The employment landscape has undergone significant transformations in recent years, with non-traditional job roles, particularly contingent workers, gaining increasing prominence, partly due to the onset of the pandemic. A Statista report highlighting the growth of contingent workers paints a picture of continued expansion in the coming years. Contingent workers in the United States are currently experiencing a growth rate of 64.8%, and this figure is projected to reach a remarkable 90.1% by 2028.

With a growing preference for contingent job roles among workers, it is essential for employers to comprehend the contingent workforce and the advantages and challenges associated with hiring them. So, who exactly are contingent workers?

Defining Contingent Workers

Contingent workers are a category of non-permanent, flexible labor that employers can hire on an as-needed basis. They do not have the same obligations as regular employees and are not on the company's payroll. Instead, they work on specific projects in exchange for monetary compensation. The contingent workforce encompasses freelancers, gig workers, on-call employees, part-timers, and independent contractors, as opposed to full-time employees.

Now that we've established who they are, let's explore the pros and cons of hiring contingent workers.

Advantages of Contingent Workers

Due to their flexibility, contingent workers come with several benefits. Let's delve into these advantages without further delay.

1. Quick Skill Gap Filling

As your company and its technological needs grow, the necessity for increased hiring becomes evident. However, the traditional hiring process is time-consuming, taking around 36-42 days to complete, leaving critical positions unfilled for an extended period. On the other hand, hiring contingent workers is swift and efficient, as they often possess the required skills and expertise from the start, streamlining the selection process. Additionally, you are not committed to them on a long-term basis.

2. Diverse and Expert Professionals

Contrary to the notion that contingent workers are less skilled, many companies now find top-tier talent through the on-demand workforce, with 40% of them recognizing the advantages of this approach, according to HCMWorks. The shift toward non-traditional work models is driven by professionals seeking a better work-life balance, dispelling the myth of lower talent quality. Hiring a diverse range of individuals from different backgrounds and locations can bring innovative and unique perspectives to help your business grow.

3. Flexible Employment Model

In an ever-changing and competitive market, the ability to adapt and respond quickly is crucial. Non-permanent workers who can fulfill short-term objectives align well with the agility necessary to thrive in a dynamic business environment.

4. Cost Reduction

According to a recent SHRM survey, the average cost-per-hire for full-time employees is approximately $4,129. Hiring is a vital aspect of business growth but can be a significant financial burden. Opting for contingent workers on a project-specific basis allows you to pay only for the work completed, eliminating costs associated with unproductive hours and benefits provided to full-time employees. This includes expenses like salary increases, insurance plans, profit-sharing plans, paid leave, and pension contributions.

5. Simplified Tax Filings

Employers are responsible for handling their employees' taxes and ensuring compliance with local laws and regulations—a complex task, especially for global employers. Contingent workers, however, are considered self-employed, relieving you of tax-related responsibilities. This arrangement saves you time and minimizes the risk of non-compliance with government tax regulations.

6. Freedom to Experiment

Introducing innovation can be risky and costly for companies. Hiring contingent workers allows you to experiment with new approaches without making long-term commitments. If a particular strategy doesn't yield the desired results, it's easier to pivot or terminate the project with contingent workers involved.

Disadvantages of Contingent Workers

While there are numerous advantages to hiring contingent workers, there are also significant challenges to be aware of.

1. Limited Employer Control

Contingent workers, despite working for your organization, are not considered regular employees. This limitation means you have less control over how they execute their work. You can specify the end results you desire but cannot dictate their work methods, working hours, or the step-by-step process they follow.

2. Trust and Reliability

The quicker onboarding process for contingent workers can lead to oversight in the screening and hiring process. Rushing through this process can result in hiring individuals who may not be trustworthy or reliable, potentially causing significant issues.

3. Security Risks

Contingent workers often handle sensitive business data, including confidential information. This presents a higher risk compared to hiring full-time employees for the same tasks, as even minor lapses in security can have severe consequences for your business and its reputation.

4. Legal and Compliance Challenges

Determining the legal status and responsibilities of contingent workers can be complex, especially concerning contractors. Various countries have different legal terminology and classifications for these workers, leading to potential misclassification issues that can result in legal penalties and complexities for global employers.

5. Team Culture and Cohesion

Contingent workers typically have shorter tenures with your company and may not fully integrate into your team's dynamics. This lack of cohesion can impact their productivity and lead to a less cohesive company culture, potentially affecting your reputation.

6. Inconsistent Talent Availability

Contingent workers often set their own working hours and may not be available during emergencies or crises. This lack of consistency can disrupt project progress and make it challenging to rely on them in urgent situations.

Managing Contingent Workers

Despite the challenges, they are manageable. Here are steps you can take to address and handle these issues effectively.

1. Meticulous Screening

Implement a rigorous screening process to select the right contingent workers. Conduct thorough background checks and gather references from their previous employers to ensure reliability and trustworthiness.

2. Data Security Measures

Minimize trust-related concerns by restricting contingent workers' access to sensitive data. Implement technical safeguards to prevent unauthorized data sharing or publication.

3. Legal Compliance

Outsource legal compliance matters to Professional Employer Organizations (PEOs) or legal experts who specialize in navigating the complexities of labor laws, especially in a global context.

4. Team Building and Engagement

Take proactive steps to involve contingent workers in your company's culture. Encourage team-building activities and include them in team meetings to foster a sense of belonging and improve their productivity.

Conclusion

Contingent workers represent a modern adaptation of the traditional employment model. Their flexibility and adaptability make them a valuable asset in today's ever-changing business environment. While challenges do exist, with proper management and strategy, the benefits of employing contingent workers can far outweigh the disadvantages.