What if your company could save 9.6M annually?
For large companies, their freelancer spend is usually littered with inefficiencies. Money spent on tax cases around worker classification issues, resourcing costs spent for the full-time employees that manage the different aspects of your external workforce, and a very high bill for the recruiters you’re relying on to source each and every freelancer you need. If we said you could implement one tool, eliminate all of those, and save around 9.6M it would probably sound too good to be true. But it’s true.
Those are the savings that one of our customers, one of the biggest global advertising networks saw — in addition to some non-monetary benefits — by switching their external workforce management into Worksome.
The Worksome savings:
- Tax savings 7.5M
- Time savings 0.1M
- Process savings 1.6M
- Recruiter savings 0.2M
Let’s take a deeper dive into the numbers.
The Worksome savings breakdown
This advertising network saves a lot of money annually by using Worksome, but what’s more impressive is how many different areas they’re seeing savings and all of the different departments that are positively impacted by them.
Tax savings: 7.5M
The biggest area they’re saving is around taxes. Managing independent contractors comes with a lot of risk in terms of compliance, worker classification, audits, and misclassification cases.
Before using Worksome, this customer classified all their contractors as full-time employees because the risk of misclassification cases was just too high for them. With Worksome handling classification — and fully indemnifying in the event of a misclassification case — this gives them the confidence to classify contractors as contractors and treat them as such.
It also solves another problem that many companies are widely having across the UK. Because so many companies decided to classify contractors as full-time employees to avoid misclassification cases, freelancers were raising their rates to make up for the fact that they were now being taxed at higher rates. Now, their freelancers are able to be classified and taxed as contractors and the advertising network doesn’t need to take on the burden of these higher rates. Let's look at the numbers.
In Q1 of 2022, they were taxed $15,665,518. When you multiply that by 26% (the tax rate for full-time workers in the UK) and then multiply that by 50% (we assume half of the burden will fall on the freelancers and half of the taxes will fall on the contractors themselves) and finally divide that by 90 and multiply it by 365 (to get your yearly rate) this gives the customer an average savings of 7,433,288 (calculated with a 10% margin of safety) that they save each year by classifying their contractors as contractors and paying them as such, instead of treating all of their contractors like full-time employees.
Time savings: 0.1M
Previously, each Status Determination Statement (SDS) for worker classification had to be done manually. Now, they’re automated through Worksome. The agencies within this network do about 5,430 of these per year, which amounted to quite a bit of time spent doing these manually before they were automated. When we look at the costs for their full-time employees processing all of this, they’re saving about 0.1M and 2,725 hours per year by eliminating the need for this admin work. That’s 68 full 40-hour work weeks of time savings.
Process savings $1.6M
Before Worksome, almost all of their freelance processes were manual and involved a lot of back and forth ensuring everyone was aligned. When it came to things like job approvals, sourcing, worker classification, contracting, and payments, their internal teams were constantly chasing each other and working through multiple systems. Now that each aspect of their external workforce is managed in one system, everyone has access to the same information.
By automating a lot of these processes and eliminating the need for internal alignment and back and forth, this really adds up in terms of the amount of time they're now saving. 6.4 hours saved per contract, to be exact.
And when you consider that they process an average of 11,773 freelance contracts per year this adds up to 75,347 hours per year. That’s an astonishing amount of time that your teams could be saving. And that adds up to $1.6M in annual savings when you consider the average hourly rate for each internal team involved in the process.
Recruiter Savings 0.2M
Before Worksome, the agencies within this network needed to go through recruiters for all of their independent contractor needs. Now they have access to Worksome’s +30,000 vetted freelancers, who they can hire at just a 5% fee, instead of the average recruiter fee of 15.3 across their recruiter network. In Q1 of 2022 they hired 401 freelancers through Worksome’s marketplace, which would have cost them $83,000 in recruiter fees. Instead, they just paid $27,521. At this rate, this would come out to annual savings of about $225K by using the marketplace instead of traditional recruiters.
Risk mitigation for contingent workforce peace of mind
For a company as large as this network, mitigating risks needs to be one of its top priorities. When it comes to things like worker classification, tax reporting, and supply chain transparency the cost of getting it wrong when it comes to an audit can be in the millions.
That’s one of the biggest ways that Worksome helps our customers. In the event of a misclassification case — which has, so far, never happened to a Worksome client — we indemnify our clients. So the risk of misclassification cases when it comes to your external workforce is eliminated. And because every message and task around external workforce management happens in the same system, you always have a paper trail for each specific independent contractor. This means that in the event of an audit they wouldn’t need to prepare for it or collect all of the relevant documents and information. All of the information is neatly packaged in the system in the event that they need it.
No more worrying about background checks
When you’re working with as many independent contractors as this network manages, background checks are a huge part of sourcing and onboarding. They need to run identity checks, right-to-work checks, and background checks for each individual independent contractor. And onboarding for contractors was already slow and this was just adding to that timeline. It was incredibly frustrating for the teams that needed their freelancers to get started but ended up waiting for all of these steps to be completed before they could.
Now, Worksome takes responsibility for all forms of background and employment checks. This alleviates them of some legal risk and greatly improves their onboarding speed.
Payments & Invoicing that work for everyone
Payments are notoriously tricky when it comes to freelancers. Independent contractors sometimes have to wait months to be paid for work that has already been completed, one of the biggest frustrations for freelancers. With Worksome, external workers always get paid in 14 days. But since Worksome fronts the money for our customers, the agencies within the network don’t need to pay for 60-90 days. This gives their finance departments more time to process everything while getting their workers paid immediately and keeping them happy. Switching payments & invoicing into Worksome also consolidated everything into one system, which saves enormous amounts of time previously spent on manual admin work to make sure everything was up to date and correct.
Access to international freelance talent
From a compliance perspective, working with external talent can be tricky and complex. But since Worksome handles all aspects of freelancer management and compliance, our client now has compliant global access to freelancers all around the world, enabling them to always use the perfect talent for each specific job and let us stress about the rest.
There’s no risk of permanent establishment from working with international freelancers, and they spend much less time onboarding with all of this off their plate. And by building a pool of trusted contacts within Worksome, they’re able to easily rehire and share great freelancers they've used across the business, since they're all in one pool that everyone in the organization shares.
Worksome for your business
No two businesses are the same, and that is certainly true when it comes to how much you’d save by switching to Worksome. It depends on how many freelancers you use, how much you pay your internal teams that process freelancer management, and more. Request a demo to get a better idea of how much your company could specifically save, and learn about how Worksome can help you work more easily with your external workforce.