How a Contingent Workforce Drives Revenue Growth

August 13, 2024

The past 10-20 years have brought a massive increase in contingent work. Experienced workers are retiring, technology has advanced to enable more flexible work patterns, and economic trends have encouraged more gig work. Contingent work provides new flexibility to workers and a way to bridge skills gaps in many industries.

Contingent work has grown significantly in recent years and is an essential part of the global workforce. As of 2023, 80% of employers use contingent workers to get the job done. For some companies, contingent workers represent 30-50% of the total workforce.

Contingent workforce: the basics

First things first: what is contingent work, and why does it matter?

What is a Contingent Worker?

Contingent workers are independent contractors hired to perform services on an as-needed basis. Contingent workers may be called freelancers, seasonal workers, consultants, gig workers, contract workers, or temps.

Contingent workers are engaged for a certain time period or for the duration of a specific project, according to a contract.

What is Contingent Workforce Management?

Contingent workforce management means to acquire, oversee, and empower contingent workers to deliver the best possible service on behalf of the organization. Company leaders set expectations for contingent workers to follow in their day-to-day work—but they must also respect the crucial differences between contingent workers and employees.

Why Contingent Work?

Companies seek contingent workers as a less risky, more affordable, and quicker solution than adding permanent staff. Companies can use contingent work to scale up quickly or offer a highly specialized (or infrequent) service. Companies can also use contingent workers to fill gaps created by staff turnover—especially in healthcare, field service, and other fields where skilled workers are in high demand.

Workers might seek contingent work arrangements because of the flexibility they offer. An individual worker can pick and choose assignments and increase their workload on their own terms. A staffing agency or temp agency can provide access to a wide range of contingent work opportunities for industries (or geographic areas) where new permanent staff positions are scarce.

How Do Contingent Workers Compare to Employees?

Contingent workers are not employees and do not receive employee-specific protections or benefits. Company managers can set expectations for reliability, professionalism, and upholding the brand, but they cannot direct contingent workers’ activities in the same way as staff.

How to use contingent work to drive revenue growth

When asked about the top benefits of using contingent workers, company leaders cite increased productivity, greater workforce flexibility, and increased organizational agility.

Contingent work can be part of a short-term or a long-term strategy. As a short-term solution, contingent workers can perform services while leaders recruit, hire, and onboard new employees. This helps weather issues with workforce retention and rapid growth. As a long-term solution, companies can use a mix of employees and contingent workers to deliver higher service volumes and specialized service types.

Here are a few specific ways contingent work can unlock revenue growth:

Expand service areas

With a contingent workforce, a company can expand to reach new locations and customer groups quickly. Contingent workers are trained and ready to go, which means faster ROI than hiring and training new staff. When expanding to a new service area, the company can engage with contingent workers who are based in the new service area to bridge the gap between the old and the new. In this way, a contingent work strategy allows the company to seize the revenue opportunity, while mitigating the risks and upfront costs.

Manage and sustain periods of high growth

Higher demand means more opportunities for revenue and business growth. But it also means higher overhead costs to recruit, hire, and manage additional staff to meet this new demand.

During these high-growth periods, leaders can use contingent workers to supplement employee capacity. It is faster to vet and onboard contingent workers than to hire and train new employees. Plus, if the demand wanes in the future, it is easier to scale down the contingent workforce than it is to lay off staff.

Offer specialized and white-glove service

Contingent workers can offer specialized skills, unique experience, and qualifications that the company does not have in-house. Even if it’s a service the company wants to provide, it’s not always easy—or affordable—to hire permanent staff members with these qualifications.

In these cases, contingent workers can fill an important gap that employees cannot. For example, a solar panel company performs ~1,000 installations per year, and ~10 of those appointments involve an irregularly shaped roof that requires a roofer to assist. If only 1% of appointments require this service, it makes more sense to use qualified contingent workers than to hire employees for that purpose.

Contingent workforce management best practices

Set clear goals and work together internally. Human Resources (HR), Procurement staff, and leaders in all departments need to understand the company’s workforce strategy and work together. Ensure everyone is on the same page about when it is desirable to hire permanent staff (e.g. when there is time to do so and a clear business need to have the relevant skills in-house) vs. when it is best to use contingent workers (e.g. time-sensitive situation or new market opportunity).

Respect the differences between contingent workers and employees. When a workforce includes employees and contingent workers, leaders must recognize these differences and treat workers appropriately. The equipment, expectations, and work processes may differ between employees and contingent workers. Treating contractors as employees, or misclassifying workers, can trigger financial penalties, legal action, and damage to the company’s reputation.

Communicate the right message(s) and get feedback. Segment communication to employees and communication to contingent workers. Consider communication tools that can deliver messages based on the start time of their next shift, rather than to all workers at once, to accommodate different work schedules. Provide opportunities for contingent workers to give feedback, and conduct a post-assignment exit survey to learn from workers’ experiences. This step alone helps managers stand out, since nearly 60% of contingent workers report they do not get post-assignment surveys on a regular basis.

Make data-informed decisions. Forecast demand to improve workforce planning and scale up contingent workers (and/or staff) appropriately. Implement systems to capture important data, like productivity and effectiveness metrics. (Be sure to account for differences between the performance metrics set for contingent workers vs. employees.) Make this data available for decision-making using role-based permissions.

Standardize your contingent workforce management. Multiple departments may use contingent workers, which creates opportunities for inconsistency. Create a standard way to source, vet, engage with, and pay contingent workers. Look for ways to make the process appealing for skilled contingent workers, like offering their preferred payment methods. To illustrate: 80% of workers prefer to be paid electronically, compared to only 13% who prefer being paid by paper check—but 31% of independent contractors report being paid via paper check.

Invest in the right technology. Implement quality assurance programs to ensure contingent workers are classified and managed appropriately. Workforce management software helps administer the contingent workforce strategy: schedule jobs, allow contingent workers to claim jobs on the schedule, store workers’ qualifications, and track contract end dates.

Ensure the right mix of vendors over time. The market will shift, the business priorities will evolve, and the workforce strategy will need to keep up. Consider the right mix of vendors based on their specialty, location, size, pricing, etc. Regularly review third-party relationships with staffing agencies and individual contingent workers to ensure they are meeting your needs.

Using Technology to Manage Contingent Workers

As one expert stated in an interview about contingent work, “The future talent war will be won by companies that provide as many avenues to access talent as possible and have the systems in place to manage and optimize them effectively.”

Contingent workforce management depends on the right technology to assist the process. Skedulo is a mobile workforce management platform that makes it easy to create custom rules and workflows for managing contingent workers. Post jobs to a job board, where contingent workers can pick their assignments. For a more flexible experience, send out job offers to your workforce—including contingent workers—to see who accepts the job based on availability.

Skedulo helps companies make the most of the contingent workforce, while providing a great user experience for every worker.

Check out Scheduling Mobile Work: 7 Insights From Customer Research to learn more about the role of scheduling and communication in workforce management.

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How a Contingent Workforce Drives Revenue Growth