In the past, the classification “temporary worker” stirred visuals of the fill-in secretary and nurses needed when an employee took a leave of absence or a team hit a busier season. Though this scenario still occurs, that isn’t the majority. In fact, the “contingent” title has long been giving the wrong impression.
The statistic that 40.4% of the workforce is now contingent has garnered a great deal of attention since it was first reported. Many believe it to be telling a tale of a rise in freelance and temporary laborers, especially with the development of “on-demand” work. However, the majority of this booming figure comes from the growth of standard part-time employees. In fact, the independent contractor title has actually seen a slight decrease since 2006.
Where did the contingent workforce start and how did it get to the place it is today? Well….
The 90s: A Beginning
The history of work and labor is an interesting one. Because our ancestors have long been working for income, even if it were on their own property, it’s difficult to really nail an actual inception. The term “contingent work” was first coined in 1985 by Audrey Freedman and quickly gained the connotation of a lack of income security. The 1990s, though not the beginning years of contingent work per se, was the beginning of contingent labor management as we know it. Economic booms lead to a need for supplemental temporary laborers, or “temps.”
The increase in labor with a more complicated designation and filing increased the need and desire for a management system that eased company resources. The result was the first Managed Service Providers (MSP) and, in the later part of the decade, Vendor Management Systems (VMS). By 1999, 5.6 million people worked contingent jobs and the contingency rate was 4.3%.
The 2000s: Labor Management Meets the Cloud
As the 2000s began, MSP and VMS solutions continued to be highly used tools, pivotal for managing the complexities of a contingent workforce. In this decade, technology would experience amazing advances, bringing about “the cloud” and other digital, always-accessible places to hire, measure and manage contingent labor. It was then that the procurement and HR departments began to collaborate, one focused on the people (HR) and the other on financial aspects (procurement).
As the US economy entered the recession, companies shifted their focus to cost savings and strategies that quickly and easily pivot. Permanent employees became a strain on finances. The best answer was contract labor and project-based employment which saw great increase throughout the late 2000s.
The 2010s and Today:
The story of the contingent worker may have started in the form of a temp laborer, but today it includes so much more. The professionals in this category might be business owners or experienced consultants. Some may be temporary labor, but many are highly-skilled experts with a great deal of talent and innovation to offer the companies they are hired to work within. These employees can be filed as temporary labor, independent contractors, SOW-based or part-time workers.
Those who choose to work contingently see benefits such as continuous skill development, participation in diverse projects, flexible work arrangements and so on. Contingent workers generally bear interest in seeing where their experience can take them without committing to one organization. Those that fall into the hourly worker category can be assured they receive compensation for their time and still balance other pursuits out of the job.
Companies who hire contingent are able to inject innovation into their permanent workforce, receive consultation on processes and practices, find support during large projects or busy times and provide specialized skills when necessary. Budgets are less strained because some workers are contractual instead of permanent. Often, organizations have strict guidelines for performance which means expectations are met by the hired contingent staff.
And the relationship between procurement and HR is not only necessary, in many organizations, it has become well-practiced and efficient. VMS provide an analytical look at an organization’s workforce, helping to provide a more strategic hiring plan. MSPs balance contracts and often help find the right talent for the company.
Tomorrow’s Contingent Labor
More and more companies are welcoming a larger contingent workforce, which means the hiring and management of those workers is no longer an afterthought or uncommon task. Procurement teams and HR have options when it comes to selecting technology and service providers. The future will be focused on using data and those advanced technologies to build knowledge. HR and procurement teams will have more tools at their disposal and the ability to research markups and bill rates. The unique analytics gathered will unveil real organizational needs and, because they have so much knowledge of their workforce and contingent labor trends, they will be able to negotiate better and make more informed hiring decisions.
Interested in learning how you can join the future now and cut costs in hiring contingent labor? Take a moment to chat with our team, or download our latest guide: