Contractor Management Outsourcing (CMO) is on the rise in the global expansion industry. This expansion solution allows companies to delegate the tasks of managing a contingent workforce to a trusted partner. Here we define contractor management outsourcing, explain why you should consider a CMO solution, and set out the usual process employed by a CMO provider.
1. Independent contractors are a useful source of talent for expanding businesses.
2. While it is possible to manage independent contractors in-house, there are significant savings and efficiencies that can be made by outsourcing the task to a specialist Contractor Management Outsourcing (CMO) company or provider.
3. Any business considering a CMO solution should seek advice from professionals as to whether other expansion solutions, such as Employer of Record solutions, would be more appropriate.
What Is Contractor Management Outsourcing?
Contractor Management Outsourcing (CMO) transfers a business’ contractor management to another provider outside of the company.
CMO, sometimes called, contractor management services, is a form of Business Process Outsourcing (BPO): A business can outsource a range of processes, such as recruitment, payroll and human resources. When contractor management is outsourced, the contractor management service provider takes over the contractual discussions and sets up the relationship with the contractors. The contractor management service provider acts as an intermediary between contractors, contingent workers and the client business.
Contractor management services may also include management of payments to the business’ partners.
Contractor Management Outsourcing is related to, but separate from, payroll outsourcing, which involves outsourcing payment processing for employees rather than contractors. You can read more about payroll outsourcing at Top 5 Benefits of Outsourcing Payroll.
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Why Do Companies Use Independent Contractors?
In a range of industries, such as the tech industry, hiring contractors has become the most common form of engaging workers. Contractor management outsourcing will only be of interest to businesses that choose to use independent contractors (in the US, commonly known as ‘1099 employees‘), so why would a business choose to engage workers in this way? Benefits of using independent contractors include:
For more information on the benefits of using independent contractors see What’s the Difference between Employees and Independent Contractors?
Why Should Companies Use Contractor Management Outsourcing Services?
Contractor Management Outsourcing is a strategic model that was developed to keep up with the expanding market of independent contractors. What are the advantages of outsourcing contractor management, as opposed to carrying it out in-house?
What are the Potential Cost Savings from Contractor Management Outsourcing?
Aside from the benefits listed above, as with all BPO services, cost is a major consideration. There are many ways that using contractor management services can save your business money, including:
What are the Challenges of Contractor Management Outsourcing?
With the benefits of contractor management outsourcing in mind, it is still important for businesses to consider whether there are any potential downsides to outsourcing this function:
What Does the Contractor Management Outsourcing Process Look Like?
When you engage a CMO provider, the process used by the provider will usually proceed as follows:
What Needs to be Considered Before Using a Contractor Management Outsourcing Company?
If you are contemplating using contractor management outsourcing services, it is important to perform a stocktake of your existing contractor arrangements. This will help you establish the type of CMO services that you need. Some things you should consider include:
Looking for Support with Global Contractors? Reach out to Horizons for More Information
Engaging a CMO provider has many benefits for any business that uses independent contractors or freelancers. The CMO provider provides contract management expertise, cost savings, flexibility and greater efficiency.
CMO provider can help businesses scale their companies in a way that minimizes hassle and makes the most out of outsourced work. This is especially true when a business is expanding internationally.
If you would like more information about Horizons and our CMO solutions, contact us today.
Frequently Asked Questions
Contractor management outsourcing (CMO) means using a specialist third party company to recruit, hire and manage independent contractors or freelancers.
Contractor management means having a systematic business process in place for dealing with independent contractors. Good contractor management is important for cost-efficiency and legal compliance.