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May 18, 2021

How Consulting Firms Manage External Talent Benches

Consulting firms are moving to more agile, on-demand staffing models.

Find out what consulting firms need to manage an external talent bench or roster of freelancers, independent consultants, and contractors.

Freelancer Management Operations Compliance Finance and Accounting

The future of work includes a shift to more project-based work. But for consulting companies, project-based work and services have long been the core of how they operate. What is changing, though, is how that work gets staffed. Increasingly, consulting firms are shifting to a blended workforce model — combining in-house expertise with on-demand talent.

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Shifting to a blended workforce approach helps consulting firms be more nimble and agile in their operations while providing exactly the right expertise and skillsets for every project. This liquid workforce model is particularly relied on by boutique consulting firms.

For example, a consulting company specializing in consulting for pharmaceutical companies may need an expert in a particular technology platform to assist with a project. By tapping into a network of freelancers and independent consultants, the company can quickly staff the right talent for that project.

Relying on a liquid workforce helps consultancies keep their operational and overhead costs low while broadening the skillsets and expertise your firm can deploy.

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Our customers report saving 20 hours per month (on average) when they use Liquid’s complete contractor and vendor management system.

    Managing Project-Based Operations

    However, once consulting companies start engaging freelancers and independent consultants regularly, the right operational tools and processes must be in place. Manually managing this talent quickly leads to headaches and can result in risks to the company. For example, your company must follow all the rules and regulations related to worker classification compliance. You need a system that can manage your talent bench, compliance, projects, and payments.

    Manage an On-Demand Talent Bench

    Typically consulting companies with a liquid workforce maintain a talent bench or roster of vetted freelancers and independent consultants. One of the best ways to build your bench is by asking for referrals from your internal workforce and your existing external bench, along with tapping into your network. 

    To manage your talent bench, you’ll need a system with easy, automated onboarding for your external talent. Once this is in place, you can quickly deploy a standardized onboarding workflow that includes contact details, contracts, work orders, NDAs, W-9s/W-8s, and payment details. Onboarding new talent will no longer be slow and cumbersome — now it will take just a few minutes, and then your new consultant is ready to jump into a project. Plus, it will be even easier to work with talent anywhere in the world.

    Manage Compliance for On-Demand Talent

    One of the challenges for any company working with freelancers or independent consultants and contractors is ensuring worker classification compliance. Misclassification of workers violates tax and employment laws, leaving consultancies open to liabilities and penalties. 

    Many behavioral, financial, and relationship control factors determine whether you are hiring a W-2 employee or a 1099 independent contractor

    To easily manage external talent at scale, you need a system that can support automating and streamlining background checks and contractor / vendor information verification. Plus, you want built-in tools to protect your company from freelancer / contractor classification issues.

    Manage Projects with On-Demand Talent

    Every consulting project is defined by its Statement of Work (SOW) or Work Order (WO). SOWs clearly define the deliverables, timelines, criteria for evaluating work (expectations), and rates / cost estimates. Just as you have an SOW / WO for every client project, you need one each time you engage an independent consultant on your talent bench.

    To quickly set up and execute each project with your external talent, you need templates for SOWs / WOs. You’ll want your external talent management system to include these templates and a process for approval and recording freelancer / consultant agreement. Plus, the system should help you organize, communicate and track details of all projects easily.

    Manage Payments for On-Demand Talent

    As you build your talent bench, you’ll also need a platform that can ensure that your on-demand team gets paid in a timely manner. However, using the same HR payroll system that you use for your internal workforce is not recommended, as this can increase your company’s compliance risk. And it’s also not recommended to use payment apps like Venmo to pay your freelancers and independent consultants. If you’re working with global talent, your payment system will also need to support global payments.

    The right on-demand talent management system will support the variety of payment models and timing associated with project-based work. Plus, it should have an invoice approval workflow, with customizable controls. With invoice matching, invoices will be automatically compared to SOWs / WOs, which will catch discrepancies or errors (such as overbilling). And with streamlined invoice reviews, you can pay invoices within minutes

    Transform Your Consulting Operations with Liquid

    Liquid: features of our Freelance Management System

    Liquid provides our users with a complete contractor management system — onboarding, contracts, compliance, and global payments all-in-one. Liquid makes it easy and efficient to manage your external talent without the hassle so that you can focus on your clients. 

    A consulting firm partnered with Liquid to simplify managing its external talent bench of 750 freelancers. With such a large bench, the executive team found managing contracts, work orders, and payments extremely time-consuming, even after operationalizing processes. By working with Liquid, the firm saved not only significant amounts of time but also money. The COO shared, “Liquid makes it all so effortless. With all the time we’ve saved and all the SaaS fees we’ve been able to eliminate, we’re easily saving $4K per month in overhead.” 

    No matter what type of consulting services your firm provides, Liquid can help you transform your consulting operations and simplify managing independent consultants and contractors.

    Ready to contract and pay your virtual assistant? Request a demo of Liquid today

    Category: Freelancer Management Operations Compliance Finance and Accounting

    Updated: May 18, 2021

    Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.

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