The demand for contingent workers is set to continue to grow, with a new study from The Economist finding that more than 61 percent of top bosses expect the use of contract labour to increase over the next five years.

The report, titled ‘Sourcing and managing talent in a gig economy’ from The Economist Intelligence Unit, surveyed executive decision-makers at 210 US and UK companies with at least 2,000 employees.

It found that at over half (58 percent) of the businesses surveyed, contingent workers account for more than a fifth of the workforce, while every single one of the companies relied on contract workers to some extent.

Meanwhile, executives at these large organization saw both flexibility and cost savings as the biggest benefits of the contingent workforce - but many companies are still failing to implement a company-wide approach to centralize their contingent workforce strategy.

In this blog, HCMWorks has summarized some of the most important questions asked in the report and how executives answered.

Will the use of contingent workers grow over the next five years?

• Increase significantly (28%).
• Increase somewhat (33%).
• Remain the same (30%).
• Decrease somewhat (6%).
• Decrease significantly (3%).

Why do businesses use the contingent workforce?

• Allows for cost savings (39%).
• Allows for more agility (36%).
• Our needs are project-specific (36%).
• Business needs seasonal/vary over time (30%).
• Lack skills that are needed to execute (26%).
• Rapid growth/inability to scale (21%).
• We lack the capacity to execute (13%).

Business challenges that drive the need for the contingent workforce

Most companies in the survey agreed with five statements that laid out the business challenges which encouraged them to turn towards the gig economy for help.

The statement eliciting the most agreement (79%) is “we are under strong pressure to increase workforce productivity,” while the second most agreed-with statement is “we are undergoing a transformation (operating model, digital, cultural, etc)” at 73%.

Reducing workforce costs; more volatile business environment than three years ago; and cannot meet strategic objectives without gig workers, where the third fourth and fifth most agreed on questions in the survey.

Benefits of contract workers

• More flexibility (46%).
• Decreased cost (30%).
• Enhanced capability of a business function or organization (26%).
• Relieve stress for full-time employees (25%).
• Talent discovery (25%).
• Fast access to talent (23%).
• Reduced risk (13%).

How do companies source contract workers?

Direct channels: Such as the re-hiring of former contract workers, soliciting references from current employees, turning to former employees and maintaining an internal database of outside talent (57%).

Intermediaries: Including staffing agencies, contract worker sites and consulting firms (34%).

What matters most when it comes to contingent workers?

• Productivity (42%).
• Reliability (36%).
• Flexibility (32%).
• Capability (29%).
• Cost effectiveness (26%).

Do businesses have a company-wide contingent worker strategy in place?

• One strategy for the entire organization (53%).
• Strategies implemented by business units (33%).
• In the process of developing a strategy (13%).
• No strategy, no plans to develop one in the near future (1%).

Large organizations with more than 5,000 employees are less likely to have an organization-wide strategy (only 44% do, versus 53% for all companies), and are more likely to leave strategies to the business units (41% do, compared with 33% for all companies).

What can we learn from this survey?

While the survey found that the contingent workforce will continue to grow over the next five years, it’s telling that around half of the organizations involved in the study do not have a company-wide strategy implemented.

Any effective contingent workforce management program is one that is centralized in one place. This prevents duplications, administration errors and dysfunctional tactics across your contingent worker strategy, as well as ensuring complete visibility into your contract workers.

The best way to ensure your program is run in a way that maximizes visibility, reduces cost and meets the latest government requirements and market conditions, is to outsource the management of your contract workers to a managed service provider (MSP), importantly, one which is vendor neutral and will not favour particular staffing firms over others.

Want to find out how HCMWorks can help? Contact us today to learn more.