The Rise of the Contingent Worker

The COVID-19 pandemic led to the growth of the contingent workforce because companies were able to tap into flexible labor and utilize remote workers. Is it here to stay?

When the COVID-19 pandemic hit, job offers were rescinded, hiring was frozen, and many businesses and their employees were forced into an unpredictable limbo. Now with tech and finance layoffs impacting the U.S. employment landscape, a significant number of permanent workers are again at risk. Contingent workers, on the other hand, may be in a better position. 

The Bureau of Labor Statistics defines contingent workers as “people who do not expect their jobs to last” or who “report that their jobs are temporary” either with or without contracts. This broad definition means that independent contractors, help agency workers, and workers provided by contract firms all count as contingent workers and the contingent worker management business is booming. The global contingent workforce industry generated $171.5 billion in 2021 and is estimated to reach $465.2 billion by 2031. Why did contingent work flourish during the most recent labor market disruption? The COVID-19 pandemic led to the growth of the contingent workforce because companies were able to tap into flexible labor and utilize remote workers. 

The Contingent Workforce Could Be Flexible

A contingent workforce provides greater flexibility than permanent roles when companies experience fluctuations. During the pandemic, employing contingent workers allowed companies to quickly scale down or scale up as needed. Before the pandemic, contingent workers were seen as people who could plug a gap or backfill a position, but during and after the pandemic, the contingent worker became a very strategically utilized part of many companies’ workforce. 

Being able to hire a contingent workforce added flexibility, scalability if needed, and decreased risk for companies without it affecting their permanent workforce negatively. This attitude is reflected in the demands for the industry. Flexible staffing was 80% of the contingent workforce management market in 2021. This demand for flexible workers created the second reason why the contingent workforce grew during the COVD-19 pandemic: remote work. 

The Contingent Workforce Could Go Remote Quickly

Between 2017 and 2018, Statista estimates that there were approximately 34.7 million people working remotely. By May 2020, there were 48.7 million additional employees working remotely. Companies had to adapt quickly, and contingent workers could be brought on to provide expertise and fill gaps where the greatest flexibility was needed all while continuing to work remotely. The Staffing Industry Analysts found that just 2% of temporary staff worked from home in 2019 across industries. In 2020, that increased dramatically to 50% of temporary staff. The effects were felt even more in IT. Only 10% of temporary staff in IT worked remotely in 2019, but, in 2020, in average 83% of temporary IT staff supplied by U.S. staffing firms worked remotely. 

Lockdowns have ended around the world, but remote work has not. On 22 March, the Bureau of Labor Statistics released data showing a decline in companies offering telework options, only 27.5% of businesses said their employees worked remotely, but many are skeptical of the numbers. The Census Bureau and researchers at Stanford University released surveys that found that remote work accounts for roughly a quarter of all workdays in the U.S.—slightly lower than in 2021 (33%) but still significant. With remote work still very much an option, will companies continue to use the contingent workforce as much?

What is the future of the contingent workforce?

While there are upsides to using temporary workers, there are downsides for companies that don’t think through the consequences. Deloitte’s research on the future of the workforce conducted with the Massachusetts Institute of Technology found that companies need to take an integrated approach to realize the full potential of the contingent workforce. Companies that continue to increase the number of contingent workers without a management program that can avoid siloes in management, uncertainty of delegated tasks, low morale among workers, and shifting organizational dynamics, particularly in human resources, can create roadblocks. 

What is the impact of contingent work on workforce mobility?

The rise of contingent workers is important for workforce mobility professionals because their popularity has realigned company talent priorities. It is easier now than ever before for companies and organizations to hire workers globally to fill both contingent and fulltime roles. Additionally, as remote work continues across industries and both employers and employees see the benefits in workplace flexibility and versatility, talent strategies have changed to incorporate these values more whether that’s in talent retention or looking at how to add contingent workers as a more permanent part of their company’s work pool. Reliance on contingent workers, both locally and internationally-based, is expected to continue and the workforce mobility industry will be expected to play a key role in helping shape and deploy these new talent strategies as they develop.