A contingent workforce refers to part-time workers, casual workers, independent contractors, consultants, and freelancers hired on a temporary basis to do a specific job within a specific time period. Some companies regularly use contingent workers as and when needed. For instance, a company may decide to outsource to a graphic designer or pay a monthly retainer to a freelancer to manage their social media.
In some cases, contingent workers perform their duties at the company’s premises, as when a cybersecurity consultant might be hired to assess weaknesses in the company’s digital security and implement stronger systems. Despite working in the building, the consultant is not an employee of the company. They are paid a contractor fee, not a salary, and are therefore responsible for their own taxes, medical insurance, and retirement savings.
The Contingent Workforce Is Growing
In 2018, on-demand workers contributed a massive $1.28 trillion to the U.S. economy. Statistics show that approximately 36 percent of US workers are now part of the gig economy and, if this upward trend continues, it’s predicted that 50 percent of the US workforce will be made up of on-demand talent by 2027—reflecting a trend that’s happening worldwide.
In the UK, for example, the number of independent workers doubled between 2016 and 2019 and now consists of roughly 4.7 million workers. In the European Union, according to the Association of Independent Professionals and the Self Employed, the contingent workforce rose by 24 percent between 2008 and 2015, increasing from 7.7 million to 9.6 million.
Thanks to the digital revolution, a traditional full-time job is no longer the only way to earn a living,
nor does it guarantee job security. In fact, more than 50 percent of full-time freelancers say they feel more financially secure as an independent contractor than in traditional employment.
For many, having the freedom to set their own hours and be their own boss is the primary reason for going freelance or wanting to in the future. A 2016 report by McKinsey Global Institute on “Independent Work: Choice, Necessity, and the Gig Economy” found that one in six employees would like to ditch the traditional job to become an independent earner.
But it’s not only the on-demand talent who enjoys the benefits here; organizations also see the advantages. Engaging the contingent workforce is an opportunity to reduce expenditure on overheads, salaries, employee benefits, and retirement fund contributions.
The Pros and Cons of a Contingent Workforce
Access to a large pool of talent.
As more people have embraced self-employment, it has created an enormous amount of talent in the freelance marketplace. For companies struggling to employ a full-time person with the right skill set to fill a position, outsourcing can be the answer.
Contingent workers don’t occupy space in an office building and thus don’t need access to the same benefits employees have, such as a parking space or tea and coffee supplies. If half of your workforce is made up of contingent workers, you can lease less office space and cut down on overhead costs.
A focused and agile workforce boosting productivity.
Whether intentional or not, employees tend to engage in time-wasting activities. According to Salary.com’s “Wasting Time at Work” survey, a staggering 89 percent of employees admit that they waste some time at work on a daily basis. Thirty-one percent waste around thirty minutes, 16 percent waste around two hours, and 2 percent reported wasting as much as five hours a day. On-demand workers, on the other hand, are often paid per project. Time literally is money for this person. To get paid, they need to get the job done, which makes them more focused. Faster turnaround times with on-demand talent can be a huge boost in productivity for a business.
Ease of terminating the relationship.
If an employee delivers subpar work, there are a number of hoops to jump through, from disciplinary steps to termination of employment, and sometimes this process can get messy. Yet when a contingent worker underdelivers, ending the relationship is easier, provided a contract is in place that outlines the expectations and consequences of not satisfactorily fulfilling the requirements of the job.
Managing on-demand talent.
The process of selecting and managing these workers can be time-consuming and tedious. However, there are many platforms that make it easy to access and manage the right talent, allowing clients to search for freelancers, review candidates, set a budget, hire, and complete the onboarding process—all in one place.
The risk of poor-quality work.
Working with contingent workers can be hit and miss. The road to finding great freelancers can be long and challenging. However, once a company has a desired stable of on-demand talent in place, these people become an asset to the company.
Less brand investment.
Contingent workers are not employees and therefore don’t know your brand as well as an employee and don’t have the same level of investment in your company. But if you aim to build a long-term relationship with a freelancer, in time they will become familiar with your brand.
How Technology Is Contributing to the Gig Economy
With the rapid growth of the gig economy, many freelance marketplaces have sprung up to meet the demand. Today, millions of freelancers and clients are registered on these sites. The McKinsey report showed that 15 percent of contingent workers use a digital marketplace to find gigs. Most of these freelance marketplaces are efficient and self-contained. Clients and freelancers never meet in person or even have a telephone conversation, with all assignments and communication being handled via the platform.
Technology also allows companies to set up and manage teams of remote workers across the globe. That’s one of the biggest advantages of a contingent workforce: top talent is accessible from around the world. Project management tools such as Bonsai and Asana allow on-demand workers to create projects, schedule work, track deadlines, and create invoices. Collaboration apps like Slack and Zoom make it easy for remote teams to communicate, track the status of projects, and engage in video conferences.
Creating a Hybrid Workforce
Human resources are the backbone of every company. Today’s work landscape has changed and so too has how we use human resources. Modern businesses are creating a hybrid workforce consisting of full-time, flextime, freelancers, remote workers, and even artificial intelligence like chatbots. Finding and hiring the right talent can ignite your business’s potential and scale growth at a faster pace.