What are contingent workers
22 November 2021

What is a Contingent Worker, and What Business Benefits Do They Bring?

3 min read

Many hiring managers and business executives have already tapped into the pool of talent that is known as the contingent workforce, and for good reason.

In fact, according to a Gartner study, 9 Future of Work Trends Post-COVID-19, a staggering 32 percent of organizations are replacing full-time employees with contingent workers as a cost-saving measure alone. 

Yet, despite the move towards organizations using an increasing number of contingent workers, many businesses are still struggling to understand exactly what a contingent worker is.

“It’s critical for business leaders to understand that large-scale shifts are changing how people work and how business gets done,” commented Brian Kropp, Distinguished Vice President at Gartner. "Leaders who respond effectively to these HR trends can ensure their organizations stand out from competitors.” 

With that in mind, in this blog we take a look at what the contingent workforce is and what benefits the use of contingent workers can bring to your organization.

What is the contingent workforce?

The contingent workforce is a pool of nontraditional workers who are hired by a business on an on-demand or project-by-project basis. These workers are not employees of the company, instead they work under contract or on a temporary basis.

Today, the contingent workforce is huge. In fact, roughly 25-30 percent of the US workforce is now contingent, and more than 80 percent of large corporations plan to “substantially increase” their use of a flexible workforce in the coming years, according to a report from Intuit

The contingent workforce is made up of a range of workers. These include independent contractors, freelancers, consultants and temporary workers. These are separated into two main categories; temporary workers (also known as temps) and independent contractors.

Independent contractor: An umbrella term for workers such as freelancers, consultants and gig workers, independent contractors are classified as self-employed and are not placed within a business by a staffing agency. They are typically hired directly by the company to perform a set of deliverables and deadlines. Since they are self-employed they are legally allowed to work from where and where they want. 

Temp/Contractor: Typically employed through a staffing agency, temporary workers are placed in businesses to fill specific workforce requirements. Working for a predetermined period of time, temps are generally used to meet project needs, seasonal demands, fill temporary positions and help companies scale up rapidly.

Contingent workers are different from permanent employees, in that they only stay with an organization for the continued existence of the job at hand. Typically, contingent workers are paid to complete a specific project or paid for a certain period of time in which they are with the company. 

Once this short-term engagement is completed, the contingent worker moves onto a new job with a different business. They are typically placed in these positions by a staffing agency, but contingent workers can be engaged directly in some situations - such as when it comes to contractors and freelancers.

What benefits come with the use of contingent workers?

The contingent workforce is growing fast. A staggering 77 percent of executives believe that freelance and gig workers will “substantially” replace full-time employees within the next five years, according to the 2020-2021 CXC Contingent Workforce Global Trends Report.

In fact, within the next two years, the report expects that 54 percent of all companies will include the contingent workforce as part of their strategic planning.

So, why are organizations turning to contingent workers to meet their workforce objectives? 

Increased business flexibility: The contingent workforce gives businesses the ability to assess their workforce requirements on an ongoing basis. Engaging temps/contractors and independent contractors gives organizations the flexibility they need to change their workforce depending on current workforce requirements and business demand. 

Improved access to hot skills: Accessing hot skills can be difficult for any organization, especially when there’s a skills shortage. The contingent workforce offers businesses access to a huge talent pool, making it a great way to navigate the skills gap and find talented workers. Often some extremely skilled resources do not wish to engage in full time employment.

Decreased time-to-hire: The average hiring process differs depending on the research you read, but it’s often considered to be somewhere in the region of between 23 days and 42 days long. That means it takes a huge amount of time to find skilled workers when they are employed on a full-time basis. With the contingent workforce, you can place workers into your organization in short notice, helping you to access talent when you need it.

Lower workforce costs: Unlike full-time workers in which businesses must spend money on benefits and other incentives to attract and retain top talent, the contingent workforce gives organizations the opportunity to pay highly-skilled and experienced workers for the work they need at any given point in time. 

To optimize the benefits that a contingent workforce brings to your organization, and to mitigate any risks, a contingent workforce management program is crucial. Need help? Contrax is here every step of the way. Let’s talk!

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