The hidden price of infrastructure gaps in enterprise and MSP programs
Most enterprise contingent workforce programs look solid on paper. There’s a vendor management system. There’s an MSP or internal program team. There are supplier contracts and approval workflows. The spend is tracked. The headcount is reported.
What often goes untracked is everything underneath that visible layer: the classification inconsistencies, the onboarding gaps, the pockets of rogue spend that don’t flow through approved channels, and the quiet accumulation of compliance risk that won’t appear in a dashboard until it becomes a problem.
The MSP market reached $226 billion in spend under management in 2024, according to Staffing Industry Analysts. Contingent workers make up somewhere around 30% of the total labor pool. These programs are no longer peripheral. They’re central to how large organizations operate. And that scale is exactly why the infrastructure underneath them matters so much.
This post is about the gap between what a well-run program looks like and what it actually costs when that infrastructure falls behind.
The Program You See vs. the Program You Have
A contingent workforce program is only as strong as the layer beneath the strategy. The visible layer covers which suppliers you use, how you structure SOW engagements, and how you manage vendor performance. What’s less visible is whether the workers in those engagements are classified correctly, onboarded consistently, and paid compliantly across every region they’re in.
According to SIA’s 2025 Workforce Solutions Buyer Survey, SOW management remains the top agenda item for contingent workforce programs specifically because rogue spend and misclassification risk remain unresolved. The technology exists to give enterprises visibility into their contingent spend. The gap lives in the structural decisions underneath that technology: how independent contractors (ICs) are engaged, how onboarding is documented, and who is accountable when a classification question surfaces.
That’s where the real cost lives.
Untracked: Where Your Hidden Costs Live
| What Your Program Tracks | What Often Goes Untracked |
| Supplier contracts and approvals | Whether suppliers are classifying workers consistently |
| Headcount and spend reporting | Rogue spend outside approved channels |
| VMS/MSP platform data | Onboarding gaps and documentation inconsistencies |
| Vendor performance metrics | Classification exposure across jurisdictions |
| SOW engagement structure | Whether SOW workers meet IC classification standards |
What Misclassification Actually Costs
Worker misclassification is more common than most program leaders assume. Between 10% and 30% of U.S. employers have misclassified at least one worker, according to the National Employment Law Project. At the scale of an enterprise contingent program, that’s a material exposure, not a fringe scenario.
To make the financial risk concrete: Plante Moran modeled a single worker misclassified as an independent contractor instead of an employee over three years, at $100,000 in annual wages. The cumulative employment tax liability, before interest and penalties, came to $135,900. Multiply that across a large program and the exposure grows quickly.
Estimated Misclassification Costs
| Workers Misclassified | Annual Wages Each | Years | Est. Tax Liability (before interest & penalties) |
| 1 | $100,000 | 3 | $135,900 |
| 10 | $100,000 | 3 | $1,359,000 |
| 50 | $100,000 | 3 | $6,795,000 |
| 100 | $100,000 | 3 | $13,590,000 |
Source: Plante Moran, “Navigating Worker Classification” (2025)
Misclassification carries costs well beyond fines. Audit burden, back-pay liability, program disruption, and reputational risk with workers you want to re-engage all add up. Treating it as a legal issue rather than a financial one tends to understate what’s actually at stake.
The regulatory environment makes this harder to manage, not easier. The Department of Labor paused enforcement of its 2024 independent contractor rule in May 2025, reverting to the traditional “economic realities” test, a more flexible federal standard. But states are moving in the opposite direction. New York, New Jersey, and Illinois have all added or strengthened their own classification requirements and penalty structures. Programs built around federal standards may find themselves exposed under state law regardless.
Why MSP Programs Carry More Risk Than They Realize
MSPs are accountable to their enterprise clients for two things above all else: cost efficiency and compliance performance. But most MSPs don’t control the payrolling and classification layer. That work happens downstream, through suppliers, and the consistency of that work varies.
The problem compounds at scale and across borders. A program operating in multiple countries faces multiple classification regimes, multiple tax authorities, and multiple enforcement bodies, each with their own rules and update cycles. The EU Platform Work Directive, expanding pay transparency legislation across the U.S. and Europe, and changes to H-1B filing requirements have all added complexity to programs designed before those requirements existed.
The signal from the market is clear. In June 2025, Deloitte publicly launched its Extended Workforce Solutions offering, citing the need to help organizations gain better visibility into their total workforce and address the challenge of managing an extended workforce compliantly. When a firm of that size makes a dedicated public investment in this problem, it reflects a gap that exists broadly across the market.
Enterprise buyers increasingly expect their MSP to serve as the compliance backstop, not just the sourcing layer. That expectation is growing faster than most MSP back-end infrastructure is.
What the Right Infrastructure Changes
The fix here is an infrastructure fix, not a strategy overhaul.
People2.0’s employer of record (EOR) and agent of record (AOR) services are designed to plug into existing MSP and VMS programs. The program keeps its structure. The compliance and payrolling layer underneath it becomes consistent, documented, and defensible.
In practice, that means workers are classified correctly at the point of engagement, onboarding is standardized and audit-ready, and a single accountable partner manages compliance across 130+ countries. People2.0 conducts nearly 10,000 IC evaluations annually and has maintained zero misclassifications across all regions. For MSP partners, that track record is what makes the compliance promise to an enterprise client something you can stand behind.
For enterprises managing their programs directly, the value runs along the same lines: cost visibility, reduced audit exposure, and a payrolling structure that scales without adding internal compliance overhead.
The Real Number
Every contingent workforce program has a budget number. What most programs lack is a full picture of the cost that builds up when the infrastructure beneath that number wasn’t designed for the scale and complexity of the work it’s supporting.
The classification gaps, the onboarding inconsistencies, the rogue spend outside approved channels: these are infrastructure problems, and infrastructure problems have solutions. If you want to understand what that looks like for your program specifically, our team is ready to help.
