Many Aspects of Contingent Workforce

“Work” – in today’s world is becoming more and more project-based and relies heavily on technical skill sets. Workforce realities, structural shifts, and a change in social norms are affecting the nature of employment. Businesses and workers need to know how to adapt to these changes. As determined, the need for sophisticated, project-based work combined with the mindset of finding work independently has contributed to the emergence of the 21st century contingent workforce. As of June 2012, there were 2.534 million contract and temporary workers in the U.S.

Definitions of the various types of contingent labor that may be employed

Temporary employees	When hired through an outside agency, temporary employees bring with them a management layer that is also contingent.
Part-time employees	These might or might not receive benefits, but fall outside the traditional category due to hours per workweek.
Interns	In paid and unpaid positions, interns work while receiving on-the-job training for a specified time period in a unique arrangement well outside the norm. They may be groomed for future positions within the company. College students are a good example of contingents in this category.
Consultants	This group is typically considered contingent. Usually knowledge-based, they are frequently part of a consulting firm or similar organization.
Independent contractors	This group is typically considered contingent. They often work as sole proprietors on an hourly basis.
Outsourced workers	These employees are paid and managed by a third-party that bills the organization, which in a sense hires the third-party directly and the employees indirectly. As with temporary agencies, the third-party itself is contingent.
Offshore workers	In some cases these might be traditional company employees, but in other cases they are not. Moving employees offshore takes them outside the four walls, and offshore status adds a unique communication layer to temporary, part-time, consulting and independent-contractor offshore workers. Offshore contingents might be the result of a buy-out, joint venture or partnership.
Persons of Interest (POI)	While not strictly a contingent worker, they are a type of person that needs to be tracked for compensation or benefit purposes.

Use of contingent labor requires separate tracking – hiring, training, managing, and either exiting or potentially converting to a full time employee – and have different requirements than regular employees. There are many legal differences depending on the type of contingent hired and each difference must be tracked and managed carefully. And there are other risks like knowledge management and co-employment.

If there are so many risks in taking contingent workforce, why would an employer go for contingent labor?

Here are few of the answers to that question.

1. May have faster ramp-up times
2. Help reduce the costs associated with recruiting and training
3. Provide diverse sources of interaction for the knowledge workers
4. Increase an organization’s ability to attract, retain, and motivate high-performing individuals
5. Enable an organization to proactively plan for the economic impact of expected talent shortages
6. Lower benefit costs, since many contingent workers don’t legally qualify for employer benefits.
7. Lower employment/payroll taxes

Contingent workers choose to find work independently because they enjoy the flexibility. Their motivation is to be their own boss, the level of compensation, and the freedom to choose their work.

In terms of productivity, the combination of a higher employee morale plus a lower cost is indication enough of a probable boost in productivity.

To conclude, having a well-run and effective contingent workforce strategy in place will allow you to reap the benefits you need to stay ahead of the competition. Use of contingent labor is on the rise and those organizations that take advantage of it early and strategically will shine.

About Author:

Nisha Tolani is consultant and part of Systems Plus Pvt. Ltd. She is a part of consulting team that delivers Sourcing and Vendor Management Office projects. She can be contacted at: nisha.t@spluspl.com