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HCMWorks Insights

The Rise Of The Contingent Workforce

Posted by Julia Fournier on 17 Aug 2016
There's a dramatic global change happening in the makeup of a company's internal workforce. The shift reflects not just the dynamics of the new economy, but also the increasingly popular employment trend of hiring a pool of contingent workers - recruiting outsourced talent to save costs.
 
The shift is significant, for example, the contingent workforce is now estimated to comprise up to 30% of procurement spend for some companies, and represents a larger share of the workforce than company employees, for others.
 
In a recent survey of 7000 executives, by a global management consultancy firm, titled Human Capital Trends 2016, 42% of executives surveyed plan to increase, or significantly increase the use of contingent workers over the next three to five years. Conversely, only 16% of executives expect to decrease the size of their contingent workforce. According to the survey, 62% of Canadian executives surveyed rated the trend towards a more flexible workforce as “important” or “very important.”
 
The survey considered a variety of types of contingent workers, including contractors, freelancers, and part-time employees. And significantly to this article, one in three workers in the U.S. is now part of the contingent workforce, with that number expected to grow to half in the coming years.
 
So what's really happening? Why are companies investing in a contingent workforce when there are so many known challenges to overcome with hiring outsourced labor? Some of these challenges include;
 
  • Limited technology to support the size and bureaucratic complexity of the hiring processes
  • Increasingly stricter government regulatory restrictions
  • Limited tracking, monitoring, reporting and analysis of workforce data
  • And, increasing legal, HR, financial and public relations risks.
Even with these challenges, hiring outsourced labor is gaining rapid momentum as it's primarily driven by a shortage of skilled workers on the one hand, and an acute need for flexibility and responsiveness on the other, creating a pressing corporate need for a high-quality, on-demand contingent workforce.
 
Companies of all sizes, local and global, are beginning to realize that the only chance of managing successful growth and organizational expansion is by engaging a quality contingent workforce.
 
One key element of the rise of skilled contingent workers we’ve observed is that organizations can save on costs by hiring for specific projects. The employment cost structure is changing, with some companies opting to pay purchase orders instead of salaries. The higher hourly rates that companies pay to strategic contingent workers are more than offset by the costs savings in terms of onboarding and indefinite salary paid to permanent employees.
 
The fact that the money to hire comes from a different source, with managers able to bypass the traditional HR processes is making hiring much more flexible. Many have been recruited through the Procurement office rather than HR.
 
A contingent workforce first and foremost gives you the ability to acquire the best available talent with a specific set of skills. It enables quick adaptation to major market changes (expansion and contraction), rapid scalability, skill development, and expertise sharing. These are all some of the reasons why adopting a contingent workforce is becoming the most powerful employment strategy today.
 
Additionally, the successful adoption and the management of, a contingent workforce can also be attributed to using a Managed Service Program (MSP), which is no longer the domain of large global companies alone, but also medium and small companies can now benefit from a large range of contingent workforce services provided by a wide choice of MSPs.
 
An MSP is a combination of process, practice, and technology that allows you to centralize and consolidate all your contingent workers, from both staffing vendors and directly sourced. The program also enables you to easily streamline, simplify and manage your contingent workforce supply chain from requisition to payment, and everything in-between. The outcome is increased visibility on contingent headcount and spend, reduced costs and greater compliance with federal and state regulations.
 
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About HCMWorks

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.

Tags: Workforce Management, Contingent Workforce Management, Managed Services Programs

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