In the drive to retain and grow market share, businesses are turning to the external workforce – nonemployees who provide fast, flexible access to specialized talent, sought-after skills, and on-demand capacity. But according to SAP research in collaboration with Oxford Economics, persistent undermanagement of these workers is rampant – and at a huge cost and risk to businesses.1
External workers represent 42% of total workforce spend
42%
of workforce
spend is on
external labor
Contingent
workers
24%
Service
providers
18%
Employees
58%
Contingent workers
  • Freelancers
  • Temporary labor
  • Independent contractors
Service providers
  • Consulting firms
  • IT outsourcers
  • Marketing agencies
  • Law and accounting firms
  • Facilities management companies
  • Operations and maintenance firms
  • R&D companies

These powerhouse nonemployees operate at the center of your business, unlocking speed and flexibility to propel your business forward

Executives can use them to swiftly access diverse talent and sought-after skill sets (such as specialized digital skills) and add extra capacity, which they use to realize critical business goals.

Percentage of executives who say the external workforce is “important”
or “extremely important” in meeting business goals

Managing costs
73%
Operating at full capacity and meeting market demands
73%
Improving the customer experience and client satisfaction
70%
Increasing organizational agility
64%
Reducing risk
64%
Increasing speed to market
62%
Developing or improving products and services
58%

But external workforces – and the spend they represent – are often siloed and routinely undermanaged

Part of the problem is that companies don’t have the right technology.
Traditional procure-to-pay solutions used to manage
contracts and POs often don’t help businesses:
Manage security and compliance
Monitor quality and timeliness
of work against project plans
Prevent overcharges, duplicate
invoices, or unauthorized spend
Classify workers correctly
Only
35%
of executives say they
have technology for
contingent workforce
management.

When you proactively manage your external workers, you mitigate risks and maximize value for your business

For example, companies that manage their extended workforce holistically and proactively experience far fewer issues with their external workers.

Percentage of executives who experience the following issues
“sometimes, frequently, or in nearly every engagement” with their:

Leader
Other executives

Contingent workers

Digital security breaches
27%
47%
Unauthorized spend without approval
from procurement
3%
40%
Overcharges and duplicate payments
3%
35%
Misclassified workers
0%
32%

Services providers

Digital security breaches
20%
40%
Unauthorized spend without approval
from procurement
3%
40%
Overcharges and duplicate payments
3%
34%
Late projects, missed milestones, or incomplete work
3%
36%

Is your procurement organization holistically and proactively managing its extended workforce?

Here’s a simple test: Can you easily answer the following basic questions?

WHO are your
contingent workers or
service providers?

WHAT IT systems,
facilities, and data
can they access?

WHAT do they do
for your organization?

WHAT is the quality
of their work?

WHERE are
they located?

HOW much
are you spending
on them?

HOW compliant are
they with regulatory
and corporate policies?

If not, it’s time to modernize how you manage your external workforce. Because
the fact is, you can’t manage what you can’t see – or achieve important goals
such as maximizing return on spend or mitigating external worker risks.

Here’s what effective management looks like

With the right vendor management solution, you can actively and holistically manage your
external workforce to get every bit of value from this powerhouse resource – all while reducing
risk. For example, customers using SAP Fieldglass solutions report improvements such as:2

2%

Overall savings through dynamic
rate management

3%

Savings on overall project
spend

3%

Savings through effective compliance

63%

Improvement in worker quality

30%–65%

Process efficiency improvements
for reduced cycle times

80%

Reduction in invoice errors

Want to learn more?

Read the infographic, “Taming the Wild West of
External Workforce Spending,” to explore the risks
and costs across key areas of your business – and
learn how you can influence what happens next.

Download PDF
  1. “Agility Isn’t Always on the Payroll: Gain Full Visibility of Your
    External Workforce to Help You Drive Better Business Outcomes    ,”
    Agile Procurement Insights Research by SAP in collaboration with
    Oxford Economics, 2021.
  2. SAP internal research.