The rise of contingent workers is shaking up the 21st-century economy

This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management.

This week, we want to highlight a fascinating survey by global management consultancy Deloitte. Titled Human Capital Trends 2016, the survey solicited 7000 responses from executives at 130 countries about a vast array of workforce topics including organizational design, hiring, leadership, and other issues, with the goal of assessing how the 21st-century workplace is evolving.

Most relevant to our work at Argentus, Deloitte’s survey features a section on the way that the rise of contingent workers is shaking up the 21st-century economy, with lots of great takeaways for companies looking to make their organizations nimbler, more responsive, and cost effective.

The big headline, for us, is that 42% of executives surveyed plan to increase or significantly increase the use of contingent workers over the next three to five years. Conversely, only 16% of executives expect to decrease the size of their contingent workforce.

According to the survey, 62% of Canadian executives surveyed rated the trend towards a more flexible workforce as “important” or “very important,” with that number going even higher in some rapid-growth markets such as India and Brazil. Deloitte’s survey factored in a variety of contingent workers, including contractors, freelancers, and part-time employees.

According to the survey, one in three workers in the U.S. is part of the contingent workforce, with that number expected to grow to half in the coming years. At Argentus, we specialize in finding companies contingent workers for high-skilled, project-based strategic work in Procurement and Supply Chain. So we found Deloitte’s findings interesting, to say the least.

One key element of the rise of high-skilled contingent workers we’ve observed is that organizations can save on costs by hiring for specific projects rather than indefinitely, and this is borne out in Deloitte’s analysis: “Cost structure is one factor driving this trend,” says the survey, “with some companies opting to pay purchase orders instead of salaries.”

The higher hourly bill-rates that companies pay to strategic contingent workers are more than offset by the costs savings in terms of onboarding and indefinite salary paid to permanent employees. The survey also outlined a key appeal of the contingent workforce for organizations that we’ve heard from our clients: the fact that the money to hire comes from a different pool, with business leaders able to bypass HR processes to make hiring more flexible. As the survey says, “These new additions to the workforce work side-by-side with those on the balance sheet.

Many have been recruited through the Procurement office rather than HR systems.” One big thing to note from the rise of high-skilled contingent workers is that companies are beginning to see these workers as part of the backbone of organizational strength, rather than as “seat fillers” for leave coverages, as contingent workers were often perceived in the past.

Contingent workers in strategic fields (such as Strategic Sourcing) are highly ambitious – they get bored easily, and are well-suited to making a positive organization on an impact fast. And as we’ve written about before, in areas like Strategic Sourcing, high-skilled contingent workers are better-positioned than permanent employees to drive organizational change and improvement. Far from seeing high-skilled workers as the transactional gap-fillers they used to be, analysts and executives are increasingly seeing these workers as one of the most dynamic factors in the 21st-century economy.

We read a great article from Forbes contributor Elaine Pofeldt about this shift, titled: “The Hot Corporate Career of the Future Isn’t What you Expect.” Pofeldt uses Deloitte’s findings, as well as interviews with career experts, as a baseline for an analysis of how contingent workers are taking on a more prominent role as strategic contributors and change agents rather than tactical role-players. It’s something we’re seeing all the time within our recruitment areas of Procurement and Supply Chain, but it’s interesting to see the contingent workforce taking off in the wider world of work as well, even for other high-impact knowledge workers like physicists and specialized engineers. In Ms. Porfeldt’s words: “Freelancing used to be a desperate measure for cash-strapped workers who were between jobs. But today, corporate freelance careers look like the next hot opportunity for ambitious professionals, as big companies embrace a business model where the traditional job is going the way of the steno pool.”

One more takeaway from the survey: Interestingly, Deloitte links the rise of the contingent workforce to increasing workforce automation, a topic that we’ve written about before. This aspect of the trend is more relevant to jobs with a high degree of repetition than the kind of strategic, high-impact contingent jobs that are emerging in Procurement and Supply Chain. But it’s interesting to note that organizations see these trends as linked. (One interesting tidbit we’d be curious to hear reactions to: Deloitte’s survey found that 20% of executives expect workforce automation to increase, rather than decrease, hiring.)

We recommend checking out Deloitte’s survey. There’s a lot to dig into beyond the topic of contingent workforce management. It’s highly relevant for anyone interested in talent and the 21st-century workplace.