KellyOCG: A Strategy For CWO - Todd Palmer

Companies looking at outsourcing the management of their contingent workforce need experienced service providers that can save them money. Todd Palmer of KellyOCG tells Jim Banks how a strategic view of outsourcing the management of temporary staff can give companies the flexibility they so badly need.

One of the effects of the economic downturn has been the emergence of hotspots in the outsourcing market, as companies try to focus on their core business and strip out costs. One area that has garnered great interest in the last year is contingent workforce outsourcing (CWO), as organisations seek efficient ways to manage external suppliers of temporary staff.

For some large companies these workers – be they freelancers, independent professionals or temporary contract workers – play a crucial role in their business model, and many have put in place contingent workforce management (CWM) strategies to control costs and mitigate the risk of employing them. The transition from CWM to CWO is gaining pace.

Providers of CWO services help their clients track spending and monitor the performance of temporary workers. While CWO was already in demand before the economic crisis took hold, it remains relevant to many organisations looking to restructure to become more agile.

Cost cutting has become the engine for growth in the CWO market, but service providers warn that cost control must be targeted within the context of a long-term contract.

‘Growth in CWO has been rapid, particularly in this economy, and outsourcing in general has picked up speed. Companies that may not have thought about it before are doing it to drive out costs and offload what are not core competencies.

While cost is the dominant factor, going for the cheapest option will only bring other problems,’ says Todd Palmer, head of KellyOCG’s EMEA Region Centre of Excellence for Contingent Workforce Outsourcing. ‘Cost is certainly the leading driver, but there are risk mitigation drivers too, such as latent availability, control of spend, and reporting and information availability. These priorities are different for each company and each location, and they are constantly shifting,’ he adds.

KellyOCG is the specialty outsourcing and consulting division of global staffing giant Kelly Services, a firm credited with both creating the temporary staffing industry some 60 years ago, as well as continuing to innovate the model into new areas such as CWO.

It delivers managed service programmes to large and medium-sized companies worldwide. In the last ten years the firm has built a successful track record of vendor-neutral solutions that deliver service excellence and tangible business benefits to its clients.

For companies such as KellyOCG, the ongoing growth in demand for CWO is good news, but it does bring its own challenges, and service providers will need to call on all of their experience to respond to greater pressure from clients.

‘CWO is a growing area, but the flipside is that customers are becoming more demanding in terms of how services are delivered. We must control the cost of running applications with the more lofty ambitions of our customers,’ says Palmer.

Strategy over tactics

Some commentators on outsourcing trends have raised fears that hasty decisions over cost control might see companies return to the impetuous, ad hoc approach that typified the early days of the market. Palmer points out that in CWO such an approach simply will not fly.

‘From the outset, clients must accept that while CWO can deliver cost savings it cannot be entered into overnight, and must be approached with a firm idea of how to create long-term value,’ he says.

‘Customers are still looking at this strategically. There is too much pre-work that needs to be done before implementing a CWO programme for it to be even a short-term measure.

‘It takes six months just to plan it properly, so you can’t go into it with a time horizon of one year. It is a long-term, strategic issue that touches places high up in the decision-making hierarchy of any organisation that undertakes it.’

Given the strategic importance of CWO for many large companies it is no surprise to see clients favouring the experienced service providers that have a track record of success.

It would therefore seem that they have not reverted to the bad old days and are able to keep CWO rooted in a strategic context. With longevity of experience come established relationships with suppliers, which are crucial to any service provider’s value proposition.

‘The big things that we offer are experience in the market, our global footprint and our collaboration with suppliers. Success depends a lot on how we manage and interact with the suppliers who provide the talent,’ says Palmer.

With strong supplier relationships comes the ability to offer clients a more flexible approach to sourcing contingent workers, which is especially important in the prevailing economic climate, where the ups and downs of business are accentuated by a high level of volatility in many markets.

‘Our programmes evolve over time. They are not static. They can change in line with our customers’ needs, which means they can be compressed as well as expanded,’ Palmer says.

He believes it is vital that suppliers and service providers have a shared understanding of market dynamics.

‘One way in which we maintain the right level of flexibility is by having pools of talent that can move between programmes, which is advantageous for our customers,’ Palmer explains.

‘New people can bring fresh perspectives and experience in other programmes. We can also respond to the internal decisions made by senior leaders in a business in a way that does not affect overall programmes.

‘We build the potential for change in future resource levels into our forecast in the early stages of a deal.’

Confidence in close relationships

Working closely with partners is critical to the success of CWO, but for Palmer it is equally important to be close to customers in order to balance cost reduction targets with long-term value.

‘The programmes that work best are those where the customer is involved in the forecasting and planning stage. It helps us to anticipate the upticks and the downturns in demand,’ he says.

He sees many companies making good use of CWO, especially in industries such as car manufacturing, pharmaceuticals and technology, which have in the past shown a willingness to embrace outsourcing in many different forms. However, he also

sees companies from many other business sectors considering CWO for the first time, and stresses that their choice of service provider will be a major factor in determining success.

Furthermore, he feels it is especially important to stress the value of experience as there are many entrants trying to break into the market for CWO services.

‘The market is becoming more competitive and traditional temping companies are moving into CWO, but they are doing so out of necessity as their traditional market is drying up. The problem they face is that there is so much pre-work and planning that goes into the implementation of a programme, and if a company has no experience of this then some important details can be lost,’ observes Palmer.

‘The companies that go to those service providers will effectively be guinea pigs and may suffer, especially where customers do not want to be a training tool for a service provider but instead want the right results. We have been in this business for a long time and have been involved in many firsts in the sector, so our experience drives our quality. We have already learnt our lessons.’

He does not rule out the prospect of a service provider succeeding in the CWO space, however, but sees most newcomers to the market facing an insurmountable challenge.

The swell of interest in CWO is echoed by a flight to quality, hence the upsurge in business for KellyOGC and the success of its clients in balancing cost reduction with confidence in their service provider.