4 Ways Contingent Workers Benefit Businesses

5 min read
WorkMarket Editorial Team
WorkMarket Editorial Team
March 27, 2020
4 Ways Contingent Workers Benefit Businesses
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Contingent Workers growing as part of the Extended Workforce

The trend towards contingent workers as a talent acquisition strategy has been growing steadily as more businesses realize the benefits of this type of workforce. ADP Research Institute recently surveyed over 75,000 businesses with a combined payroll of 18 Million employees and found that the share of gig workers within these companies has grown from 14.2% in 2010 to 16.4% in 2018.

Contrary to popular belief, the trend is not shifting due to Gen Z and millennials only, but baby boomers are actively choosing contingent and gig work after retirement to supplement their retirement income, as 20% of the contingent workers surveyed were ages 55 and older. With 1 in 6 workers, according to ADP Research Institutes’ recent report “Illuminating the Shadow Workforce,” in any given business being classified as a contingent worker, many are asking why the shift and what are the benefits to my business to hiring one of these gig workers?

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What are some of the benefits to firms of hiring a contingent worker?

Contingent workers fulfill an immediate need for a temporary problem.

Save Money by using a Contingent Workforce

They enable businesses to be agile in response to changing consumer needs by tapping into qualified talent without the complexity and expense of recruiting and onboarding a permanent employee.

Save Time by using a Contingent Workforce

There are times that specific tasks need a little boost in productivity to meet milestones, and hiring a full-time worker can slow down your ability to meet the deadlines.

As a result, many businesses, as shown above, have moved to building a program based on an extended workforce of contingent workers, specifically to meet those agility needs for the short term. There are four benefits to businesses when using contingent workers. They are:

  • flexibility in staffing,
  • cost savings,
  • tapping into valuable expertise (think the Corporate Brain Drain), and
  • access to a significantly wider talent pool.


Staffing flexibility with a contingent workforce

You can hire an individual for the scope of one specific project, and do not need to participate in the everyday onboarding activities of hiring a full-time permanent worker. The more flexible nature of a contracted position means you can better meet various needs:

  • Repetitive assignments that are high volume, high velocity (frequent and short in duration)
  • Geographically dispersed work that requires skills in different locations, high volume but not concentrated where the same talent can be used
  • Fluctuations in your business such as seasonal influxes and reductions based on your customer demands

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Cost savings from using a contingent workforce

Contingent workers, such as 1099 independent contractors or freelancers, are a more variable expense than a permanent W-2 employee. You also can save on the associated costs that come with supporting employees such as utilities, rent, home office expenses. Aside from not carrying these fixed costs, you also reduce your cost of onboarding and hiring which can cost in excess of $4,000 per new hire.

A contingent workforce provides valuable expertise

According to ADP Research Institute, 1099-M workers tend to be the most educated and carry specialized skills. Sometimes, there is an immediate project where you do not have the internal expertise to perform such as translating documents. Or you may be looking for specific credentials but need them available in multiple time zones on short notice and sending your employees would not be feasible.

A contingent workforce broadens your talent pool

By tapping into the contingent workforce, you can access a wider pool of talent to meet your needs. You might have specific skills to perform work on behalf of your customers but they are distributed across geographical regions. For example, you might need certified technicians or want to tap into retirees that possess certain skills that are limited within your existing workforce.

The increased adoption of workforce productivity tools, like Slack or Google Docs, has led to the ability of more and more contingent workers and businesses to work with businesses far outside their physical geographic location. Meaning talent from another continent, which previously had not been available, is now within reach and can give you that competitive edge you need.

Freelance Management Systems (FMS) Give Companies Visibility into Contingent Workforce Management


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Despite the strong growth in contingent workers, an interesting statistic stood out from ADP Research Institute’s Report titled “Illuminating the Shadow Workforce”. That is the fact that despite this growth, businesses have no official system to manage and track these resources. A wide array of tactics are used to extend beyond the traditional workforce, including staffing agencies, accounts payable, and payroll, but the complexity makes it almost impossible to truly understand and track the business costs associated with these workers. This can lead to “rogue spend” and makes it difficult to effectively build budgets with true insights into the full cost of managing this extended workforce.

Analysts predict that 60% of all contingent worker spend goes unaccounted for within the financial planning, forecasting and budgeting of the average company, but the emergence of freelance management systems, like WorkMarket, have made it possible to effectively and efficiently streamline the process of onboarding, vetting, managing, rating and paying your contingent workforce.


Gain visibility into your extended workforce of contingent workers

We invite you to learn more about Freelance Management Systems in this free guide or give us a call to discuss your unique business staffing needs.


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