A new NPR/Marist poll has revealed that one in five jobs in the US is held by a worker under contract. It is expected that independent contractors could consist of half of the entire workforce in the US within the next 10 years.
An increasing number of organisations are beginning to see contractors and suppliers as valuable business partners intrinsic to driving service and product innovation. For an increasing number of companies, operating in highly regulated industries and managing compliance in-house for all of these suppliers can be burdensome. Avetta has released a whitepaper called “The ROI of Streamlined Contractor Qualification and Management” that finds out more.
The hidden costs of ignoring contractor management
When an organisation’s compliance function is effective, its success is often quantified by what didn’t happen: lawsuits, damage to reputation, lost business, legal sanction and so on. The absence of any compliance-related incident often makes management complacent about compliance. Due to this some of the function’s budget could have to be reallocated to fund activities that are perceived to have a better impact on shareholder value and earnings. However, with a focus on anti-corruption laws and workplace safety policies intensifying globally, such a stance carries significant risks.
The rise of the extended enterprise
Until the recent past, most organisations viewed contractor and supplier relationships predominantly as a convenient way to reduce costs, and not as drivers of business value. However, an increasing number of organisations see contractors and suppliers as valuable business partners who are intrinsic to driving service and product innovation, as part of the extended enterprise.
Offsetting third-party risks to drive value
Organisations often approach contractor and supplier management on an ad-hoc basis with point solutions. Such solutions only address specific challenges such as regulatory mandates when they arise, without a thorough, cross-enterprise approach to compliance management.
Costs of in-house contractor compliance management
In most organisations, contractor and supplier management is highly fragmented and requires a great deal of effort, this also makes it expensive for the organisation. For instance, the pay of an experienced full-time employee for a single function could be between $70,000 and $75,000.
Paper-based processes and disparate system make for compliance silos, with separate teams in place to address compliance requirements for different departments or regions. This results in unnecessary duplication of manual effort and the growth of a complex ecosystem of data records that are hard to maintain.
The cost of procrastination
For lots of companies, especially those operating in highly regulated industries like O&G, chemicals, and pharmaceuticals, managing compliance in-house can be ineffective. But the cost of non-compliance, in the form of penalties, fines, productivity losses, settlement costs, and inefficiencies - is ruinous.
Toward holistic compliance and governance
It’s clear that the costs of non-compliance and inefficient contractor management can quickly escalate. One way for organisations to effectively minimise costs and manage risks is by working with a company like Avetta. The company’s innovative and configurable technology brings complete transparency to its supplier management process and clients vouch for our trusted contractor prequalification, safety training and monitoring, and regulatory compliance services.
Avetta ensures that contractors are qualified, information is managed effectively, the risks involved are evaluated as well as training and upskilling of contractors are completed.
Where’s the ROI?
Telecom major SBA Communications subcontracts repair and upgrade services to a network of almost 2,500 independent contractors. Without a central database, the company had to manually check for compliance with safety regulations with safety regulations and insurance requirements.
Aveta’s solutions allows organisations to initiate a more comprehensive review of a supplier and contractor data. This data is not stored in silos but captured in a centralised platform which allows you to constantly review each contractor and their associated audit trails.
To read the full whitepaper, click here!