The Ultimate Guide To Building A Business Case For Contingent Work

​ Table of Contents

1. Creating Excitement
2. Output Increases
3. Cost Savings
4. Secondary Benefits
5. What Do You Do Now?

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The Case for Contingent Work

The utilisation rate of the contingent workforce is growing. Expert360's Getting Trendy report establishing that by 2020 80% of large companies in Australia will be using freelancers to fill skills gaps "most of or all the time" and many companies are moving to a more agile structure, enabling freelancers and contractors to step in at any time. However, many businesses are finding their way in the on demand economy and figuring out the best tools to use and how to manage the people involved. According to Workmarket, 73% of businesses are still managing their contingent workforces manually with "Excel and Spreadsheets".

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This is the number one way to manage freelancers. In the majority of businesses (43%), HR is the department that is responsible for setting up new tools, including freelancer management technology like Expert360.

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Figure 1.1: How Companies Are Managing Contingent Work[/caption] For advocates and supporters of increasing the use of contingent workers in your business, it is critical to develop a business case that will encourage buy in from all key stakeholders - from employees to c-level executives. Critically, there are four key elements to building this business case successfully:  Create excitement about the potential opportunity; estimate output increase; estimate cost reduction; outline secondary benefits. This piece will detail how your build your business case to colleagues and superiors and, importantly, define one of the key steps in your movement towards a contingent workforce.

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1. Creating Excitement

Creating excitement among your colleagues and superiors is one of the best ways for you to push your business case. But how do you create this excitement? One way to build excitement is through knowledge sharing and showing off how well supported your move to a contingent workforce is by thought leaders. Empirical research and expert opinion is at the highest level and helps you engage the most senior stakeholders of a decision. Choose sources and individuals that command respect among your audience.

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Figure 2.1: Examples of sources that will command the respect of your superiors.[/caption] It's important that when creating excitement you paint the “view from the top” picture at a level that resonates with key influencers and decision-makers. 

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​​Figure 2.2: Impact of online freelance marketplaces across sectors. Source: McKinsey[/caption] By building excitement through an overview of the problem you're trying to solve and your innovative solution (backed up by reliable sources) you will have a great grounding for your business case.  

2. Output increases

When building a business case for increasing your company's use of the contingent workforce it is important to focus on how much it will allow you to drive business outcomes using less effort. A good starting point is calculating the extent to which new technologies can help you.  

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How the output of your business might increase from contingent work

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Calculations for how contingent work will increase outputs

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3. Cost Savings

Tapping into the contingent workforce can be a huge cost saver, which can be a convincing argument when presenting your business case. You could even enlist the help of an expense reduction analyst here at Expert360 to assist you with determining your true savings. For example, the use of contingent workers can save you money by: Reducing churn This includes costs associated with: ○ Direct exits ○ Sourcing candidates ○ Hiring and onboarding ○ Training ○ Administration ○ Lost productivity ○ Lost expertise Reduced cost associated with projects that go over-budget, over-time or do not achieve KPIs  - due to the lower overall costs associated with freelance and contingent work. Reduced redundancies - by not hiring full-time employees for skills that may not be needed in 6-12 months. Reduced consulting spend - Typically one of the largest buckets, using freelance talent marketplaces can reduce spend by 80% compared to firms when it comes to implementing project work  

Deep Dive: Presenting Your Business Case Based On Cost Savings

If you are looking to build your business case on the back of the cost saving measures that are associated with contingent work, this section will be useful for you. In this example, we will establish our goal and lay out some key assumptions for the business case.

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We'll then look at some key cost savings for the example business.

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Example Goal:

• Reduce consulting spend by 40% from $40M to $24M across organisation over next 18 months across strategy, HR, Marketing, Technology, M&A, Operations.

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Key assumptions:

• Project implementation oriented work can be shifted from firm to contractor and business management consultants

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Types of projects included in addressable cost base:

• Additional capacity required
• Additional expertise required
• Project leadership, management or
• delivery Cost Saving Assumptions

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​​ Figure 4.1: Key savings assumptions[/caption] Solution: Shift 30% of consulting work from firm to direct sourcing, achieving 65% cost savings.  

Deep Dive: Reducing Turnover & Associated Costs

If you're aiming to present your business case with the lens of reducing costs associated with turnover, this example will be of use to you.

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Turnover incurs costs including:

• Direct exit costs
• Sourcing candidates
• Hiring and onboarding
• Training
• Administration
• Lost productivity
• Lost expertise ​​

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Example Goal:

• Reduce turnover by 10%

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Assume:

• Company size = 5000 employees
• Reduce turnover by 10% (from 11% annually to 10%)
• Positions are mid level of salary
• Mid-level employees are paid $70K

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Business case: 

• Churn moves from 550 per annum to 500.
• 50 new retained employees vs. base case
• Run-rate savings = 125% * 50 * $70K = $2.5M

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Figure 4.2: Demonstrate the size of the prize (in run rate savings)[/caption]

4. Secondary Benefits

There are a number of secondary benefits associated with using contingent workers, freelancers and independent consultants which can further push your business case.

These can include:

●  Enhanced decision-making through better quality data

○ Ability to identify issues - hard or soft

○ Take action

○ Measure outcomes

● Access to the best talent

● Greater employee engagement internally

○ Diversified culture ○ Flexibility options - retain best and brightest women in particular

● Stronger CVP (Contingent Value Proposition) and therefore increased overall EVP in the market where war for talent is high  

What Do You Do Now?

Now that you are armed with some examples and reasons for using increasing your company's use of the contingent workforce, you should be ready to present your business case. Remember to use real life examples where your business may have benefitted in the past from establishing contingent workforce and infrastructure, rather than going the permanent route. Some examples include:

• A large round of redundancies
• A project falling over/going over budget

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You may find that some of your colleagues and superiors may not buy in. That's okay - they will get there in time. Ensure that you lean on advocates to support you, whether this is a co-worker, a freelance friend or even one of Expert360's team. Keep up your energy and enthuisiasm, knowing that your contribution will make a significant difference to the way your business functions and, in turn, boost your career trajectory.