What Are Contingent Workers, And Are They Right For Your Company?

Across all industries, more companies are using contingent workers as part of their talent and business growth strategies. With so many companies adopting this workforce, should your company do it too? Here’s how to decide.

What are contingent workers?

Contingent workers encompass a variety of people who only work on a project or temporary basis. This label applies to all workers of any skill type or experience level. This workforce includes temporary employees provided by an outside staffing agency to flexible talent and independent contractors.

You can think of them like a superhero who only comes in when you need help. They’re not part of your staff. And you aren’t responsible for providing them continuous work.

What’s the difference between a contingent worker and an employee?

Contingent workers are independent contractors who work as their own businesses. You must work with them differently than you would an employee.

Here’s an easy way to think of how to interact with them: When you visit the dentist, would you sit in the dental chair then tell them how to do their work? Of course not.

It’s the same with contingent workers: You never control when, where, or how the work is done. You simply tell them what you need done (e.g., create a mobile app with specific functionality), then step aside and wait for the deliverables. This means no training and no supervision.

For U.S. workers, the quick-glance chart below shows the general differences between an independent contractor and an employee.

Contingent workforce pros and cons

Contingent workers are skilled professionals with years of experience across multiple organizations. Not only does their varied experience help them ramp up quickly, it often provides insights and fresh perspectives that can improve project results.

The chart below lists several advantages to incorporating more contingent workers into your talent strategy. Most companies recognize it’s a cost-effective way to fill skills gaps, foster innovation, and remain competitive as work needs change.

But there are also disadvantages, such as increasing misclassification risk. That is classifying workers as independent contractors when they should be employees. Getting it wrong can lead to serious tax and employment law violations.

Incorporating contingent workers for business growth

Incorporating contingent workers into your talent strategy can range from isolated projects to creating hybrid teams. Hybrid teams are made up of employees and freelancers who collaborate on projects of any size. Employees perform the ongoing work that moves your company forward. Flexible talent performs project-based work requiring specialized skills.

Companies build hybrid teams to help strengthen customer loyalty, maintain competitiveness, and increase revenue. Such as when one fast-growing tech startup nearly hit capacity at their new call center. The company didn’t have time or a budget to build another center, so they added 139 remote customer service agents to their existing Philippines-based live chat team. Customers liked live chat, so this also gave the company an opportunity to test the service further. The result: call center volume lowered by over a half, thereby extending their deadline to build another one. And their virtual team maintained the company’s high service levels, at a cost of 5X less per customer interaction.

Is it time to add contingent workers? The reality is, you may not have a choice. Sourcing talent is harder than ever before and rapidly-evolving technology makes it difficult for a single business to have all the skills it needs in-house.  It’s little surprise that over six out of 10 HR managers (62%) cite talent shortages as the top driver for embracing a more flexible workforce.

Squeezing businesses further is their need to move faster and more nimbly in order to remain competitive. That’s why more companies are embracing a flexible workforce. And they’re making adoption easier and more cost-effective by finding individuals and agencies through flexible talent platforms such as Upwork.