Contingent Workers Pros and Cons

Weighing up the pros and cons of contingent workers for your talent population is a critical business practice today. Why? Because the workforce has been changing for some time now. And well before we were living with COVID, these changes included factors such as:

  • the explosion of contingent worker usage
  • the increasing incidence of remote working
  • global mobility
  • and the rise of the gig economy (amongst many other factors).

Now, in the era of COVID, we’re seeing even more industries take on contingent workers across the globe. Sure, this trend was happening before the pandemic. But now, contingent workers are proving to be an incredible advantage. How? Market adaptability, the capacity to scale quickly and efficiently, and access to specialist talent, amongst other factors.

But there are also several downsides.

Today, we’re taking a look at the pros and cons of contingent workers in your business. Consider this a precursory insight if contingent workers aren’t yet part of your workforce mix.

What is a contingent worker?

But first, let’s quickly cover the definition of a contingent worker. A contingent worker is any category of worker operating on a tenure-limited basis. The different types of contingent workers, by category, includes:

  • Independent contractors (direct or agency sourced)
  • Freelancers
  • Statement of Work workers
  • Part-time contractors
  • Temporary workers
  • Consultants

Most often, contingent workers have the specialised skills your business needs at a specific point in time and are engaged into the business for a short-term or fixed period.

pros and cons of contingent workers

Pros and Cons of Contingent Workers

Firstly, let’s look at the pros:

  1. Contingent workers offer flexibility

Today’s changing workplace requires adaptability. These are uncertain times. So, the short-term nature of contingent workers provides an ideal option for companies to engage workers, on-demand. The ability to upscale and downscale in response to market demand is a prize offering of the contingent worker. And, when specialist skills are called for, contingent workers are a great, short-term, and therefore cost-effective option.

  1. Contingent Workers Offer Cost Savings

The short-term nature of the contingent worker relationship means your talent overheads are low (lower than if you engaged a full-time employee). Outside of the fixed tenure, you’re also not required to pay superannuation, leave or other statutory entitlements. For business projects contingent workers offer a huge business advantage.

  1. Contingent Workers offer Fresh Perspectives

Contingent workers can offer your business new and fresh perspectives, irrespective of their source. Business leadership and the team can sometimes get too close to day-to-day operations or current projects. The fresh eyes of contingent workers can highlight issues or factors you simply haven’t identified.

contingent worker example

Contingent Worker Advantages and Disadvantages

And now for the cons…

  1. Contingent Workers and Statutory Risks

The statutory risks associated with engaging contingent workers are largely around worker misclassification. If the worker has been with your business for an extended period and is deemed an employee, you’ll encounter potentially significant penalties.

  1. Loss of Company Intellectual Property (IP)

If your company doesn’t have a robust contingent workforce management strategy in place, including water-tight onboarding and offboarding procedures, you risk losing your company IP. Workers who haven’t signed NDA’s or non-compete contracts can (and do!) take your trade secrets, competitive data, and other sensitive IP. This is a potentially devastating loss.

  1. Less Worker Control

Contingent workers are independent by nature. And they’re typically used to working in a ‘certain way’. This can be frustrating for some managers and teams if this style doesn’t fit with the company culture of ‘how we do things’. Some perseverance and patience will go a long way to ensure all parties to the contingent worker relationship are happy and satisfied with the outcomes.

Have a conversation about these pros and cons with us

If you’d like to discuss these (and other) pros and cons of engaging contingent workers into your business, please don’t hesitate to contact me here.