With today’s talent and skills shortages and quickly emerging new technologies, organizations are increasingly recognizing the immense potential of the contingent workforce. From adapting swiftly to market fluctuations and cost-effectively managing human resources to bridging critical skills gaps, the contingent workforce is reshaping traditional employment models. In the United States alone, nearly 36% of the workforce considers themselves independent workers.
However, managing this new workforce demands a fresh perspective and a modern approach. Hiring contractors is much more than a stop-gap measure. Comprehensively and strategically tapping into this unique and flexible talent pool helps with long-term growth, diversity, and adaptability.
In this report, we explore the critical and growing role of the contingent workforce and how contract workers are helping businesses navigate uncertainty, optimize their workforces, and close growing skills gaps.
Based on our latest talent insights, the contingent workforce — including freelancers, consultants, and temporary contract workers — is projected to grow by 53% globally within 2023. This explosive growth can be attributed to several factors, including economic unpredictability, increased layoffs, and the significant shift toward matching skills with work.
But why is contingent such an effective solution? The contingent workforce offers a versatile approach to workforce planning, helpingorganizations bridge growing skills gaps at a lower cost and scale up or down on demand. This strategy minimizes overhead risk and ensures rapid talent mobilization to meet sudden demand surges or personnel fluctuations. And businesses are noticing. According to a 2020 report on gig work by Mastercard, “freelancers could make up half of the workforce in the U.S. within one decade.”
Outmaneuvering the skills shortage
Employers estimate that 44% of workers’ skills will be disrupted in the next five years, according to the World Economic Forum. Much of this has to do with digital transformation and broad adoption of new technologies, such as AI. However, while six in 10 workers will require training before 2027 — according to the WEF — only half of workers have access to adequate training opportunities today.
Contingent workforces allow businesses to quickly tap into a broad talent pool with specialized skills, allowing them to address skills gaps without lengthy processes, costs, or legal hurdles of hiring or laying off full-time employees. It enables organizations to bring in experts for specific projects, ensuring that the right skills are available when and where needed, driving business growth and innovation.
A winning employment model
Hiring contingent workers presents a winning scenario where the organization benefits from operational flexibility and reduced costs. Workers enjoy diverse project engagements (commonly seen in tech sectors where independent workers work for multiple companies at once) and more flexible working arrangements.
One of the key advantages for organizations is the elasticity contingent workers provide. Companies can easily onboard these workers and just as readily conclude their services, bypassing the complex processes often associated with permanent hires. It’s an effective way to avoid layoffs when right-sizing the workforce. Additionally, contingent work offers a unique opportunity for both parties to assess compatibility before considering a full-time engagement. This evaluation period can ensure a stronger, more harmonious relationship in the long run.
