Contingent Workforce, relatively a new term, is a group of employees who work for organizations on a non-permanent basis. This includes employees who are hired on a short-term or project-based work contract. In recent years, the contingent workforce has grown significantly in size and importance.
The global contingent workforce is growing at an unprecedented rate. This growth is being driven by the need for large companies to be more efficient and adaptable to survive in today’s ever-changing business environment. As per a Gartner survey, almost 32% of large companies are hiring contingent workforce to scale faster and stay ahead of the competition.
In this article, we’ll focus on what exactly is a contingent worker. And how can organizations make the most of this growing trend? We’ll also look at how contingent work is becoming the gateway to permanent employment at big companies.
Who is a contingent worker?
A contingent worker is an individual hired to work for a company on a temporary or project basis to perform specific tasks. Contingent workers are not regular employees which reduces the company’s costs and increases the flexibility to stay more adaptable. Research with Oxford Economics indicates that contingent workers give necessary effectiveness for companies with broad business goals including managing costs and reducing risk by 64%.
According to McKinsey’s global business executives survey, around 70% of organizations predict that they will hire more temporary contingent workers and freelancers compared to before covid levels.
The terms which are also referred to as contingent workers are gig workers, freelancers, contractors and outsourced workforces as well. These workers can be hired via staffing agencies, freelancer marketplaces or directly by companies through their HR.
What is contingent work?
Contingent work is defined as any type of work that is not done on a full-time or permanent basis. This includes temporary work, contractual work, specific tasks, short-term assignments and freelancing.
This type of work involves less job security and payment based on work. Although it reports higher income than traditional or permanent employment to freelancers.
Who is hiring contingent workers at a large scale?
According to a recent study, Fortune 500 companies and fast-growing startups are hiring contingent workers at a much higher rate than in the past, especially compared to the pre-covid period. This is because they can scale their businesses much faster by doing so. Additionally, these companies are also able to save money on labor costs by recruiting a contingent workforce.
Some of the largest companies that are hiring contingent workforce include Infosys, TCS, Uber, Amazon, Paypal, Reliance Industries, Nykaa, Swiggy, Paytm, Airbnb, and many others. These companies have all been able to scale their businesses very quickly by utilizing this workforce strategy.
The contingent workforce is trending upward for a long time and becoming the choice of many large-scale companies and growing startups. Companies in the Asia-pacific region are notably interested in hiring contingent workers. The major reasons are workforce flexibility and specifically skilled workforce on a project basis. The various vital advantages and increasing popularity of this workforce are shaping corporates to lean on to the contingent workforce.
Benefits of hiring contingent workers
There are diverse benefits of hiring contingent workers to achieve the strategic and financial goals of companies. Perhaps the most obvious benefit is that it can help a company scale quickly. When a company needs to ramp up its workforce quickly, hiring contingent workers is often the most efficient way to do so. Few benefits of them are as follows:
1. Increased Flexibility:
One of the biggest benefits of hiring contingent workers is the increased flexibility it can provide. Contingent workers are not employees and are not subject to the same rules and regulations as full-time employees. This means that businesses can hire them for specific tasks or periods and then release them when they are no longer needed. This can be a great way to manage fluctuating workloads or respond to short-term needs.
2. Cost Savings:
Another major benefit of using contingent workers is that it can save businesses money. Contingent workers are typically paid an hourly rate that is lower than the salary of a full-time employee. In addition, businesses do not have to provide benefits to contingent workers, which can further reduce costs.
3. Access to Skilled Labor:
Another benefit of hiring contingent workers is that it can give businesses access to skilled labor that they might not otherwise be able to afford. For example, businesses might hire contingent workers with specialized skills or experience to work on specific projects.
4. Reduced Training Costs:
Another advantage of using contingent workers is that businesses can reduce training costs. Contingent workers are typically already familiar with the skills and tasks required for the job, so businesses do not have to invest in training them.
5. Increased Productivity:
Hiring contingent workers can lead to increased productivity compared to regular employees. Contingent workers are often highly motivated to get the job done quickly and efficiently since they are typically paid by the hour. In addition, businesses can often set clear expectations and deadlines for contingent workers, which can help to ensure that tasks are completed on time.
Gateway to permanent roles at big companies
The hiring process in large-scale companies is often quite lengthy and includes several different screening processes. This makes it hard enough to secure a permanent position. However, doing contingent work at big companies is an opportunity to onboard with them as permanent employees easily and quickly in the future.
Contingent workers gain the trust of their project managers and prove the value and advantages they can provide the company with. This helps in getting referrals from project managers to secure permanent roles without many time-consuming and hard screening processes.
There’s no doubt that the contingent workforce is on the rise, and it’s clear that large companies are benefiting from this trend. By scaling their businesses faster and accessing a wider pool of talent, they can stay ahead of the competition. Approximately, 42% of the global workforce is contingent workers who are making a great impact on the world economy. With the many vital benefits of the gig economy, most of the employment rate is switching to a contingent workforce.
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