How To Achieve Millions In Contingent Cost Savings
By Meredith Bryan
Work as we know it is constantly evolving. But one thing is certain: America’s burgeoning temp workforce is here to stay. Hiring and managing these employees has become a top priority for C-suite executives as contingent workers help organizations scale flexibly in a dynamic environment.
As a company’s temp workforce expands, so do opportunities to drive cost savings. But sourcing flexible workers at the right price—and then training, managing, and maintaining that workforce while mitigating risk—is a complex challenge.
Read on to learn how two companies turned to an outside partner to transform their talent acquisition and people management strategies — and saved millions.
Case Study 1: An American multinational technology company cuts its costs by $25.7 million
A manufacturer of glass, ceramics and related technologies such as Advanced Optics – which we call Company X – has built its industry-leading reputation by staying ahead of workforce trends, including utilizing a diverse workforce that included both full-time and temporary workers .
However, the growing number of flexible workers presented challenges in tracking employee workloads across locations, establishing an appropriate employee classification system, and streamlining procurement practices. To manage them, Company X needed a partner with the resources and expertise to oversee all aspects of their temp workforce. The workforce management platform Magnit is “vendor-neutral”, i.e. not connected to personnel service providers. Company X liked that Magnit’s approach allowed for competitive sourcing of top talent, as well as cost savings and risk reduction. The company has selected Magnit as the sole supplier for its temporary staffing scheme.
Magnit set to work to develop an innovative, bespoke temporary workforce management strategy that addresses Company X’s specific challenges, including labor sourcing, a desire to increase workforce visibility, and a methodology for Mitigating the risks associated with worker classification.
In less than five years, the results were overwhelming: Company X achieved $25.7 million in cost savings, filled 130 vacancies and overhauled its entire talent scouting process. Here’s how Magnit and Company X did it:
- They eschewed a one-size-fits-all approach. Instead, they implemented an entirely new program tailored to Company X’s needs. To design this program, Magnit consulted and worked with key stakeholders to identify real challenges and develop creative, purposeful initiatives to address them.
- They have created their own private Talent Cloud. Company X needed highly skilled temp workers, so Magnit helped them launch their own invitation-only talent cloud. This screened talent pool comes from former full-time employees, retirees, near-hires and other employees known to the organization. It allowed Company X to streamline its hiring while reducing the risks associated with untested workers.
- They saved “pocket change.” Magnit conducted a thorough review of contingency rates and made market rate adjustments where necessary, resulting in a 5% reduction in billing rates, saving Company X nearly $1 million.
- They minimized the risk. Magnit also conducted a compliance analysis of all of the company’s temporary workers and supplier network – including 66,000 purchases – to identify and weed out risky practices and vendors, as well as rogue spend.
Overall, the customized temp workforce management strategy helped Company X maintain its competitive edge and save millions of dollars in a tight labor market. (Related: Reduce costs while maintaining the quality of talent)
Case Study 2: ServiceNow Reduces Labor Spend by 17.5%
ServiceNow is a global cloud-based technology company providing software-as-a-service (SaaS) technical management support solutions. Highly skilled external labor has long been key to supporting business scaling. But finding the right talent at the right price has become increasingly difficult. In addition, ServiceNow wanted to attract diverse talent to bring new perspectives and experiences. Here’s how Magnit and ServiceNow achieved this:
- They used technology to improve talent acquisition. ServiceNow needed advanced technology and top-tier market intelligence to overhaul its entire talent acquisition strategy. That’s why ServiceNow chose to implement Magnit’s holistic, integrated platform, leveraging its Pay Intel technology and strategic consulting team to inform hiring managers about market supply/demand and pricing policies.
- They improved diversity and reduced costs. ServiceNow used Magnit’s extensive data archive to compare the cost and supply of skilled labor in its local offices to other locations around the world, then saved money — and diversified its talent pool — by sourcing talent from previously untapped locations.
- They saved money in contract negotiations. An on-demand rate benchmarking feature enabled ServiceNow’s purchasing team to save even more money on contract negotiations. The Magnit Strategic Advisory team also served as trusted advisors, providing industry-specific expertise and best practices.
The results were crucial: Magnit helped achieve ServiceNow 17.5% savings from labor while significantly reducing the number of days it took to fill each position (by 7.7 days on average). They expanded their access to diversified and highly qualified talent pools and improved their decision-making in relation to workforce planning.
“We’ve been able to leverage Pay Intel not only to diversify our talent pool, but also to achieve significant cost savings,” confirms Steve Mendez, global quota solutions manager at ServiceNow, “by leveraging on-demand rate benchmarking so that we could appropriately could budget. “
For more information on leveraging talent intelligence to drive cost savings and other benefits, see these resources:
- Magnit Ebook: Preparing for Economic Uncertainty: Resilient People Strategies
- SIA White Paper: Talent Intelligence as a Strategic Advantage
- Magnit White Paper: Leveraging Five-Star Data to Achieve Massive Cost Savings