Contingent workforce

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A contingent workforce is a provisional group of workers who work for an organization on a non-permanent basis, also known as freelancers, independent professionals, temporary contract workers, independent contractors or consultants.[1][2] Contingent Workforce Management (CWM) is the strategic approach to managing an organization's contingent workforce in a way that it reduces the company's cost in the management of contingent employees and mitigates the company's risk in employing them.[3]


According to the US Bureau of Labor Statistics (BLS), the nontraditional workforce includes "multiple job holders, contingent and part-time workers, and people in alternative work arrangements."[4] These workers currently represent a substantial portion of the U.S. workforce, and "nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing." "People in alternative work arrangements" includes independent contractors, employees of contract companies, workers who are on call, and temporary workers.[4]

Drivers of growth[edit]

Among several other contributing factors, globalization has had a large impact on the growth in using contingent labor. Globalization contributes to rapid growth in industries, increased outsourcing, and a need for flexibility and agility to remain competitive.[5] By engaging contract workers, organizations are able to be agile and save costs. The contingent workforce acts as a variable workforce for companies to select from to perform specific projects or complete specialized projects.[6] Also as organizations make efforts to be more agile and to quickly respond to change in order to be more competitive, they turn to the contingent workforce to have on-demand access to professionals and experts.[7] Organizations also see the opportunity to reduce benefits and retirement costs by engaging the contingent workforce.[8] However, there is risk involved in avoiding these costs if an employee is improperly classified as a contingent worker. Using the contingent workforce is also cost-effective in that using contingent labor allows for adjustments to employment levels and employment costs depending on what kind of expertise and labor is need and at what time it is needed.

Trends in the contingent workforce are also impacted by the economy. A study conducted by the MPS Group shows the relationship between the contingent labor cycle and the state of the economy.[9] In a bullish economy, the demand for contingent labor is strong. This is most likely because organizations are trying to grow with the economy, and using contingent workers allows them to work with experts when needed, without the long-term costs of hiring them.
A knowledge-driven economy also contributes to the growth in the use of the contingent workforce because organizations rely more on their specific and expert knowledge and expertise.[10] As demand increases for highly skilled and knowledgeable people, the expertise of contract workers becomes more attractive.

Advantages and Disadvantages of using Contingent Workers[edit]

Advantages [11] Disadvantages
Flexibility in type and amount of labor resources Lack of loyalty to employer or company
Save costs in benefits and tax Disturbs organization's core morale and culture
Immediate access to expertise not present internally Training costs
Savings in long-term compensation costs Worker carries the full risk, limited benefits

See also[edit]


  1. ^ from [1]"Workforce Planning and Employment", Quepublishing
  2. ^ from<>"Contingent and Alternative Employment Arrangements, February 2005", US Bureau of Labor Statistics, Summer 2005
  3. ^ from<>"Contingent Workforce Management: Developing a Successful Strategy" Procurement Professional, October/November 2005
  4. ^ a b from "Futurework", Occupational Outlook Quarterly, US Bureau of Labor Statistics, Summer 2000, p.36
  5. ^ from<>, " Ten important issues and trends shaping human resources in 2004", Innovative Employee Solutions, 2004
  6. ^ from<>, "Banc of America Securities Conference", MPS Group, July 2004, page 21
  7. ^ from<>,"The Contingent Workforce", Business Week, May 2007
  8. ^ from<>, "Banc of America Securities Conference", MPS Group, July 2004, page 21
  9. ^ from<>, "Banc of America Securities Conference", MPS Group, July 2004, page 10
  10. ^ from<>, "Contingent Workforce Management", The Human Capital Institute, 2006
  11. ^ from<>, "Workforce Planning and Employment", Que Publishing, December 2005

External links[edit]