Contingent Work

More, more, and more. To stay ahead, organizations are constantly looking to do more work. The speed at which change happens requires organizations to be more agile and more innovative. There's little time for trial and error and a big need for talent with comprehensive experience and expertise. The high demand for expert labor is shaping a new type of economy - The Gig Economy. It's an economy in which organizations increasingly depend on contingent workers.

The concept of contingent work is as old as the days. Organizations are constantly experimenting with new initiatives. These initiatives require skills that an organization's workforce may not possess. Rather than hiring and training employees, organizations growingly use contingent labor to meet skill requirements for these initiatives. Contingent workers are independent contractors hired for temporary assignments during which they lend their skills to one or multiple organizations. Organizations leveraging contingent work choose to do so because they may not have the skills, or time to train and develop skills or be in the need for skills once a project is completed. People choosing to work on a contingent base benefit from greater autonomy, control over their activities, and the flexibility to engage in different projects. Arrangements between organizations and contingent workers also have their risks around quality, security, and cost. Nonetheless, the concept is more popular than ever before.

Contingent work is booming. A study by McKinsey and Company (2022) revealed that 36% of people with work identify as independent workers. Gartner (2023) expects the contingent workforce to make up 30%-40% of the global workforce by 2025. By 2031, the global contingent workforce industry is expected to generate $465.2 billion by 2031 (Allied Market Research, 2023). The rise of contingent workers is predominantly driven by organizations and their needs to scale. Organizations are more frequently exposed to market developments impacting their revenues and, therefore, are looking for flexibility to increase or decrease their labor force accordingly. Positive for the availability of contingent workers is the redefined sense of purpose people are pursuing in their work. Like organizations, people want more flexibility and control. People want to choose when they work, where they work, and to what projects they lend their skills. These needs increasingly find each other in the free market system that contingent labor provides.

Employers currently see the benefits of contingent work outweigh the risks. Organizations experience savings in time and cost while enjoying greater on-demand access to talent and expertise. Harmony between the gig economy and technological advancement has helped organizations overcome previous drawbacks, including a lack of control or security risks. It has become easier for organizations to manage talent even when not all workers are employees. It's near perfect for the short term. The challenge around contingent work is therefore more in the long-term approach. According to Deloitte (2023), organizations must be careful about contingent work's consequences. Growing the number of contingent workers within an organization without a solid management plan creates future roadblocks specific to organizational dynamics. When poorly managed, contingent work could lead to low morale among workers, management silos, and uncertainty around task delegation. Additionally, leaders have to keep in mind the nature of contingent work. Contingent jobs end and when they do talent, knowledge, and skills move on to the next gig. 

Changes in the needs of workers and organizations have given way to the growth of contingent work. Primarily driven by demand from organizations to quickly scale up or down, contingent workers are expected to make up a significant portion of the overall workforce. The short-term benefits have organizations and workers convinced but challenges lie ahead. Without robust talent management practices, organizations could quickly lose critical skills and set up roadblocks for future growth.