Contingent staffing has come a long way over the past decade. What used to be largely agency workers who were likely to be covering a temporary and often manual need has now become part of a holistic and powerful workforce strategy for organizations and enterprises alike.
Ask yourself a question, though. Does your company leverage contingent staff to the fullest extent possible these days?
This is part of a series of articles about Contingent Workforce.
How has contingent staffing changed over the past few years?
The term contingent staffing previously summoned up thoughts of temporary blue collar roles such as security, cleaning and construction, or seasonal work where substitutes needed to be found for employees on leave or to cover a spike in demand.
In many cases, contingent workers were hired by a third-party agency and then outsourced to the business in need. As they were hired by the agency, they often never received compensation or benefits from the places they worked at all.
Today, contingent staffing has changed almost beyond recognition, and its evolution is an important part of the freelance revolution.
Organizations are forced to look to freelancers and independent contractors to fill a wide range of roles, especially in professional areas of the business. According to an Oxford Economics survey, 83% of executives say that they have increased contingent labor in order to meet their business objectives.
Ernst & Young research gives a number of reasons for this shift, and greater insight into what these business objectives might be. “A contingent workforce can help drive and accelerate change. It can also support rapid scale-ups in business models where dramatic growth can occur overnight. Given the extraordinary pace of technology change, contingent workers provide a critical bridge to integrating new products, services, technology and more into operations, without having to expand full-time equivalent headcount.”
It’s time to wake up and smell the time sheets. We are no longer talking about contingent staffing in terms of manual or blue-collar workers.
Instead, we’re seeing the use of contingent labor spread into highly skilled, niche and technical talent as part of a robust business strategy for today’s organizations. Whether it’s gaining new skills not available in-house, overcoming remote hiring challenges, or helping companies outsource niche expertise so they can focus on core competencies — the contingent workforce is here to stay.
Managing a contingent workforce: In-house vs staffing agencies
So, it’s clear that over time the meaning of contingent staffing has changed. But while companies have been increasing the number of freelance workers, Gig workers, and one-off project hires that they onboard, the processes for bringing in contingent labor have largely stayed the same.
The most common approach for enterprises is to use staffing agencies. Staffing agencies became popular as the solution to the challenge of hiring and onboarding independent contractors yourself, in-house.
After all, when you take responsibility for hiring freelance talent, you’re taking on a huge task. You’ll need stakeholders from Finance to approve the budget, Procurement to negotiate payment terms and approve the vendor, Legal to direct which legal docs to sign, HR to recommend additional onboarding steps, Accounting to run KYC and collect the relevant taxation forms, and IT to provide system access or even equipment.
It’s no wonder that organizations like your own turn to staffing agencies, who handle ALL onboarding, payments and compliance, and sometimes even do the hiring for you, too.
Hoever, staffing agencies can become quite an expensive and cumbersome choice when working with knowledge workers due to their high salary. While they may have made a lot of sense when you were looking for security or a construction team, onboarding this new kind of contingent labor is much more disparate and complex.
One week you might need an experienced IT manager, while on another you might need seven entry-level front-end developers. As a result, staffing agencies increase the time it takes to find and acclimate new freelancers, and can end up adding another task to your to-do list — finding the right staffing agency in the first place!
Considering the rise in the use of freelance workers, staffing agencies have also become an expensive option. They will usually take a large finders fee for every worker that they send your way, and in some cases they even ask for a percentage of all projects moving forward, a charge that your freelancers will likely expect you to cover.
Finally, staffing agencies may not even be the smartest way to find the best talent, as premium knowledge workers often grow out of using agencies as they become more skilled, and may prefer to rely on word of mouth.
A new approach for a new contingent workforce
We hate to gossip, and hey — some of our best friends are staffing agencies.
However, as the reliance on a contingent workforce becomes increasingly prevalent, a new approach has begun to rise to the top — Freelance Management Systems (FMS). In many ways, these offer the best of both worlds.
A complete FMS provides these 5 solutions:
Sourcing: Find top freelance talent, and share the love across your company with an intelligent online talent directory of all freelancers, consultants and gig-workers and their expertise.
Onboarding: Customized and automated onboarding workflow defined by finance, legal, IT etc. These workflows can include legal e-docs signage, tax forms collection, background checks, KYC and more based on the needs of the company.
Management: Stay on top of budgets and set up milestones payment approval workflows to keep on track of your freelancers’ spending.
Payments: Stop spending hours paying multiple invoices. Fms will pay your freelancers while you pay one monthly invoice.
Compliance: FMS cab takes the liability over your legal, tax and workforce classification compliance so you can stop worrying over it.
Altogether, your business can keep the control, low costs and flexibility of hiring contingent labor in-house, but also save the resources and headaches involved in creating dedicated procurement processes for sourcing freelancers, onboarding, ensuring compliance, and making payments.
Related content: Read our guide to contingent workforce solutions
Related content: Read our guide to contingent workforce program
Related content: Read our guide to external workforce management