The Contingent Staffing Industry Gets a Seat at the Table as a Strategic Business Partner
Contingent staff, often referred to as temporary or contract employees, are professionals hired on a non-permanent basis. These individuals may be engaged to fill short-term skill gaps, manage workload fluctuations, or undertake specific projects. Unlike traditional employees, contingent workers are typically not considered part of the company's permanent headcount.
Their flexible nature allows businesses to quickly adapt to changing market demands while maintaining operational efficiency and cost-effectiveness.
The use of contingent staff has evolved over the years, with more and more companies relying on temporary workers. According to a report by Staffing Industry Analysts (SIA), one 2023 study found that 65% of companies plan to increase their use of contingent staff over the next two years.
In this article, we'll explore what contingent staffing's new, strategic role means for procurement leaders and the businesses they serve.
The Evolution of the Contingent Staffing Industry: From Service Providers to Strategic Partners
Traditionally, contingent staffing was viewed merely as a tool to fill short-term labor gaps, often in low-skilled positions. Businesses would turn to staffing agencies to provide temporary workers for seasonal surges or to cover for absent employees.
However, as business landscapes evolved, so too did the roles and expectations of contingent staff.
Today, contingent workers are no longer limited to simple, transactional tasks. Instead, they are increasingly found in high-skilled, strategic roles, becoming integral parts of project teams and even participating in decision-making processes. They are employed in a wide range of industries, from information technology and engineering to healthcare and finance, serving in roles such as interim executives, project managers, consultants, and more.
Here are some of the hallmarks of today's contingent staffing industry:
- Companies now leverage contingent staffing to gain access to specialized expertise and competencies that are not available in-house. For example, a business undergoing a digital transformation may hire IT consultants on a project basis to implement new systems and train their permanent staff.
- Businesses also use contingent staff as a strategic tool for managing business uncertainties. For instance, during periods of economic downturn or industry disruption, companies can scale their workforce up or down without the costly and time-consuming process of hiring and laying off permanent employees.
- Contingent staffing enables businesses to be agile, adapting quickly to market changes and maintaining operational efficiency. For instance, in response to the COVID-19 pandemic and the sudden shift to remote work, many businesses engaged contingent workers to swiftly transition their operations online.
The 'seat at the table' is well-deserved and signifies the recognition of the industry's strategic contributions to business success. It also presents more options for workforce procurement leaders, as contingent staffing companies are presenting not only more temporary workers but also workers with extremely specialized skill sets.
The Role of Contingent Staffing in Driving Business Growth
Contingent staffing has long been viewed as a necessary expense to keep the business operational. However, contingent staffing firms can now offer opportunities to help companies drive business growth.
Let's delve into how businesses can harness the power of contingent staffing to scale, innovate, and stay competitive.
Access to Specialized Skills and Expertise
First and foremost, contingent staffing provides businesses with access to a pool of specialized skills and expertise. By hiring contingent staff, companies can tap into high-level competencies and knowledge without committing to long-term contracts.
It's especially beneficial when a company faces specific challenges or ventures into new arenas that require unique skill sets.
For instance, if a company is exploring artificial intelligence (AI) for business automation, it can engage AI specialists on a contingent basis. This approach not only provides them with the necessary expertise but also saves time and resources spent on hiring full-time roles.
This is the result of more specialized employees gaining the freedom to work for themselves. It's also a result of flexible workforce trends, which were spurred by the COVID-19 pandemic. According to McKinsey & Company, 36% of the workforce self-identifies as independent.
Flexibility and Scalability
Contingent staffing provides the flexibility and scalability that modern businesses need to thrive. Companies can adjust their workforce size in response to fluctuating market conditions, seasonal demands, or new projects. In this way, contingent staffing allows businesses to:
- Navigate economic downturns without the need for layoffs
- Ramp up operations quickly during peak seasons
- Undertake ambitious projects without overstretching current employees
Fueling Innovation
Innovation is the lifeblood of business growth. Contingent staff, with their diverse experiences and fresh perspectives, can bring in new ideas that spur innovation. Their outsider viewpoint can often see solutions and opportunities that those immersed in the company culture might miss.
Businesses can also engage contingent workers to pilot new projects and initiatives. If successful, these can then be scaled up, driving business growth and giving the company a competitive edge.
It's no longer a question of why businesses should leverage contingent staffing, but how they can do it effectively to drive business success.
Risk Management and Workforce Flexibility: The Strategic Value of Contingent Staffing
The strategic use of contingent staffing can also play a pivotal role in mitigating various business risks. The inherent flexibility of a contingent workforce allows businesses to adapt quickly to changes in the market, thereby lowering the financial and operational risks associated with permanent staffing.
For instance, during periods of economic downturn or market volatility, the cost of workforce adjustments can be significantly minimized by leveraging contingent staffing. This is because contingent staff can be scaled up or down with ease, whereas layoffs or hiring in the permanent workforce often incur higher costs and longer periods.
Furthermore, engaging contingent staff with specialized skills can help mitigate technical or operational risks. Firms can quickly bring in experts to address specific challenges or to implement new technologies, ensuring that they stay on the cutting edge and avoid falling behind competitors.
Integrating Contingent Workers for a Better Operating Model
The full benefits of contingent staffing can be realized when businesses move beyond viewing it as a stop-gap arrangement and start to integrate contingent workers into their operating models. According to Tony Steadman, EY Americas Leader for Total Talent Supply Chain, companies will need to move toward a "total workforce approach" that integrates contingent workers and direct hires.
"We know that companies are at various stages on this journey,” he says. "This new talent paradigm will allow us to fill in the details — and help companies understand and manage this vital resource."
Here are a few strategies companies can adopt to better integrate contingent workers:
- Inclusion in Strategic Planning: Involve contingent staff in strategic discussions and decision-making processes where their expertise can add value. This fosters a sense of belonging and encourages them to contribute their best to the organization.
- Cross-Functional Collaboration: Encourage collaboration between permanent employees and contingent staff. This not only promotes knowledge sharing but also helps to break down any silos that may exist in the organization.
- Invest in Onboarding: Implement a comprehensive onboarding process for contingent staff, similar to that for permanent employees. This helps to familiarize them with the company's culture, systems, and processes and enables them to start contributing effectively as soon as possible.
- Develop a Contingent Workforce Strategy: Companies should develop a comprehensive strategy for managing their contingent workforce. This should include processes for hiring, managing, and evaluating contingent staff, as well as plans for their integration into the company culture.
By adopting a strategic approach to contingent staffing and integrating contingent workers into their operating models, companies can not only mitigate risks but also leverage the agility, expertise, and innovation that contingent workers bring to drive their business success.
Enabling Digital Transformation through Strategic Contingent Staffing
Digital transformation has become indispensable for businesses striving to stay relevant in today's rapidly evolving technological landscape. Contingent staffing emerges as a key enabler in this regard, offering unique advantages.
Access to Novel Technology Skills
Contingent staffing allows companies to tap into a vast pool of specialized technology talent that's crucial for digital transformation. Be it expertise in AI, machine learning, data analytics, or cybersecurity, businesses can access the necessary skills on demand.
The flexibility to bring in experts for specific projects or initiatives can significantly expedite the transformation process.
Cost-Efficiency
Implementing digital transformation can be an expensive endeavor. Contingent staffing offers a cost-effective alternative, as companies only pay for the skills and services they need for a specific period.
For example, if a company wishes to do an overhaul of its existing computing infrastructure, it could rely on a contingent staff for the temporary project instead of hiring internally and incurring significantly more overhead. This allows businesses to optimize their budget allocation, investing more in key transformational technologies.
Agility in Transformation
Nonetheless, digital transformation is not a one-time task; it's a continuous process of adaptation to emerging technologies.
Here, the agility provided by contingent staffing proves invaluable. Businesses can swiftly scale their digital initiatives up or down, depending on market dynamics and technological advancements, enhancing their resilience and competitiveness.
Envisioning the Future of the Contingent Staffing
Businesses are increasingly recognizing the immense value this flexible workforce offers - not just as a means to fill temporary gaps, but as a strategic asset that propels growth, innovation, and resilience. With its inherent versatility, contingent staffing is poised to become the backbone of a new, agile business model that thrives in uncertainty and embraces change.
This shift in perspective signifies an exciting evolution for the staffing industry, as it transcends its traditional role to become a strategic business partner. As businesses across industries blend contingent staffing into their talent strategy, they not only enrich their capabilities but also foster a more diverse and innovative workspace.
To learn more, don’t miss ProcureCon Contingent Staffing 2024. It’s happening from April 3rd to April 5th at the JW Marriott LA LIVE in Los Angeles, California.