On Average, 44% of an organisations workforce is external.

While I’ve been working with global organisations, picking on the ones that have a strong IT focus, I’ve seen an average external workforce split of around 90% SoW (Statement of Work) – 10% Contingent.

When you start drilling further into the reality and start getting the visibility of how a customer manages their external workforce, this is where the fun begins (Me, being a procurement guy, I geek out 😊 €$£ + risk)

Misclassification of workers is one of the greatest opportunity areas to reduce risk and make savings.

My explanation of misclassification is: “as soon as the Customer provides direct work instructions to an external worker that is provided through a SoW, it is deemed as supervision”.

What this can mean contractually and commercially to a SoW:

·       Liability – the delivery and liability clauses that you spent weeks negotiating are out the window, and the responsibility can transfer back to the Customer

·       Risk – If anything happens to the worker or if the worker does fraudulent activities, the responsibility can move back to the Customer

·       Legislation – This can be Country dependant, but there are cases where the Customers become liable for the Workers tax payments and in some cases had to hire the worker (deemed employed)

·       Cost – Potentially you could be paying SoW delivery prices for a supervised worker.

On SoWs, I have seen mark-ups between 20 to +40% applied

Imagine this. You had 100m of Spend on SoWs. Suppliers on average were applying a 40% delivery / at risk mark-up. But you found 20% of the SoWs were misclassified and should be sitting within the Contingent Workforce Category.

Do the math. There is your business case for change.