Outmaneuvering uncertainty: The contingent workforce and a winning employment model

Outmaneuvering uncertainty: The contingent workforce and a winning employment model

Tap into specialized skills at a lower cost and with greater flexibility with a strong contingent workforce.
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Outmaneuvering uncertainty: The contingent workforce and a winning employment model

Overview
Summary

The contingent workforce is expected to grow by 53% globally in 2023 — which is good news for organizations. Gig workers offer a versatile approach to workforce planning, helping companies bridge critical skills gaps at a lower cost than hiring full-time employees and scale up or down on demand.

In this executive brief, we explore the critical and growing role of the contingent workforce and how organizations can incorporate these workers into their talent strategies.

Read our latest executive brief to learn:

  • How to close skills gaps and reduce costs by hiring contingent workers
  • Why the contingent-workforce employment model is a winning one for employers and contractors
  • 4 steps to strategically implement contract workers into your workforce

From adapting swiftly to market fluctuations to bridging critical skills gaps, the contingent workforce is reshaping traditional employment models. According to McKinsey 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 stopgap. Comprehensively and strategically tapping into this unique and flexible talent pool helps with long-term growth, diversity, and adaptability.

In this brief, 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.

The case for contingent workers

From nonstop recruitment campaigns to extensive layoffs, the volatile market has caused businesses to continually adapt their personnel strategies. There has been a notable surge in the use of contingent workforces over the past three years — a trend we anticipate will persist.

Based on our latest talent insights, the contingent workforce — including freelancers, consultants, and temporary contract workers — is projected to grow by 53% globally in 2023. This explosive growth can be attributed to several factors, including economic unpredictability, increased layoffs, and the significant shift toward matching skills to work and outcomes.

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.

Breaking down the demographics of the contingent workforce

As the gig economy expands, it’s critical for organizations to understand the demographic composition of the contingent workforce. This broad talent pool has varying levels of skills, backgrounds, and experiences.

Understanding the diverse background of the contingent workforce can contribute to a more inclusive and diverse workplace. In fact, contingent roles often appeal to various marginalized groups, including women, underrepresented racial demographics, and individuals without college degrees. By hiring from these groups, businesses inherently foster a more diverse work environment while they discover hidden talent.

 

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