What is a contingent worker?

42% of the global workforce is contingent labor. Learn why this talent segment is so vital to the digital economy.

What is a contingent worker?

Contingent workers are individuals hired by a company to do role- or project-based work on its behalf, but not as traditional employees.

They could include independent contractors, consultants, freelancers, temps, or other outsourced labor such as gig workers.

These workers could be contracted via suppliers or other talent pools such as staffing agencies, freelance marketplaces, or sourced directly by a company through their HR or Procurement departments.

 

Contingent workers are also referred to as:

  • gig workers

  • flexible labor

  • non-payroll workers

  • outsourced workforces

  • non-employees

  • staff augmentation

  • individual resources

  • temporary staffing

  • independent contractors

  • contractors

  • freelancers

  • contracted consultants

  • agency workers

Example roles of contingent workers include:

  • nurse

  • retail clerk

  • marketing services

  • truck driver

  • IT specialist

  • construction worker

  • engineer

  • web designer

  • architect

  • copywriter

  • project manager

  • legal services

 

 

 

 

 

 

 

 

 

 

 

Contingent workers bring great benefits to companies

Contingent workers can provide much-needed agility for companies that experience seasonality, uneven fluctuations in their labor force, or economic downturns. The critical flexibility of an external workforce allows a company to ramp up or down quickly, depending on business conditions.

Research conducted in collaboration with Oxford Economics shows that external workers can help organizations realize a broad range of business goals, including managing costs (73%), boosting organizational agility (64%) and reducing risk (64%) – all critical capabilities for business resiliency, especially in uncertain economic times. Download the research

And the need for contingent workers will likely grow. The McKinsey Global Business Executives Survey reveals that approximately 70% of executives anticipate they will hire more on-site temporary workers and freelancers in the next two years, compared with pre-COVID levels

What is contingent workforce management?

Effectively managing flexible labor can be challenging for many companies. The complex interactions required between internal stakeholders, managed service providers (MSPs), and contingent workers typically occur across multiple tools and applications. Often there are multiple, disconnected processes and technologies for managing external workers within the same company, resulting in confusing and disconnected management, frustration, and critical time lost.

Despite their importance to many companies, contingent workers are frequently under-managed. This limits insight into their work quality, individual performance, progress on projects, and other key metrics that can impact a company’s success. It also opens the door to security breaches and compliance issues.

Part of the problem is that companies don’t have the right technology: Only 35% of executives say they have technology for contingent workforce management.

The role of technology

Many organizations implement vendor management software (VMS) to help them manage their contingent workers. Vendor management software is an integrated application with a company’s enterprise technology stack that allow for the full lifecycle management of contingent workers and services providers – from requisition through offboarding.

In some cases, however, organizations do not take full advantage of their VMS functionality, or do not roll the solution out across the entire enterprise. This makes it difficult for global organizations to achieve complete visibility across all of their external labor force, resulting in numerous inefficiencies at an operational level, worldwide.

Only about one-third of executives say their technology helps them effectively source talent from preferred suppliers, enforce negotiated rates, and track quality of work. Even fewer have contingent workforce management solutions to help them manage security access, run bid events, and track equipment usage.

All of this and much more is possible with a best-in-class, cloud-based vendor management system like SAP Fieldglass.

But not all VMS solutions are the same. Discover which VMS is the best choice for your business.

Related Library Resources - Frequently Asked Questions (FAQ)

Are contingent workers the same as the external workforce?

“External workers” or “external workforce” is an umbrella term for all external workers, including non- contingent labor (or non-payroll workers) and services providers. Contingent workers are a part of the external workforce, but not the entire category.

from the library: What is the external workforce?

How are services providers related to the external workforce?

Services providers, or services procurement providers, are companies that deliver people-based services to an enterprise – consulting firms, marketing agencies, law firms, or facilities management companies, to name a few. They are typically contracted to do project-based work via a Statement of Work (SOW), or via an annual retainer agreement that may also be tied to an SOW or other legal agreement.

from the library: What is services procurement?