As customer expectations, technology, and the demands of running a modern business change, relying on a contingent workforce makes it easier for organizations to adapt to business needs.
The number of people working as freelancers or independent contractors is growing. More than 1 in 3 professionals currently freelance. They like the freedom and flexibility they gain with this type of work, including the ability to scale up or down in terms of what projects they take on as desired.
Today’s contingent workforce makes it easier for businesses to bring experienced professionals on board as needed. Rather than hire full-time employees to manage various tasks, such as building a website or outlining a marketing strategy, they can hire contingent workers to complete the work.
This arrangement includes various benefits and considerations that businesses should be familiar with. Understanding how the contingent workforce functions and what it can offer your organization will make it easier to decide if this arrangement is best for you.
What is a contingent workforce?
Contingent workers are hired on a per-project basis. They’re also known as freelancers, independent contractors, and consultants.
Importantly, these workers aren’t considered permanent employees, and often aren’t employees at all, although they can work a full- or part-time schedule, because they work for the company for a specific project or length of time only. Contingent workers can work on-site or remotely.
Contingent workers allow organizations to scale their teams up or down based on projects and current business demand without adding a permanent headcount that may not be needed long term. These temporary workers bring their expertise in specific areas and help businesses accomplish particular goals.
Contingent worker examples
Contingent workers are available at all skill levels and for virtually any type of work. Many companies still believe that freelancers are low-skilled and the work they do is low-level. However, that couldn’t be further from the truth, as contingent workers might include:
- A project manager to help identify the main objectives of a project and communicate with key stakeholders
- A web developer to script language to build websites and test webpage functionality
- A social media manager curates a brand’s image across their social media platforms
- An iOS developer to program a shopping app to work on Apple’s iOS
- An accountant to handle increased accounting demands, like at tax time
- An editor to edit newsletters from industry thought leaders
- A customer support representative to answer product or service questions that customers might have
What are advantages and considerations of the contingent workforce?
As businesses consider what they can accomplish, they’ll want to review the benefits of using temporary workers and several considerations when embracing a contingent workforce. This can help businesses looking to build hybrid teams that combine temporary workers and permanent employees.
Contingent workforce advantages
Organizations often find themselves drawn to the benefits that temporary workers can bring to the entire workforce. Some of the most significant advantages include the following:
- Cost savings. Financial advantages often stand out. Working with contractors and freelancers means that businesses don’t have to spend as much time and money on administrative costs. They also don’t have to worry about employment benefits, such as health care, which can add a financial burden to the business.
- Added flexibility. Businesses only need to hire people when they need them, preventing unnecessary expenses. Workers can join the team at key points in a project, and the organization can scale down when they’ve fulfilled their roles.
- Ability to expand the team’s skills/abilities for special or one-time projects. The contingent workforce brings considerable talent to the proverbial table. These professionals will generally have portfolios that demonstrate their skills and how they can benefit businesses.
- Access to a wider pool of talent. With a contingent workforce, businesses also have access to a wider selection of workers, including those not in their geographical area. On Upwork, for example, businesses have access to the top independent professionals worldwide—allowing each organization to select professionals who fit their needs best.
- Ability to shorten the hiring process. Working with freelancers means that human resources departments spend significantly less time onboarding new hires. This gets everyone working faster and helps the business get the most productive work time for their investment.
Contingent workforce considerations
For businesses getting started with contractors, there are a few considerations that can help make the transition successful.
- Observe the impact of contingent hires on the overall team. Organizations will need to carefully monitor how the rotation of workers impacts working relationships and team productivity.
- Build communication within the team. When you have a team made of employees and independent contractors, develop a system that ensures all members feel appreciated and encourages effective communication so that everyone understands their role.
- Understand the differences between employees and independent contractors. Employment status is based on the worker’s relationship to the business. As a result, this can affect everything from taxes to the benefits they’re entitled to. Upwork’s Enterprise compliance support can help ensure you’re classifying your workforce correctly.
What are the best practices of contingent workforce management?
Organizations interested in taking part in the contingent workforce will find that utilizing best practices can help them get the most out of their work arrangement.
- Make sure to utilize human resources. Your HR department can help ensure that your new hire is appropriately classified and given directions and responsibilities that coordinate with other team members.
- Create an excellent worker experience. Ensure that the hire and the team they work with see the benefits of the arrangement. Have a plan before hiring contingent workers that outlines how they’ll fit into the project, their role on the team, and their fit within the team hierarchy.
- Have a companywide plan for bringing in contractors. Rather than allowing individual departments to create policies and ideas for managing their contingent workers, have a companywide strategy to create cohesion and minimize confusion. This plan should also include a system for managing workers’ time, payments, and responsibilities.
- Use a platform to help you manage projects from one place. Having everything in one place can keep team members on the same page and reduce confusion or delays. A central platform like Upwork can help with tracking work progress and administrative management as you progress toward milestones, as well as keep communications in one place and ensure secure and timely payments.
Understand how to use contingent workforces in 2022
Contingent workers will continue to play a critical role in modern businesses moving forward. With businesses turning to remote work throughout the pandemic, they have only begun to see the potential for a contingent workforce. This opens up the door further to the benefits of independent workers to help businesses scale, save money, adapt, and tap into the world’s best talent.
If you’re interested in seeing how the contingent workforce can help your business, explore the independent professionals available on Upwork. We make hiring the right talent simple and straightforward.
FAQs: Contingent workforces
Which categories make up the contingent workforce?
The contingent workforce can include various groups. Many contingent workers operate as freelancers, independent contractors, and consultants. The central component remains that the professional has an independent business and only works for your business for a set period or on a particular project until that project is completed.
Is a contingent worker an employee?
The classification of a contingent worker depends on several factors. One of the main considerations is the relationship and level of control or freedom between the contingent worker and your business. It is critical that businesses pay attention to the rules differentiating employees and contractors to classify the worker’s status appropriately. This FAQ doesn’t attempt to provide any legal advice or to list all the criteria that go into the classification process.
Do contingent workers get benefits?
Contingent workers that are not classified as employees may not be entitled to benefits, such as health care or retirement benefits. Businesses should work with their HR departments to ensure they properly understand how to differentiate between independent contractors and employees to ensure they comply with all laws and regulations.
