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Agency Labour Cost Reduction: 5 Top Tips to Ensure Success

26 April 2023

Temporary workers can significantly benefit your organisation but if you are not careful, the cost of contingent and temporary labour could end up costing your company more than you anticipate. Contingent and temporary labour is one of the most expensive indirect procurement categories and it is often the most overlooked too. If you want to reduce costs in contingent and temporary labour spend for a better the return on your investment, you must look at strategies to maximise your contingent workforce cost savings.

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Here our top 5 tips to ensure a successful contingent labour cost reduction:

1. Consider an MSP and ensure supplier optimisation

By streamlining your contingent workforce operations, an MSP can help you start saving time and money right away. An MSP manages every aspect of contingent and temporary labour recruitment like-payroll, taxes, analytics, compliance, and more in one place. All recruitment agency suppliers are subject to the same contract terms, rules of engagement, and delivery guarantees, bringing consistency and savings to the supply chain process.

Incorporating fair and consistent rules of engagement into supplier agreements, MSPs assist in benchmarking rates, screening candidates to ensure legal compliance, and leveraging supplier relationships to negotiate the best terms. Service enhancement is driven by ongoing evaluations of supplier performance and supply chain optimisation.

2. Consider auditing your recruitment agencies

By reviewing the processes, systems, and records in place for each recruitment partner, you can ensure ongoing compliance and that your agencies have everything they need to meet the standards you deserve by performing regular audits (every six months). Audits protect your brand and its reputation by ensuring that all legal and best practice checks are carried out on a regular basis.

3. Ensure your recruitment agency suppliers are not overcharging you

An MSP will select the best recruitment agency suppliers based on a client's existing preferred suppliers, a panel of agencies will be proposed and agreed upon, reducing the risk of change. The agencies will be assessed based on process, financial stability, geographic coverage, and legal compliance, and a panel of suppliers will be selected for each site, business unit, or division. When there is a shortage of suppliers, new ones will be proposed based on previous experience. An MSP will ensure you are not being overcharged.

4. Be more involved in the process

Ensure that you are informed and involved at all stages of the process. It is critical to maintain a good communication flow between MSP and agencies so that they understand what you are looking for, where they are going wrong, and how to mitigate risks early in the process.

5. Ensure legal compliance

If you are found to be employing someone illegally in the UK, you may be subject to a civil penalty of up to £20,000 per illegal worker unless you can demonstrate that you have conducted a right to work check in the required manner.

An MSP runs each candidate's information through a software programme to verify their eligibility to work in the UK, driving records, health and safety training, and tenure in accordance with Agency Workers Regulations requirements, as well as ensuring they are paid correctly.



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