The world of work has been in flux for the past decade. At the core of its changes is the continuous rise of the gig economy, with pre-pandemic numbers indicating 36% of US workers are involved in non-traditional employment. Since the onset of the global pandemic, the economy and workforce have witnessed upheavals that have reverberated across industries, with contingent labor spend predicted to shrink by 17% this year. This decline is predicted to shift to a 12% growth in 2021, as more organizations realize the positive impact contingent labor will have on their company’s ability to meet strategic goals. As we all move forward within the new landscape, there are three emerging trends indicating that an extended workforce will help organizations to rebuild for success.
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Cost Savings and Flexibility
There’s no doubt that the global pandemic has accelerated large-scale shifts in how people work and how business is conducted. No matter if your organization is just reopening, weathering a significant financial blow, or operating as usual, the uncertainty in the economy is driving all businesses to be aware of how to save money while still achieving strategic goals.
One method for accomplishing this task is to boost contingent staff hiring processes. Research shows that “32% of organizations are replacing full-time employees with contingent workers as a cost-savings measure”. While budget cuts initially hit the extended workforce, there’s a growing shift in the opposite direction—to increase contingent staff hiring. Hiring gig workers offers greater flexibility for staffing up or down, and a cost-savings from lower financial burdens than when bringing on a full-time hire.
In order to stay competitive and ensure business continuity, it’s imperative that companies create and execute a contingent workforce strategy that allows them flexibility in hiring to achieve critical goals while saving on operating costs.
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Direct Sourcing is the process in which companies leverage their brand to attract talent for contract positions, and is a growing trend in alternative sourcing strategies. As organizations look to cut costs, direct sourcing is an appealing solution as it offers a more direct connection to the talent as well as even further cost savings with their contingent labor program.
Through strategic technology partnerships or leveraging an MSP or RPO offering for direct sourcing, companies can position themselves as a destination brand which can result in increased applications and broader access to talent. While only 20% of large organizations utilize their career site to attract gig workers, 57% of those surveyed intended to do so within the next two years. Additionally, direct sourcing of a candidate can mean lower bill rates and cost savings while building rapport directly with your extended workforce who may fill full-time positions when the time is right.
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Skill Focused vs. Role Focused
The hiring process often involves an emphasis on filling a role within an organization. The hope is that this person can bring the mix of skills required for the position, develop ties to the organization, and stay on board for an extended period. In the post-pandemic era, there’s now a stronger focus on skills and being able to hire individuals who can complete skill-specific work through freelancing. This allows organizations to pay only for the critical skill needed to complete a project rather than taking on the burden and cost of filling a full-time position. Engaging with freelance talent was on the rise before the pandemic, however high unemployment rates have now accelerated the trend towards traditional employees taking on freelance work.
Technology and “stay-at-home” initiatives throughout the US have shifted employers’ mindsets to create more flexibility in the workplace. Now that white-collar jobs are no longer tied to a brick-and-mortar office, work can be completed at any time and any place. And the most cost-effective way of doing this is through engaging with freelancers.
Thinking about what skills are needed to complete a strategic initiative or project, and hiring to fill that skill gap for a specified period of time is going to allow companies to recover and grow.
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Conclusion: Rebuilding the Economy
The gig economy was gaining momentum in the years leading up to 2020. The pandemic has resulted in an accelerated emphasis on the contingent workforce providing solutions to a company’s business continuity plan while simultaneously providing cost savings. These three emerging trends can help HR departments and organizational leadership develop creative solutions to recovery and achievement of strategic initiatives.