Contingent Workforce Outsourcing
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- "CWO" redirects here. For other uses, see CWO (disambiguation).
Contingent Workforce Outsourcing (CWO) denotes a provider who facilitates clients' ability to aggregate and track spending, billing, and performance of more than one type of non-W-2 worker. This includes traditional temps and independent contractors and consultants.
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[edit] About
The size of the CWO market, according to the Bureau of Labor Statistics (BLS), is that nearly 10 percent of the U.S. workforce can be classified as contingent. The BLS predicts that the contingent growth will outpace FTE growth by a 3:1 ratio over the next 10 years, and that by 2010, nearly 25 percent of the U.S. workforce will be contingent or part-time.
The business trends behind the up-tick in contingent work are inexorable. Retired employees with valuable skills are now hanging out a shingle. Employees who want a flexible lifestyle prefer to work as consultants. Two of the largest and most-talented segments of the U.S. workforce, retiring baby boomers and Generation Xers, are foregoing full-time W-2 jobs and opting to work as contingents. In addition, multi-earner families where one partner has company-funded employee benefits make it possible for the other partner to work freelance. With business expenses fully deductible, a 1099er can live life at a much lower effective tax rate than her W-2 counterpart. But by hiring this valuable and cost-effective source of talent, managers are diving into a domain that is much harder to run than if all the workers are W-2ers.
CWO is a toolkit that has evolved to handle the non-W-2 business wave. As contingent workers continue to grow at a double-digit annual pace as a percentage of the overall workforce, companies are feeling an ever greater need to have tools to manage this quickly-growing phenomenon. Capturing and managing data that allows managers to see and control their entire contingent and full-time workforces is a complex task that is now possible with contingent workforce management or CWO tools.
[edit] History
Among the brave pioneers in this field, one standout is Gary Nelson. Nelson's firm ABE started in the mid 1990s, ABEs innovation was to run 1099ers through a 1099-compliance screen. Based on the IRSs 20-question test, ABEs screening service gave employers a way to test their contractors compliance. If the contractors passed the test, they stayed independent. If they failed, Nelson ran them through his W-2 payrolling service, charging a small markup over the wage and mandatory payroll tax. Nelson, owner of San Francisco-based Nelson Personnel, a $230 million temp service group, knew this was a nice little fix but less than the whole answer. He knew they needed a technology platform that would allow larger employers to track 1099ers, temps from several providers, and other contractors that seemed to breed like rabbits throughout the organization. His ultimate solution is called WorkforceLogic, and it enters a field that is brimming with potential and potential competitors.
