second, contingent labor is simply less expensive—an average of 13 percent—as
compared to full-time, permanent staff. For certain skill sets and shorter-term
assignments, hiring contingent labor—at least for some of the tasks—makes better
financial sense.4
“
“

Third, for certain high-skill labor requirements (especially in the technology sector), it
is difficult to find, hire, and retain full-time employees for these roles. Rather, it is easier
to fill these roles with skill-specific contingent workers who are interested in short-
term assignments.5
Fourth, provisional projects that require very specific skill sets are becoming
increasingly prevalent. Maintaining a base of full-time employees to staff these is now
recognized as a less-than-ideal approach. Rather, leveraging a high-skilled talent
ecosystem is a much faster and cost-effective method. The onboarding and offboarding
of contingent workers is a seamless process, with payment based on project
milestones.
Fifth, growing numbers of workers prefer the flexibility of contingent work. They want
to work on projects with clearly defined parameters and demarcated by a beginning
and an end. Businesses are simply going to where they are at: the contingent
workforce.

Finally, the globalization of many companies and their turn towards
offshoring and outsourcing creates a much larger demand for solutions
that deliver lower costs and greater flexibility and agility. The ability to
secure contingent labor in these instances and efficiently and
effectively manage the risk (e.g., different countries have different
compliance regulations) leads to substantial business advantages.
The upward growth trend of contingent
labor over coming years is corroborated
by a recent study, which found that 42%
of companies plan to increase their
contingent workforce numbers.
Source: “Workforce 2020: The Looming Talent Crisis,” Oxford Economics, 2014.
Businesses understand the importance of MSP
and VMS solutions. The numbers and trends
speak for them. Penetration of MSP programs in
the U.S. market is estimated at 45 percent to 50
percent. VMS deployments are reaching
comparable levels. Yet despite these saturation
points, VMS spend grew at 23 percent globally
in 2013, while MSP expanded by 19 percent
during the same timeframe.
Source: Tony Gregoire, “2014 VMS and MSP Landscape Summary
Report,” Staffing Industry Analysts, September 15, 2014.
DOUBLE-DIGIT ANNUAL
GROWTH FOR VMS AND MSP
“
“

COMPLEXITY INCREASES
WITH THE GROWTH OF
CONTINGENT WORKERS

Managing these burgeoning numbers of contingent workers creates various business
challenges. These challenges expand in scope and complexity depending on the number
of workers and departments using contingent labor, size of organization, industry
segment, among other factors.
How businesses go about securing and managing contingent labor is multifaceted,
encompassing everything from requisitioning and securing talent, to onboarding and
offboarding, to statement of work (SOW) processes, to invoicing and payrolling, to
supplier relationships, to reporting and data analytics. This necessitates that companies
implement comprehensive contingent workforce management solutions that
communicate across each of the different functions, including the different departments
using contingent labor, and provide a transparent view across the contingent worker.
47% of companies indicate they plan to
moderately increase their use of SOW
workers and 10% indicate signiﬁcantly.
Source: Craig Johnson, ”Here a SOW, There a SOW. Everywhere a …,”
Stafﬁng Industry Analyst, June 4, 2014.
“
“

FOUR TALENT-
SOURCING OPTIONS

Enterprises seeking to use contingent labor have four different options. The first is to
employ some form of self-sourcing capability. In a nutshell, they directly contract with
each worker. These could be “known” workers—either those contingent registered as
part of a broader talent network tapped by department heads and managers, or workers
who have completed previous assignments within the organization. But they could be
“unknown” workers as well; in this scenario, managers go to online job boards, LinkedIn,
and other job sites to recruit contingent labor directly.
The second is to source contingent talent through a staffing company. Here, the staffing
company contracts with the enterprise to supply contingent workers for specific roles
and projects. They may or may not be classified as employees of record for the staffing
firm, depending on its business model.
Contingent labor as a percentage of the
total U.S. labor force continues to increase
—up nearly 50% since 2009.
Source: Tyler Womack, “2014 Contingent Buyers Survey: Short-Term and Long-
Term Contingent Workforce Projections,” Staffing Industry Analysts, May 22, 2014.
“
“

The third is a newer phenomenon where
enterprises define projects via Statements of
Work (SOW) that are staffed or partially
staffed by SOW suppliers. These SOW
projects normally require high-skilled workers
who are managed by the SOW supplier as an
employer of record.
The fourth is an evolution of the staffing
model; freelance marketplaces managed by
what are called Freelancer Management
Systems (FMS). These next-generation
staffing platforms eliminate traditional online
staffing agencies from the contingent labor
ecosystem—along with other components—by
building talent networks of independent
workers (a subset of what is deemed
contingent labor; see sidebar “What Is a
Contingent Worker?”) with companies
typically needing short-term labor for specific
tasks.6
Contingent workers are a provisional labor group who work on a non-
permanent basis and engage either directly with an organization or
through a third-party supplier (viz., staffing agency). Nomenclatures
encompassed within the sphere of contingent labor include
freelancer, independent worker, consultant, contractor, and
temporary worker. They may be 1099 or W-2 workers, and either
paid directly by the company or by a third-party employer of record.
The boundaries of the contingent workforce continues to expand; for
example, there has been a recent surge in the use of high-skilled
workers for SOW/project-based engagements, offshore workers, and
outsourced companies that fall underneath the umbrella of
contingent labor.
Source: Tyler Womack, “2014 Contingent Buyers Survey: Short-Term and Long-Term Contingent
Workforce Projections,” Staffing Industry Analysts, May 22, 2014.
WHAT IS A CONTINGENT WORKER?

GENESIS OF THE THREE
ACRONYMS

The genesis of contingent workforce management dates back to 1991 when PRO Unlimited
launched a 1099 compliance program. This was followed in 1994 with a vendor-neutral
Managed Service Program (MSP) and a Vendor Management System (VMS) designated PRO
Wand in 1998. Since then, the MSP and VMS solution space has attracted a number of
different entrants and become increasingly crowded. It is important to note that FMS solutions
are not the equivalent of MSP and VMS solutions.
The FMS providers are new entrants to the contingent workforce space. Most specialize in
filling one or more narrowly defined job types, though others aspire to offer a much broader
talent network through what is called freelance marketplaces. Like staffing platforms, FMS
providers match independent workers with companies and then provide basic assistance in
managing the workers after the match has been made.
Rather than approaching the “problem” of
contingent workforce management from a
perspective different than traditional sourcing
models, FMS providers are better explained as the
next generation of online staffing platforms.
“
“

Businesses use FMS platforms to search for and find independent workers, onboard and
manage their project status, and pay them for the work provided. Because FMS employs
a different approach to sourcing and managing labor than staffing providers, labor cost
for FMS versus staffing agencies is lower. As the FMS platforms mature, they have added
“light-weight” features to initiate, manage, track, analyze, and complete work done by
independent workers under specified projects (typically under a SOW). A few FMS
providers have begun offering customers indemnification from misclassification.
As the ecosystem of stakeholders
expands, so does the complexity of
contingent workforce management.
Basic components in an FMS solu7on include (some, not all, include all of these pieces):
• Sourcing talent
• Verifying talent
• Engagement talent
• Managing projects
• Payrolling
• Rating/ranking performance (both suppliers and workers)
“

APPLES AND ORANGES:
MSP AND VMS—AND FMS

CONTINGENT WORKFORCE
MANAGEMENT GETS MORE
STRATEGIC, MORE COMPLEX
FMS solutions aim to offer a solution that addresses a subset of issues in
the broader contingent workforce management continuum. Rather than
approaching the “problem” of contingent workforce management from a
perspective different than traditional sourcing models, FMS providers
are better explained as the next generation of stafﬁng agencies.7
FMS providers address one portion of the broader contingent
workforce management ecosystem: the matchmaking between workers
and the enterprise. However, most other aspects of the continuum are
either not encompassed in the FMS universe or given peripheral
treatment.
The technology platform is the focus of the FMS approach, which does
not account for the trusted advisor role played by the MSP. Further,
contra an integrated MSP and VMS approach where freelance
marketplaces comprise only one of many talent sources, FMS solutions
rely solely on their own private talent network, resulting in a
monopoly of one supply chain channel over others.
Companies increasingly see contingent
labor as a solution to complex projects
requiring high-skilled talent. While growth
rates for temporary and contract labor are
slowing, the demand for talent to staff
SOW projects and outsourced services—
which includes offshoring—grew rapidly
over the past two years.
Source: Tony Gregoire, “2014 VMS and MSP Landscape Summary
Report,” Stafﬁng Industry Analysts, September 15, 2014.

UNDER THE MSP AND
VMS “UMBRELLA”

While FMS solutions are gaining traction with some enterprises in the
marketplace, they are not an appropriate fit—as stand-alone
deployments—for all organizations. For companies with contingent
staffing requirements of 20 or fewer concurrent workers, an FMS
solution might be a possible option. Contingent workforce requirements
for these organizations are relatively straightforward and involve a small
number of workers spread across only one or two departments.
Issues such as globalization, talent requirements
that necessitate extensive supplier options, risk
mitigation strategies and expertise, inclusion of
offshoring and outsourcing models, and SOW/
project-based initiatives that involve numerous
skill sets and perhaps geographical locations
necessitate a MSP and VMS approach.
2015 PREDICTIONS FOR THE
“FREELANCE” ECONOMY
A recent article on Forbes.com
enthusiastically embraces the growth in the
freelancer market (viz., independent worker).
The authors make five predictions for 2015:
1. Continued growth of freelancer work
2. Heightened need for FMS solutions and
growing frustration with homegrown
solutions that consist of spreadsheets,
single-use point solutions, etc.
3. Integration of FMS into broader VMS
solutions through APIs
4. Freelancers are not just for SMBs, but
also for organizations of all sizes
5. Use of data analytics within FMS (using
the VMS solution set) to make real-time,
strategic business decisions
Source: Jeff Wald and Jeffrey Leventhal, “5 Predictions for the
Freelance Economy in 2015,” Forbes.com, November 24, 2014.
“
“

The number of contingent workers is just one factor to look at. The length of
contingent labor assignments is another attribute to consider. Speciﬁcally, FMS
solutions typically lack the technological integration and capabilities to support longer-
term contingent labor assignments. Treatment of these contingent workers must be
distinct from full-time employees. As the length of contingent labor engagements
increase however, so does the complexity of managing these workers—as a whole and as
individuals—as well as the level of ﬁnancial and compliance risks.
Issues such as globalization, talent requirements that necessitate extensive supplier
options, risk mitigation strategies and expertise, inclusion of offshoring and outsourcing
models, and SOW project-based initiatives that involve numerous skill sets and perhaps
geographical locations necessitate a MSP and VMS approach.
Indeed, these business requirements cannot be solved by FMS. The sourcing model of
an FMS can be integrated into the larger framework of a MSP and VMS solution, which
manages the required integration points, enterprise-wide visibility, and risks.

CONTINGENT LABOR
STAKEHOLDERS

There is growing interest by lawmakers and regulators to crackdown
on employers who misclassify workers as contractors when their tasks
and the way they are treated equate to that of regular employees. In
2012 and 2013, the U.S. Department of Labor collected $18.2 million
in penalties linked to misclassification of more than 19,000 workers.
And this looks to increase in coming years; as an example, the
Department of Labor earmarked $14 million in 2014 to pursue and
investigate potential misclassification of labor instances.
Some assume that written contractual agreements with contingency
workers protect them from risk. That isn’t the case. Under federal law,
the classification of a worker as an employee or contingent worker is
determined by the degree of an employer’s control over the manner
and means of work. Whether unintentional or intentional, punishment
can be quite severe. And it simply isn’t an issue of fines; it involves
qualitative issues as well such as potential damage to a business’
brand, an implication that reaches all the way to customers, partners,
and the talent pool.
Management of contingent labor typically
involves myriad departments and individuals,
each of which hold different responsibilities and
have varying business requirements. The
following are the primary stakeholders, along
with their interest and role in contingent
workforce management:
There is an evolution afoot in
how enterprises view and use
contingent labor.
“
“
DON’T MISCALCULATE THE
MISCLASSIFICATION RISK

The priority is on financial fundamentals,
encompassing areas such as price benchmarking,
rate controls, and fair bidding practices. In
addition, seeking greater operational efficiencies
and lower costs, procurement leaders aim to
optimize supply chains through supplier
rationalization. Financial approval processes,
including approval-level matrices, are particularly
important (e.g., activation of band-level approval
matrices when certain conditions such as
thresholds of spend are met).
1. PROCUREMENT.
Advocates of stricter enforcement of worker misclassification and even
passage of further regulation argue that employers intentionally classify
workers as contingent labor to avoid paying taxes and healthcare costs.
Though the proposed federal legislation is still pending approval, the
“Payroll Fraud Prevention Act of 2013” is a perfect example of the
political groundswell that is occurring.

Individual states are getting behind this effort at the same time. New
Hampshire became the 17th state to enter into a “Memorandum of
Understanding with the Department of Labor.” All of the states that
have signed the memorandum agree to share information and
coordinate law enforcement to reduce the misclassification of
employees as contingent labor.
The intent of the memorandum is to put teeth behind the enforcement
of the law, as described by New Hampshire Labor Commissioner James
W. Craig: “Misclassification of workers steals benefits and protections from
employees, and allows unfair advantages to businesses that do it. [Our]
agreement will help us grow our state and regional economy by leveling the
playing field for honest and law-abiding employers.”
DON’T MISCALCULATE THE
MISCLASSIFICATION RISK (CONT.)

HR leaders have a different set of priorities and concerns; their focus shifts to talent
management, involving activities that include onboarding and offboarding, ranking and
segmenting candidates, sharing full-time and contingent labor pipelines, and integrating
workforce planning.
2. HUMAN RESOURCES.
Contingent workforce management is becoming a
strategic lever for many companies. The hiring of
contingent labor to fill temporary roles and contract-
to-hire opportunities is decreasing, while the use of
contingent workers to staff a well-defined SOW that
requires a specified high-skill set or offshore and
outsourced workers is rapidly expanding.
“
“

Risk mitigation, regulatory compliance, and maintenance of assorted legal controls are
areas of focus for corporate attorneys. Speciﬁc activities include assessing risk and
implementing controls for certain contingent labor populations as well as instituting
systems and reporting mechanisms to validate compliance with service level agreements
(SLAs) at the time of billing.
3. LEGAL.
Due to the potential liabilities, legal counsel
has fast become an important stakeholder
in the management of contingent labor.
“
“

The systems used to manage contingent labor must integrate with other pieces of the
technology stack like ﬁnancial applications, project management tools, and HR talent
management systems in order to deliver the capabilities spelled out by business
stakeholders. Without these integration points, the capabilities of a contingent
workforce management solution are inadequate. And this becomes a bit of a “chicken-
and-egg” scenario when a security lens is introduced; with every additional integration
point, a new security checkpoint and cause for concern is created.
4. IT.

In addition to the landmark case against Microsoft, which cost the
company in excess of $97 million in penalties, there are a number of
recent cases that highlight the importance and need to have the right
systems and processes in place to avoid misclassification. Consider the
following two examples.

Google and Elance-oDesk: A lawsuit was filed on November 12, 2014 in
New York federal district court against Google, Inc. and its FMS
provider Elance-oDesk for allegedly misclassifying a worker as an
independent contractor (McPherson v. Google Inc., No. 1:14-
cv-09026). The plaintiff was paid on a 1099 basis, along with others
who are part of the lawsuit. The suit claims that Google and Elance-
oDesk did not pay them for all of the hours they worked beyond those
that were budgeted and that they were not paid overtime for the
hours worked beyond 40 in a work week.
Each department using contingent labor will
have different requirements—from band-level
matrices, to the data contained in reports and
their format, to key performance indicators
(KPIs). These requirements shape the entire
lifecycle of contingent workforce management
and necessitate levels of customization at
each department.
5. DEPARTMENT HEADS.
For certain high-skill labor
requirements (especially in the
technology sector), it is difficult
to find, hire, and retain full-
time employees for these roles.
“
“
TWO MISCLASSIFICATION EXAMPLES

The compliant alleges that Google had a practice of limiting the number
of hours for which the contingent worker was paid, while assigning
more work than could be completed in the allotted timeframe. It also
asserts that the worker was treated like an employee, being required to
adhere to the same code of conduct as employees such as dress code,
blogging protocols, and absenteeism. This also included being
prohibited from using competitive products and services and received
the same ofﬁce space and equipment allocations as employees.
If all of the above are true, this situation is an example where a
combined MSP and VMS solution could have averted the different
scenarios that form the basis of the lawsuit. A VMS-only solution likely
would not have been sufﬁcient, as the expertise of onsite MSP
professionals was needed to institute the correct protocols to ensure
contingent labor categorization.
Just as departmental heads require
customized management and reporting
capabilities, managers increasingly want the
same customization at their levels. Industry
benchmarks, peer comparisons, supplier
ratings, worker evaluations, among other data
analytics provide managers with valuable
insights used for labor planning and
management.
6. MANAGERS.
A direct-talent-sourcing
framework that eliminates key
stakeholders and even technology
components from the contingent
workforce ecosystem incurs
certain liabilities.
“
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TWO MISCLASSIFICATION
EXAMPLES (CONT.)

7. WORKERS.
The consumerization of technology in the workplace
extends to the systems used to manage contingent
workers, and in particular, the expectations those
workers have when communicating and interacting with
the company. 8
This encompasses all of the different touch points as well
as the individual stakeholders attached to each; these
include areas such as onboarding and offboarding
processes, timecard reporting and payrolling, and project
tracking and reporting.
The Web-based interface for these interactions and
workflows must be straightforward and easy to use. In
addition, as most contingent workers leverage mobile apps
nearly every day in their personal lives, they expect the
same level of convenience in their professional lives;
systems used for timecards, expense reporting, payrolling,
project management, and onboarding and offboarding
must resemble those workers use themselves.
scenarios that form the basis of the lawsuit. A VMS-only
solution likely would not have been sufficient, as the
expertise of onsite MSP professionals was needed to
institute the correct protocols to ensure contingent labor
categorization.
Onward LLC. On November 3, 2014, an oilrig consultant
filed a class-action lawsuit seeking to represent 25 other
oilrig consultants who performed work on offshore drilling
rigs in the Gulf of Mexico for Onward LLC (Austin v.
Onward LLC, 3:14-cv-00350). The lawsuit claims the
consultants were improperly classified as independent
contractors during a four-month period when they
performed work for Onward.

Documentation submitted with the case indicates the
company hired, trained, and supervised the consultants’
EXAMPLES (CONT.)

As the ecosystem of stakeholders expands, so does the
complexity of managing a contingent workforce. FMS
solutions lack the technology integrations of MSP and VMS
solutions and begin to show deficiencies as the scope and
complexity of a contingent labor program expand.
Further, a direct-talent-sourcing framework that
eliminates key stakeholders and even technology
components from the contingent workforce ecosystem
incurs certain liabilities—whether lack of transparency
across the organization, talent quality and/or cost, and risk
mitigation (or lack thereof). Rather, MSP and VMS
solutions were designed and built to deliver real-time
results to any—or all—of the stakeholders involved in
the contingent labor management lifecycle.
daily work as if they were employees, required them to
comply with instructions on how to do their work, required
their attendance at an onshore training course, and set all
days and hours of the work. At the end of the four-month
timeframe, the consultants were reclassified as employees
but denied pay for all hours worked and for overtime.
As with the McPherson v. Google Inc. case, utilization of a
combined MSP and VMS offering could have averted this
potential misclassification through the institution of
additional protocols and processes.
EXAMPLES (CONT.)

EVALUATING THE
OPTIONS

Organiza7ons essen7ally have ﬁve diﬀerent op7ons from which to choose when
direct talent sourcing is assumed as a requirement:
• FMS Only
• VMS Only
• VMS + FMS
• MSP + VMS (this could be in-house or outsourced)
• MSP + VMS + FMS
As companies evaluate these different options, the following are the most
noteworthy issues to consider.
40% of the U.S. workforce has
been a contingent worker at
some point during their career.
“

1. COST MODEL.
Compared to supplier models that are embedded within MSP and VMS offerings, the
fees of FMS solutions are often higher. Fees charged by FMS providers typically fall into
the range of 8 percent to 12.5 percent. With a MSP and VMS approach, labor costs are
substantially lower.
This cost difference is understandable in that FMS providers must “straddle the fence”
and satisfy the ﬁnancial requirements of two juxtaposed constituents—the vendor
and worker. A MSP and VMS approach employs data benchmarks to deliver optimal
outcomes for the business.

While the leading FMS solutions include light-weight business logic and processes that
attempt to protect against misclassification risks—with some offering indemnification
protection—they simply do not offer the breadth of capabilities available in a MSP and
VMS solution.9 Because there is no staffing agency or MSP as the employer of record in
FMS-only scenarios, vulnerabilities are higher.
The recommendation is that FMS solutions should be deployed in the U.S. only for
organizations with a need for a small number of intermittent or short-term workers. The
complexities of longer-term engagements that extend outside the U.S. are substantial
and engender a much higher risk posture.10
2. RISK MITIGATION.

The private talent network of each FMS provider varies in size and scope.11 And though it
depends on the FMS solution in question, the private talent networks of most exceed the
size and breadth of talent pools offered by individual stafﬁng agencies. However, the
independent workers who comprise the talent pools maintained by FMS providers are a
subset of the larger contingent labor ecosystem.
Compared to a MSP and VMS approach, there is no limit to the number of suppliers that
make up a talent pool. This creates a broader and deeper contingent worker ecosystem
with enhanced quantity and quality as a byproduct.
3. TALENT: HIGH QUALITY AT MARKET RATES.

4. DATA ANALYTICS AND INSIGHTS.
FMS is a new entry in the contingent workforce management space and does not have
the breadth of capabilities of a MSP and VMS solution around market analytics,
industry benchmarks, data analysis and insights, and reporting. In particular, the cost
structures and data insights of a MSP and VMS model cannot be replicated by a FMS
provider that looks at only a slice of the bigger picture with a technological toolset that
is also a mere subset.

5. MSP: THE TRUSTED ADVISOR.
FMS does not account for the same level of compliance and expected business outcomes
as does a MSP and VMS. As a trusted advisor, an MSP proactively pinpoints issues before
they evolve into risks, helps identify strategies and tactics that drive operational
efﬁciencies, and institutes processes that mitigate risks while sustaining high talent
quality at competitive market rates.
Conservative estimates project contingent labor
comprising 22% of the workforce by 2024.* Other
estimates place the ratio at around 50% within that
same timeframe.**
* Tyler Womack, “2014 Contingent Buyers Survey: Short-Term and Long-Term Contingent Workforce
Projections,” Stafﬁng Industry Analysts, May 22, 2014.
** “Freelancing in America: A National Survey of the New Workforce,” Edelman Berland,
Commissioned by Freelancers Union and Elance-oDesk).
“
“

6. SOW PROJECT-BASED LABOR.
An evolution in how contingent labor is leveraged is underway. The growth rate of
contingent labor as a percentage of the total labor force continues to increase—up
nearly 50 percent since 2009.12 But how contingent workers are used is also changing;
transforming from a largely tactical undertaking to a strategic business lever.
Companies hire contingent labor less and less frequently to fill temporary roles and
contract-to-hire opportunities; rather, they are turning to contingent workers to staff
well-defined SOWs that require a specified high-skill set or even offshore and
outsourced workers. FMS solutions simply cannot satisfy the talent requirements of
these multifaceted projects. Here, the capabilities of MSP and VMS present a compelling
value proposition.

CONCLUSIONS

An FMS-only approach is fraught with risks and missed opportunities for many
organizations leveraging larger subsets of contingent labor across multiple departments,
not to mention multiple countries. For small businesses leveraging small numbers of
contingent workers (less than approximately 20 to 30) across one or two departments, an
FMS-only solution might be the right ﬁt. However, for organizations using larger subsets
of contingent labor across multiple departments, not to mention multiple countries, an
FMS-only approach will not deliver the desired business outcomes—from risk
mitigation, to operational efﬁciencies, to cost reductions, to organizational transparency
and visibility.
An FMS-only approach simply cannot
address all of required business
outcomes of larger enterprises.
“
“

An FMS solution can be used to
augment the existing supplier network
of an MSP and VMS solution that is
used to contain costs and mitigate risks.
In these cases, FMS must be subsumed underneath the umbrella of a MSP and VMS
solution. Before selecting a contingent workforce management solution, companies need
to complete a thorough assessment of their current programs as well as their short- and
long-term strategies to leverage contingent labor. Organizations that fail to complete this
important step may encounter unexpected compliance risks, pay higher costs for
contingent workers than necessitated, lack a ubiquitous view of contingent labor across
the business, and incur operational inefﬁciencies that drain valuable time and resources.
“
“

About PRO Unlimited
PRO Unlimited, through its Vendor Management System (VMS) and Managed Service Provider (MSP) solutions, helps
organizations address the costs, risks, and quality issues associated with managing a contingent workforce. A pioneer and
innovator in the VMS and MSP space, PRO offers integrated, vendor-neutral solutions for e-procurement of contingent labor,
1099 compliance and audit support, and third-party payroll for client-sourced contract talent.
7777 Glades Road, Suite 208, Boca Raton, Florida 33434 | information@prounlimited.com | 1.800.291.1099 
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1 Robert Balicki, “2012 Contingent Buyers Survey,” Staffing Industry Analysts, July 11, 2012. | 2 Tyler Womack, “2014 Contingent Buyers Survey: Short-Term and Long-Term Contingent Workforce Projections,”
Staffing Industry Analysts, May 22, 2014. | 3 Womack, “2014 Contingent Buyers Survey.” The earlier projection by Intuit (“Intuit 2020 Report: Twenty Trends that Will Shape the Next Decade,” October 10, 2010)
that contingent workers will comprise 40 percent of the workforce by 2020 was overly optimistic. | 4 Robert Balicki, “2010 Contingent Buyer Survey: Does Using Contingent Labor Save Money, and If So How
Much?” Staffing Industry Analysts, June 8, 2011. | 5 Long-held negative connotations associated with contingent workers are quickly disappearing. Many in the “new” workforce embrace contingent work (cf.
Rawn Shah, “Is the Employment Relationship Keeping Up With Business?” forbes.com | 6 The primary focus of FMS o short-term labor requirements is made by Yvette Cameron and Deborah R. Wilson, “Getting
Ready for the Next Generation Workforce: Impacts of the Freelance Economy,” Gartner, January 2015, Document G00273874. | 7 Cameron and Wilson, “Getting Ready for the Next Generation Workforce”
make the analogy that FMS is the next generation of online staff platforms. | 8 See Tammy Erickson, “The Rise of the New Contract Worker,” Harvard Business Review (September 2012). | 9 It is unclear
whether most FMS providers deliver compliance capabilities or if they have simply leveraged third-party services to provide this service. For example, OnForce (an FMS solution), which was recently acquired by
Adecco and is being integrated into Beeline’s VMS offering, relies on a third-party compliance service (cf. David Francis, “The Rise of Freelancer Management Systems: Review of an Emerging Technology,” Staffing
Industry Analysts, October 17, 2014). | 10 Cameron and Wilson, “Getting Ready for the Next Generation Workforce” makes this observation. | 11 The combined Elance-oDesk claims its private talent network
consists of 8 million workers (see Francis, “Rise of Freelancer Management Systems”). However, the number of workers who are actively engaged versus simply logged historically is unclear. Other FMS providers
cite much smaller private talent networks. | 12 Tony Gregoire, “2014 VMS and MSP Landscape Summary Report,” Staffing Industry Analysts, September 15, 2014.
For more details on how PRO Unlimited can help you address your contingent workforce
management requirements, including how best to use freelancer marketplaces, contact PRO
directly at information@prounlimited.com or 1.800.291.1099.

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