Across pretty much every industry, businesses are under intense pressure. Increased tariffs, rising labor costs, and a volatile economic landscape are squeezing margins tighter than ever.
For organizations reliant on large workforces — especially in logistics, retail, manufacturing, and facilities management — it’s well worth considering: how do you control costs and maintain workforce stability, while dealing with the issue of unpredictable demand?
The answer may well lie in contingent staffing technology. By turning to automation, real-time workforce visibility, and vendor management tools, businesses can streamline operations and improve workforce performance at scale.
According to ALFRED, labor costs make up around 60% of the overall cost of production of US economic output across nearly all sectors, meaning even a small percentage reduction in workforce spend can help businesses to save millions per year.
The hidden cost of poor workforce visibility
Many organizations fail to realize just how much they’re spending — or where that money is going. Disjointed staffing systems, manual processes, and a lack of workforce data create blind spots that make it almost impossible to manage costs effectively.
- ✔ New labor regulations and labor cost increases are eating into already thin margins. Without precise tracking of agency fees, overtime expenses, and worker classification, businesses are overspending without realising it.
- ✔ Attrition and turnover rates remain high, leading to constant rehiring and retraining costs. The average cost of replacing a worker can be between six to nine months of their salary, adding unnecessary financial strain.
- ✔ Vendor and agency performance is inconsistent, with some suppliers delivering low-quality candidates at inflated rates, further driving up costs.
The first step to addressing all of the above is by gaining real-time visibility into staffing performance.
A centralized workforce management platform allows procurement, finance, and operations teams to identify underperforming vendors, spot unnecessary costs, and deploy workers more effectively.
Where technology delivers cost savings
Investing in contingent workforce technology provides a direct route to far better cost control. Research from Deloitte found that organizations using AI-driven workforce analytics reduced staffing costs by 15-25%, with measurable gains in productivity.
Examining vendors and agency performance
- Track fulfillment rates, worker retention, and compliance across all vendors in a single dashboard.
- Identify high-performing suppliers while eliminating agencies that consistently provide low-quality candidates, are slow to respond, and inflate fees.
- Consolidate vendors and negotiate better rates based on performance data.
Contract consolidation and smarter spend control
- Standardize agreements across vendors to avoid unnecessary markups and hidden costs.
- Reduce the risk of inconsistent pay rates that lead to wage inflation and worker dissatisfaction.
- Implement bulk contracts for more predictable workforce costs.
Streamlining onboarding and compliance
- Automate worker onboarding to reduce time-to-productivity and heavy manual admin.
- Ensure proper classification of workers to avoid co-employment risks and compliance fines.
- Implement digital compliance tracking, so all workers meet legal requirements before they start.
Improving attrition rates and stability
- Use predictive analytics to identify sites, departments, or roles with high turnover and intervene before problems escalate.
- Offer structured career pathways for contingent workers to improve retention and engagement.
- Reduce constant rehiring by ensuring the right fit up front, with AI-driven workforce matching.
Why this matters in low-margin industries
For businesses operating on tight margins, every additional cost has an impact on your ability to operate effectively.
But you can reduce these costs by using real-time workforce analytics, allowing you greater control over labor spend and vendor management.
In doing so, you can:
- ✔ Cut excess labor spend by identifying overstaffed or underutilized locations.
- ✔ Reduce agency reliance and gain more control over workforce costs.
- ✔ Increase workforce productivity by ensuring the right people are in the right roles.
- ✔ Improve retention and reduce hiring churn — saving both money and time.
When procurement, finance, and operations have full visibility into staffing performance, they can make data-driven decisions that, ultimately, drive profitability.
The future of workforce management is data-driven
The best-performing companies are already using workforce technology to reduce overall labor costs and ‘trim the fat’. With real-time insights, automation, and smarter workforce planning, organizations can also improve agility, and build a high-performing, stable workforce, ready to deal with fluctuating demand across the course of the year.
Find out how you could take control of your own workforce costs and book a demo with us, today.
