Contingent workers are skilled experts who are hired on a per-project, temporary basis. Examples include contractors, freelancers and consultants.
Running a business requires significant investment and labour costs are among the largest. To remain competitive, many organisations 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 generally highly skilled experts who operate within their specific fields. These temporary employees are hired for specific projects, rather than being expected to fulfil general duties.
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.
The benefits of hiring contingent workers tend to heavily be financial. A company doesn’t have to collect and pay taxes for the worker, they don’t have to provide sick days or PTO, they don’t have to offer health benefits and there is no need for overtime pay. This saves costs on employing a worker and administrative costs with payroll and HR.
A contingent worker can also provide increased flexibility. If there is an influx of work that is too much for the employees of an organisation, 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 helps prevent the extra costs of bringing on permanent employees and then having to either lay them off, or continue to pay ongoing salaries for unneeded workers. The ability to scale easily without the risk of having to carry a bloated workforce after demand has dropped off is a major advantage of working with contingent workers.
Finally, contingent workers bring with them abilities and expertise that you may not be able to find within your own organisation, especially if there is a unique project that needs to be completed. Contingent workers can be hired based on these special skills—skills that may be essential for a current or upcoming project, but not essential to your ongoing business.
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, otherwise the contingent worker will have the freedom to fulfil their obligations in the way that 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 speaking, 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 and 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’ll need to update your tax information accordingly.
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’ll have all the resources you need to ensure that your contingent workers are happy, productive and effective, for as long as your professional relationship lasts.
Learn more about what ServiceNow could do for your organisation.