As far back as the 1960s, temporary workers moved beyond clerical work to skilled work. Contingent workers in engineering, accounting, programming, and other professions were hired to fill in roles for employees who were on sick days, taking a vacation, or to increase capacity during peak periods.

Today, the role of the contingent workforce has rapidly grown to be one of the key drivers of business success. Research conducted by SAP shows almost half of the human resources costs are spent on contract workers, and 55% of companies cannot conduct their regular operations without hiring contingent workers.

In this article, we explore how leveraging a contingent workforce can provide businesses with a significant competitive advantage.

Are contingent workers employees?

Contingent workers are non-permanent workers who work for an organization without being hired as their employees. They provide their services for a fixed period of time, usually on a project basis.

Examples of contingent workers are freelancers, consultants, part-timers, and independent contractors. They are also sometimes referred to as gig workers, external workers, contingent labor, or outsourced labor, whereas a contingent workforce is also known as an external workforce, a flexible workforce,  or an extended workforce.

Contingent worker roles can include seasonal hires and interns, customer service representatives, and creative roles (like graphic design, audio production, and writing).

They can also be experts with highly technical skills, like SQL experts, IT technicians, and information security professionals.

Independent contractors also include project managers, product managers, and interim managers who are often sought after to lead projects and teams.

Contingent workers can take on assignments that last as little as a few hours, or as much as a couple of years. They can work remotely, or they can work on-site, as needed by a business.

Why do businesses rely on them so much?

Now that we know who they are, let’s explore the advantages and challenges of hiring contingent workers.

Cost savings

Hiring contingent workers like independent contractors and consultants can save companies money. This method avoids many of the usual costs that come with full-time employees. Here’s a simple look at the financial benefits for companies using contingent workers:

Reduced overhead costs:

No additional employee benefits: Contingent workers typically do not receive the same benefits as permanent staff, such as medical insurance, pension contributions, and bonuses.

Tax savings: Companies are not required to pay employment taxes for contingent workers as they do for permanent employees.

Flexibility in hiring:

Pay-for-need basis: Firms can hire contingent workers as needed, ensuring they pay only for the specific skills and for the duration required.

Adaptability to workload fluctuations: This flexibility allows companies to efficiently manage workload peaks and troughs without the financial burden of maintaining a full-time staff.

Cost-effectiveness of rates:

Perceived high rates vs. overall savings: While independent contractors and consultants might charge higher rates than the hourly wage of a permanent employee, the overall cost is often lower when considering the elimination of benefits and other long-term employee expenses.

Project-specific hiring:

Expertise on demand: Companies can hire experts for specific projects without the long-term commitment and associated costs of a permanent hire.

Efficiency in project completion: This targeted approach often leads to more efficient project completion, further saving costs in terms of time and resources.

Although contingent workers may charge more per hour or project, it usually works out cheaper for companies in the long run. This is because they save on fixed costs and can adjust their workforce size as needed, leading to a more efficient and cost-saving way of operating.

Fast access to specialized skills

Fast access to specialized skills is a key advantage of hiring contracted employees, especially when considering the time and resources involved in recruiting and training new full-time employees. Here’s a detailed look at how having a contingent workforce strategy in addition to your traditional employment model can be beneficial:

Time-consuming recruitment for full-time employees:

Hiring duration: It takes an average of 44 days to find a new employee. For highly skilled and specialist positions, the hiring process can extend from 3 to 6 months.

Additional time investment: Once hired, new employees typically undergo training and onboarding, which further delays the time before they can operate at full capacity.

Efficiency of hiring contracted employees:

Shorter hiring process: The process for hiring contingent workers is generally much quicker, addressing immediate skills gaps more efficiently. Experienced independent contractors are often available at short notice, allowing for rapid deployment on projects.

Minimal training needs: Unlike full-time employees, contingent workers usually don’t require extensive training and onboarding, as they are hired for their existing skills and expertise. This means they can start contributing to projects almost immediately after being hired.

HR process simplification:

Less HR involvement: The HR team is not burdened with the extensive training and onboarding processes required for full-time employees, simplifying their workload. Fuels innovation and growth

Hiring contracted employees helps companies quickly fill skill gaps without the long process of recruiting, training, and onboarding that full-time hires usually need. This way, businesses can get the specialized skills they need faster, making their project work more agile and efficient.

Provides flexibility during crucial periods

Employing temporary staff offers businesses a high degree of flexibility, especially during crucial periods or unexpected surges in workload. This approach to staffing is beneficial in several key ways:

Ease of hiring:

Quick availability: Temporary staff can often be found and hired quickly, which is useful during urgent or unexpected needs.

No long-term commitment: Employers are not tied to contingent workers beyond the immediate requirement, allowing for greater workforce flexibility.

Adaptability to work demands:

Scaling workforce as needed: Businesses can hire contingent workers to manage sudden increases in workload or bring in just a few workers when demand is lower.

Meeting specific needs: This adaptability is particularly useful in balancing the varying demands of the business without the financial burden of a full-time staff.

Access to specialized skills:

Technical and skilled experts: For short-term assignments or other contingent work, businesses can bring in technical experts or highly skilled workers.

Immediate contribution: Unlike permanent employees who may require orientation and training, these skilled workers can begin work on assignments immediately.

Cost-effectiveness:

Value of expertise: Although temporary skilled workers can be expensive, their skills and experience often make them a worthwhile investment.

Short-term financial commitment: The cost associated with hiring these experts is typically offset by the value they bring in a short period.

The flexibility provided by hiring temporary staff is a significant advantage for businesses. It allows companies to respond quickly to changing work demands, access specialized skills when needed, and manage workforce costs more effectively.

Access a wider pool of talent

Accessing a wider pool of talent through remote contingent workers offers several key advantages for businesses. This approach broadens the scope of potential hires, allowing companies to tap into a global talent pool. Here’s a detailed look at how businesses benefit from this strategy:

Global talent access:

Overcoming local talent shortages: Remote work enables businesses to find skilled professionals beyond their local or regional boundaries, especially in areas where a skills gap exists.

Diverse expertise: Hiring from a global pool means access to a diverse range of skills and experiences, which can be invaluable for specialized projects or innovative endeavors.

If you need remote contingent workers to fill skill gaps in your team, get in touch with us. We’re experts at finding the best remote professionals for your specific needs. Contact us to see how we can help your business succeed with global talent.

Efficiency in hiring:

Streamlined recruitment process: With the entire world as a potential recruitment ground, finding the right talent can be faster and more efficient.

Leveraging technology for recruitment: Using online platforms and recruitment tools makes it easier to connect with and evaluate potential remote contingent workers.

Enhanced business opportunities:

Cultural and market insights: Remote workers from different parts of the world can bring unique perspectives and insights into new markets, aiding in business expansion and adaptation.

Round-the-clock productivity: Having remote workers in different time zones can enable businesses to operate beyond the standard 9-to-5 workday, potentially increasing productivity and responsiveness.

Cost-effective solutions:

Flexible work arrangements: Remote contingent workers often have flexible work arrangements, which can be more cost-effective compared to traditional full-time employees.

Reduced overhead costs: Businesses save on costs associated with physical office space, utilities, and other resources typically required for on-site employees.

Hiring remote contingent workers gives businesses access to a wide range of skilled professionals globally. This strategy helps fill local talent gaps and brings diverse skills and perspectives, improving business performance and potentially reducing costs.

Common challenges in hiring and working with contingent workers

Hiring and working with contingent workers to complement your core employees has its own set of challenges, despite the benefits they bring. Companies need to understand and manage these challenges to make the most of using contingent workers. Here are some typical problems they might face:

Availability:

Scheduling conflicts: Independent contractors may not always be available when needed due to commitments to other clients or overlapping project timelines.

Limited availability for urgent needs: Finding a skilled contractor on short notice can be difficult, especially for specialized skills.

Confidentiality:

Risk of data leakage: Contingent workers often have access to sensitive company data, posing a risk of information being inadvertently shared with future employers or competitors.

Trustworthiness and reputation: It’s important to vet contingent workers for their reliability and track record in handling confidential information.

Control:

Different management approach: Managing contingent workers differs from overseeing permanent employees; there is less control over how they execute tasks.

Limited oversight: While you can set objectives and deadlines, dictating the method of work is typically outside the client’s purview.

Integration and culture:

Cultural fit: Ensuring that contingent workers align with the company’s culture and work effectively with existing teams requires some team-building efforts.

Onboarding and training: Providing adequate onboarding and training to contingent workers without the same level of investment as permanent staff requires a balanced approach.

Legal and compliance issues:

Classification challenges: Correctly classifying workers as independent contractors to comply with labor laws is crucial to avoid legal repercussions.

Contractual obligations: Ensuring that contracts with contingent workers are comprehensive and legally sound to protect both parties.

Quality and consistency:

Varying quality of work: The quality of work can vary among different contingent workers, requiring thorough vetting and selection processes.

Consistency in deliverables: Maintaining consistency in the quality and style of work, especially when engaging multiple contingent workers, can be challenging.

To effectively handle these challenges, companies need to plan carefully, communicate clearly, and manage strategically. Recognizing and actively dealing with these issues helps companies make the most of using contingent employees and reduce any negative impacts.

Best practices for hiring contingent workers

With the challenges of hiring and working with contingent workers in mind, here are some tips for a glitch-free engagement.

Have a screening process

Screening employees is an important step whether or not they are temporary. Conduct a complete background check and learn about your potential hire from their previous employers. If security and confidentiality are particularly important in the assignment, include questions related to trustworthiness.

At Right People Group, we specialize in matching you with the ideal candidate. Our process includes understanding your needs, utilizing a vast network, selecting top candidates, thorough screening, and delivering the best fit for your project. Contact us for a stress-free way to find your perfect IT consultant.

Know when to hire

Although there are a lot of pros to hiring contingent workers, it’s important to know when hiring them is a more cost-efficient solution.

Here are some examples of when a contingent worker is a good choice for your business:

• When you need experts and specialized skills such as data mining, software programming, and project management.
• When you need help during particularly busy times for your business.
• For tasks that take just a few hours per week and don’t justify hiring a full-time employee.
• When the worker will not require close supervision.

Consider remote

If the job isn’t on-site and can be done online, consider hiring remote professionals. The talent pool will widen significantly, and you’ll have a higher chance of finding an available professional with specialized skills.

Conclusion

Using contingent workers gives businesses flexibility, saves costs, and brings in special skills. While there are challenges, handling them well can lead to great results. This approach is becoming more important for companies to stay competitive and adapt to changing markets.

Who are contingent workers?

Contingent workers are people who work for an organization without being hired as their employees. They provide their services for a fixed period of time, usually on a project basis. 

Examples of contingent workers are freelancers, consultants, part-timers, and independent contractors. They are also sometimes referred to as gig workers, external workers, contingent labor, or outsourced labor, whereas a contingent workforce is also known as an external workforce, a flexible workforce,  or an extended workforce. 

Contingent worker roles can include seasonal hires and interns, customer service representatives, and creative roles (like graphic design, audio production, writing). 

They can also be experts with highly technical skills, like SQL specialists, IT engineers, and information security professionals. 

Independent contractors also include project managers, product managers, and interim managers who are often sought after to lead projects and teams.     

Contingent workers can take on assignments that last as little as a few hours, or as much as a couple of years. They can work remotely, or they can work on-site, as needed by a business. 

Why do businesses rely on them so much?

Now that we know who they are, let’s explore the advantages and challenges of hiring contingent workers. 

Cost savings

Employing contingent workers can save companies a lot of money on fixed expenses they would otherwise spend on traditional employees.

Unlike a permanent employee, a contingent worker does not require additional expenses like taxes, medical benefits, pension contributions, employee benefits, bonuses, and other company benefits associated with hiring staff on a permanent basis. 

So while it may feel like independent contractors and consultants charge a lot, overall, companies reduce costs when they hire temporary workers. 

Additionally, contingent employees are hired only when needed – so a company will only need to pay for someone with the required skills for as long as they need them.

Fast access to specialized skills

Based on research from the Society of Human Resources (SHRM), it takes 36 days on average to find a new employee. 

For some roles, particularly highly skilled and specialist positions, finding and hiring an employee can take 3 to 6 months. New hires will then spend some time going through training and onboarding before they can work at full capacity. 

Many employers find that hiring contracted employees is an excellent way to fill existing skills gaps quickly because the hiring process for contingent workers is a lot shorter. Experienced independent contractors are often available at a short notice. You find them, negotiate a project, and they can get to work soon after. The HR team won’t need to make sure contingent workers go through the training and onboarding processes that full-time employees do. 

Fuels innovation and growth

Contractual workers don’t spend much time working for one employer, so they tend to have experience working on a range of projects. They are often exposed to various methods or processes related to their skills, which is a potentially huge advantage for the companies who hire them. The experience they’ve gained will allow them to offer fresh perspectives and make improvements.

Contingent workers also allow companies to give new approaches and adventurous ideas a trial run. They can hire the contingent staff they need on a temporary basis to execute a new venture without a long-term commitment.

Provides flexibility during crucial periods

Temporary staff are easier to find and are only hired on an as-needed basis. Employers won’t have to worry about being tied to contingent workers beyond an urgent but short-term need. 

Businesses can hire contingent workers to pick up the slack when they are suddenly overwhelmed with work or hire just a few workers when work demand is low. 

Technical experts or highly skilled workers are also often called in for a short-term assignment or specific project. In contrast to permanent employees, they can be found quickly and can begin work on assignments immediately without having to undergo orientation and training. Temporary skilled workers are also highly cost-effective because, although they can be expensive, their skills and experience make them worth the investment.

Provides access to a wider pool of talent

When talent is scarce locally, remote workers give businesses a bigger pool to choose from. Similarly, businesses that are open to remote contingent workers have the option to hire top professionals from all over the world. 

Finding a remote contingent worker is a lot easier as well – when businesses can hire from anywhere in the world, the faster they’ll be able to find their expert.

Common challenges in hiring and working with contingent workers

The potential benefits of using contingent workers are many but there are also challenges in hiring and working with contingent workers. Some common challenges include: 

Availability

It can be easy to find an independent contractor with the specialized skill that you’re looking for, but they may not always be available when you need them. They may be in the middle of contract work with another company, or the length of your project may overlap with another.

Confidentiality

Contingent workers will likely work with your data and have access to confidential information. There is always a risk that some information is leaked to the company that they work with next. One way of avoiding this is to make sure that a contingent worker has a trustworthy reputation.

Control

Managing contingent workers is quite different from managing core employees. There is some loss of control over how tasks are performed. Contingent workers can be assigned tasks and imposed deadlines, but you cannot tell them how to do their work.

What to consider when hiring a contingent worker

With the challenges of hiring and working with contingent workers in mind, here are some tips for a glitch-free engagement. 

Consider remote

If the job isn’t on-site and can be done online, consider hiring remote professionals. The talent pool will widen significantly, and you’ll have a higher chance of finding an available professional with specialized skills.

Have a screening process

Screening employees is an important step whether or not they are temporary. Conduct a complete background check and learn about your potential hire from their previous employers. If security and confidentiality are particularly important in the assignment, include questions related to trustworthiness.

Know when to hire

Although there are a lot of pros to hiring contingent workers, it’s important to know when hiring them is a more cost-efficient solution. 

Here are some examples of when a contingent worker is a good choice for your business: 

• When you need experts and specialized skills such as data mining, software programming, and project management. 
• When you need help during particularly busy times for your business.
• For tasks that take just a few hours per week and don’t justify hiring a full-time employee. 
• When the worker will not require close supervision.