Contingent workers are skilled experts who are hired on a per-project, temporary basis. These non-permanent employees work under contract, offering flexibility, helping scale workforces, and bridging skill gaps—without the administrative burdens associated with hiring additional in-house personnel.
Running a business requires significant investment, and labor costs are among the largest. To remain competitive, many organizations need ways to improve workforce efficiency at lower spend. Contingent workers, consisting of consultants, freelancers, independent contractors, and other professionals brought in to work on a per-project basis, may be the answer.
More than simply being temporary employees (such as those sourced through a temp agency), contingent workers are highly skilled experts who operate within their specific fields. These temporary employees are hired for specific projects, rather than being expected to fulfill general duties.
Although employed by your company, contingent workers are technically not your employees. The following are three distinctions to keep in mind:
Contingent workers alleviate the financial burden of traditional employment by eliminating many key expenses. The company does not have to collect and pay taxes for the worker, they don’t have to provide sick days or PTO, they need not offer health benefits, and there is no expectation of overtime pay. This cost-effective approach allows organizations to allocate resources more efficiently and invest in other areas of their business.
Contingent workers provide the flexibility to scale up or down based on project demands, without the long-term commitment associated with permanent employees. If there is an influx of work that is too much for the employees of an organization, a contingent worker can step in to perform the extra work and temporarily fill shoes as needed. Once business slows down or the temporary need is satisfied, the business and the contingent worker simply part ways. This adaptability enables organizations to respond quickly to market changes, seasonal fluctuations, or unexpected project needs.
Contingent workers bring with them abilities and expertise that you may not be able to find within their own organization, especially if there is a unique project that needs to be completed. Contingent workers can be hired based on these special skills—skills that are essential for a current or upcoming project, but not essential to your ongoing business. Whether it's niche technical skills, industry knowledge, or creative talents, contingent workers are a reliable source of diverse perspectives and valuable expertise.
Non-permanent employees require a less comprehensive onboarding process and demand less HR support, allowing them to dive directly into their work. Additionally, because these workers are often paid on a per-project basis, they are well motivated to work quickly and to produce the best possible results.
The benefits of hiring contingent workers tend to be financial, though they are not strictly limited to economic gains. The following are among the most noteworthy advantages of working with contractors and other temporary employees:
Part-time and full-time employees are usually hired on a permanent basis; their contracts do not specify a specific end date. Contingent workers are individuals hired on-demand for a limited span of time, or until the completion of a specified project. A company has no commitment to retain the individual after the end of the project or contract.
Employees of an organization qualify for company benefits and perks, while contingent workers do not. They can still receive certain benefits, but not through the company they are working with. If a contingent worker is hired through a third-party agency, the staffing company will likely provide benefits.
Contingent workers will usually fall into one of two categories: independent contractors who invoice their work, or employees who work through a third-party agency. In either case, your business is not responsible for withholding or paying employment taxes, including medicare or social security.
Although there are several benefits to hiring contingent workers, there are also challenges to be aware of. One such disadvantage is that managers often have less direct control over contingent workers. Contingent workers often set their own hours and are responsible for managing their own projects. Any specific demand for availability or adherence to processes must be clearly outlined at hiring, or the contingent worker will have the freedom to fulfill their obligations as they see fit. For some managers, this lack of direct control can be a problem.
Contingent workers may also create issues relating to loyalty, commitment, and ownership. Generally, contingent workers are dedicated to their projects, not to the company itself. And because they may be working for more than one company at a time, they likely will not push themselves to go above or beyond what their contract specifies to ensure the success of your business.
There are also tax risks in hiring contingent workers. Tax documentation can be complex and confusing, and if an employer accidentally hires an employee as a contractor, they may end up facing steep fines and penalties—in addition to paying missed employee taxes. When working with contingent workers, be aware that if your professional relationship changes and the worker becomes a true employee, you will need to update your tax information accordingly.
There are three primary categories of contingent workers: consultants, temporary workers, and independent contractors.
A consultant is an expert in their field, and they advise businesses on their area of expertise. They usually work in highly specialized or complex industries or areas, such as marketing, business strategy, or even intellectual property. Like all contingent workers, they are non-employees. But, unlike many temporary workers, they function at a high level of independence and don’t usually execute the work associated with the guidance or strategy they provided.
Temporary workers are usually staffed by third-party agencies, but they still work onsite at the location of their work assignment. The assignment can last anywhere from hours to months, depending on the staffing needs of the company. Organizations that need to scale up for seasonal demands or require specialized skills for a short-term project may use temporary workers to fill those gaps without fully employing them.
This category contains consultants, freelancers, and gig workers who are not employed or represented by any consulting firm or staffing agency. They are self-employed individuals offering their services to the public or organizations. They are responsible for all employment tasks and are not eligible for any company benefits.
Contingent workers play vital roles across a range of industries, offering specialized skills and flexibility to meet ever-changing organizational needs. Here are several examples of how contingent workers are utilized to support business goals:
In the technology sector, contingent workers are often hired to complete short-term development projects or provide specialized expertise in areas such as software engineering, cybersecurity, or data analysis. Companies may engage freelance programmers, consultants, or project managers to augment their in-house teams during peak periods or to address unexpected technical challenges.
Healthcare organizations frequently rely on contingent workers to fill staffing gaps in clinical and administrative roles. This includes locum tenens physicians who provide temporary medical coverage in understaffed facilities, as well as contract nurses, allied health professionals, and medical coders who support day-to-day operations and special projects.
Marketing and advertising agencies often enlist contingent workers to support creative campaigns, digital marketing initiatives, and client projects. Freelance graphic designers, copywriters, social media managers, and marketing consultants bring fresh perspectives and specialized skills to the table, helping agencies deliver innovative campaigns and meet client objectives.
In the retail and e-commerce sectors, contingent workers may be employed to manage seasonal spikes in demand, assist with inventory management, and enhance customer service capabilities. Temporary warehouse associates, delivery drivers, and customer support representatives are commonly engaged to handle peak periods such as holidays or promotional events.
Financial firms utilize contingent workers for various roles, including financial analysis, risk management, compliance, project management, etc. Contracted finance professionals support ongoing operations, promoting regulatory requirements and helping with strategic initiatives on an as-needed basis.
Manufacturing companies and engineering firms often engage contingent workers to support product development, quality assurance, and production processes. Contract engineers, technicians, and assembly workers assist with prototype testing, manufacturing optimization, and project-based assignments, helping organizations meet production deadlines while maintaining quality standards.
Field service companies frequently employ contingent workers to perform on-site installations, repairs, and maintenance for equipment and infrastructure. Contract technicians, electricians, and HVAC specialists travel to customer locations to troubleshoot issues, conduct inspections, and ensure optimal performance of systems and machinery.
Brands frequently engage contingent workers as brand ambassadors to represent their products or services at events, trade shows, promotional campaigns, or even as enthusiasts on social media. These individuals embody the brand's values and messaging, engaging with consumers, generating leads, and fostering brand awareness and loyalty.
Regardless of the type of contingent worker you are hiring, it is important to build solid onboarding and offboarding processes to ease transitions. Onboarding and offboarding at the enterprise level can be complex, which makes it crucial to start with a clear vision of your objectives, stakeholders, and scope. A phased approach achieves these goals more quickly, which helps you develop insights as you scale.
Managing a contingent workforce involves a distinct set of procedures compared to traditional hiring and onboarding practices. This specialized approach ensures that organizations efficiently engage and integrate temporary talent to meet their evolving needs. The contingent workforce process encompasses several key stages:
- Research and planning
Before engaging contingent workers, organizations conduct thorough research and planning to identify project requirements, skill gaps, and resource needs. This phase involves assessing project scope, timelines, and budget constraints to determine the optimal mix of contingent talent to support in-house resources. - Sourcing
Once project requirements are defined, organizations embark on sourcing efforts to identify and attract qualified contingent workers. Sourcing methods may include leveraging staffing agencies, online platforms, professional networks, and talent marketplaces to connect with suitable candidates. - Selection
During the selection phase, organizations evaluate candidates based on their skills, experience, and fit for the project or role. This involves conducting interviews, reviewing portfolios or resumes, and assessing the candidates' abilities to meet project objectives. Cultural fit may also be a consideration. - Onboarding
Upon selection, contingent workers undergo an onboarding process tailored to their specific role and project requirements. This is typically streamlined to ensure that temporary employees have more time available for their projects, but may still include orientation sessions, training on necessary tools and resources, and clarification of project expectations and deliverables. - Development
Throughout the project lifecycle, organizations may wish to invest in the ongoing development and support of contingent workers. This can involve providing additional training, feedback, and opportunities for skill enhancement to ensure contingent workers remain effective and aligned with established objectives. - Departure
FInally, as projects conclude, the organizations are responsible for managing the departure process for their contractors. This generally includes conducting exit interviews, transitioning project responsibilities, and acknowledging the contributions of contingent workers to the project's success. Organizations may also wish to explore opportunities for future collaboration. ServiceNow for optimizing a contingent workforce.
ServiceNow Enterprise Onboarding and Transitions solutions are built on the Now Platform, and are designed to increase employee productivity, improve workforce flexibility, support employee journeys, and enhance the overall employee experience. Working with a contingent workforce, businesses can automate the onboarding and offboarding processes at scale, providing effective guidance and getting contingent workers up to speed quickly, no matter how many contractors are involved.
With mobile capabilities, end-to-end visibility, step-by-step guidance, workflow automation, and in-depth analytics, you will have all the resources you need to ensure that you contingent workers are happy, productive, and effective, for as long as your professional relationship lasts. Demo ServiceNow today!
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