Taming the Wild West of

External Workforce

It’s easier to do than
you think. Here’s why.

Download pdf

In a postpandemic world, it’s more important than ever to have
fast, flexible access to extra capacity and sought-after skill sets.

That’s why, according to Agile Procurement Insights Research by SAP in collaboration
with Oxford Economics,* external workers such as contingent workers (including consultants,
freelancers, and agencies) and service providers typically make up 42% of total workforce spend.
The external workforce operates at the core of the expertise.
More than half of executives (55%) say their company would be unable to conduct business as usual without an external workforce.
of workforce
spend is on
external labor
Together, these on-demand resources make up the external workforce –
and play a vital role in business agility and resiliency.

But traditional “Wild West” approaches to sourcing and managing external workers can lead to misinformed assumptions with unintended consequences.

When business functions are free to find and contract with external workers using statements of work (SoWs) and POs – without the structure and rigor provided by a vendor management system – it can lead to unintended business consequences. Perhaps you’ve heard statements like the following ones before. But are you aware of how these ways of thinking can hurt your business?

Signed SoWs and POs are just documents – not intelligent tools that help managers find the best talent, get the most value, track spend against budget, and mitigate risk.

So it’s no surprise that business functions relying on SoWs and POs
report significant challenges managing and extracting value from their
external workforce. These are signs of persistent undermanagement.





  • Difficulty filling talent requests promptly
  • Long onboarding cycles that delay worker productivity
  • Poor compliance with local labor laws, industry standards, and policies
  • Improper worker classifications
  • Limited insight into worker performance
  • Difficulty enforcing tenure limits in different countries
  • Limited insight into future skill and capacity needs
  • Inability to ensure external workers feel valued and included

The good news is that taming the Wild West of external workforce management is easier than you think. You just need the right point of view – and the right technology.

When you take an enterprise view rather than a functional view of external workforce management challenges, it’s easy to see common needs and goals across them. Everyone is looking for a way to:
Budgets icon
Build more-accurate budgets for external worker spend
Accurately monitor actual spend against budget
Quality icon
Assess service quality and timeliness against project plans to make better spend decisions
Cost icon
Reduce project costs
value icon
Get as much value as possible from their external workers – right from day one
compliane icon
Reduce compliance and safety risks
evolving icon
Increase agility to meet evolving business needs
help icon
Help ensure external workers feel valued and included

Procurement can address all these needs and goals by
defining the right enterprise strategy and operationalizing it
with a vendor management system (VMS).

Regardless of whether your department currently focuses more on contingent labor or
service providers, in the end, both categories are part of the broader external
workforce and need holistic, proactive management.
With the right strategy and
VMS designed to support all types of external workers, procurement can add value
to every department
– and play a key role in driving better business performance.

Free download

Download a copy of this infographic “Taming the Wild West of External Workforce Spending
Download pdf

Ready for the next step?

Assess the current state of external workforce management in your organization using our quick diagnostic tool. Answer the short survey and you’ll then receive personalized next-step recommendations from experts at SAP.

*Source: “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.