Economic uncertainty is definitely one of the factors driving employers to hire more temporary, or contract workers; however many employers are beginning to see that their contingent workforce allows them to become more lean and agile in the marketplace.
Companies of all sizes can now see other benefits. Particularly, they can hire highly skilled workers for specific projects, and when the project is over, they're not forced to find other tasks and roles for these individuals.
A recent survey published by consulting firm McKinsey, reports that 58% of employers said that they plan to hire more “part-time, contract, and temporary workers” over the next five years. And that number is probably going to grow over the next few years.
There are now many labor industry consultants and experts saying that a fundamental shift is taking place in the workforce, as temporary and contract workers can now be found across all industries and job functions.
10 years ago, temporary and contract labor was primarily limited to manufacturing, construction, clerical and other relatively low paid job functions. However, now contract workers can be found in Information Technology, Engineering, Accounting, Health Care and many other job functions in many industries.
Why are people are turning to contract work?
There are various reasons. Some people have been laid off, and find that temporary and contract work is the best way to gain income while searching for full-time work, and many are finding that contract work often leads to full-time positions at those companies.
Additionally, people find that they prefer the freedom and flexibility of contract work. They are able to choose when and how much they work, and they are able to be their own boss.
Others have found that they would like to work after retirement, and they want to be able to choose their own projects and how much they work. Contract work provides the perfect balance for those looking to work after retirement.
The employer perspective
Employers who traditionally had a large full-time workforce are now looking to migrate to a mixed workforce model - maybe 80/20 - 80% full-time core workforce, while maintaining a 20% contingent labor component.
While the budget for contract labor will increase, companies will have fewer responsibilities with taxes, healthcare and insurance costs, and other full-time employee benefits and costs. The key to success for an employer is to capture expertise in the short term, then have the contractor move on. Then the company can manage more strategic priorities with the right balance of full-time and contingent workers.
This gives employers the flexibility to adjust to changing business demands, but the management of a contingent workforce is complex, with many organizations not having the necessary resources to manage these workers in-house. For that reason, many employers are also using an MSP provider in order to mitigate risk and save money.
We are a contingent workforce service provider helping organizations gain better access to talent through the use of independent contractors, consultants, temporary workers, freelancers and other non-payrolled employees. We provide the expertise, the technology, and processes to help you reduce your workforce costs, mitigate against misclassification and co-employment risks, and increase the efficiency and timeliness of your contingent recruitment process. Read more about what our clients say about us here.