The contingent workforce goes by many names, such as independent contractors, freelancers, and on-demand workforce, but all of these terms mean the same thing: they all refer to non-permanent workers who are hired by companies on a temporary basis to fill gaps. And in some cases, contingent workers make up the majority of a company’s workforce, being used as part of a business strategy that focuses on increased flexibility, lowered fixed costs, and better skills.
But contingent work isn’t only advantageous to businesses looking to save money, it’s also beneficial for many workers who prefer to take control of their own careers, have more flexibility, and be their own bosses, working on their own schedules and largely by their own rules.
As more workers and companies jump on board, the clearer it is that the contingent workforce tsunami is coming. Here are 10 shocking statistics that solidify this assumption.
1. Approximately 40 percent of workers are contingent. That figure includes agency temp workers, on-call workers, contract company workers, independent contractors, self-employed individuals, and standard part-time workers.
2. For the average company, contingent workers make up 18 percent of the total workforce.
3. In the next 5 years—that is, by 2020—non-permanent workers are expected to make up 40 percent of the average company’s total workforce.
4. The flexible, on-demand workforce has doubled in the past seven years.
5. Interestingly, 74 percent of employees who left full-time jobs with permanent employers to become independent contractors mentioned a lack of employer engagement as their primary reason for leaving and making the change to becoming part of the freelance economy.
6. Forty percent of companies stated finding their best talent through the on-demand workforce, making it an effective way to bridge the skills gap that many firms face.
7. Compared to 73 percent of permanent employees, 86 percent of independent contractors state their level of job satisfaction as being either good or excellent.
8. The five industries taking advantage of the contingent workforce the most include retail, financial services, healthcare, professional services, and public service industries.
9. In the United States, there are an estimated 53 million people who identify as freelancers today.
10. The average annual procurement spend on the contingent workforce ranges from 1 billion to 5 billion.
What Does This Mean for Your Business?
The statistics on the flexible workforce show a rapid rise in the use of contingent workers in the United States, and the numbers are only going to increase in the next few years. If you use contingent workers and plan to increase their use in the future, you need to be prepared.
You will no doubt have more contractors to choose from as more workers jump on board with contingent work, but you’ll also have more competition as more companies start to dip into the contingent talent pool, too. And the more non-permanent workers you hire, the more you’ll be spending on procurement, and the more difficult it is going to be to track, manage, and pay them all in an efficient and effective manner.
It’s better to prepare yourself for the tsunami before it hits. It’s time to integrate a contingent workforce management program into your organization now, before it’s too late and your disorganized and lax management procedures begin to affect your bottom line and your productivity. Such a management program will increase visibility, reduce spend, heighten efficiency, increase compliance, and enhance performance. You’ll have big data on your side so you can make more informed decisions when it comes to sourcing, scheduling, and more. If you don’t know where to start, contact a managed services provider for help. A provider can analyze your current processes and help put your workforce solutions into action.