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changing nature of contingent workforce

The Changing Nature Of The Contingent Workforce

changing nature of contingent workforce

In the last decade the Irish workforce has dramatically changed and one such development has been the changing nature of the contingent workforce. What was traditionally seen as a low skilled disposable workforce has evolved to become a key strategic element of organisations’ workforce strategies.

 

Defining Contingent Work

There are several different definitions of ‘contingent work’ including direct-hire temporary staff, direct-hire fixed-term contract staff, independent contractors and perhaps the most prevalent of all, those engaged through recruitment agencies. This clearly demonstrates that temporary or contingent staff are a heterogeneous rather than a homogenous cohort so a ‘one size fits all’ policy to manage them is unlikely to be successful.

 

The Traditional View

A traditional view of contingent staff was that of low skilled workers who were paid less than permanent workers, likely to be female or minority and likely to be working in administrative or support roles – essentially a ‘disposable workforce’. In the early 1990s there was a view that the spread of contingent work practices helped perpetuate a two tier labour market system with contingent workers on the second, more disadvantaged tier.

 

The Contemporary View

The more contemporary view is that contingent work represents liberation rather than isolation; it increases flexibility and personal control and, reflective of the value of their skills, some contractors (e.g. in IT) earn more than permanent workers. Contingent work has continued to spread across virtually all disciplines including accounting, law, medicine, banking, management etc. Another manifestation of this is how ‘Interim Management’ positions for C-level executives are now facilitated through a network of executive search firms in Ireland and worldwide.

 

Demand

There are a number of factors that underpin the increased demand from firms for contingent workers. Using workers with specialised skills on a project basis (especially in the IT area), filling temporary absences, facilitating employees’ requests for part-time hours and looking at workers on a ‘try before you buy’ basis are several of the reasons organisations choose contingent workers. However the key demand drivers would seem to come from companies looking to create value and competitive advantage through cost efficiencies and through the use of flexibility.Through this flexible model, organisations can adjust the types of skills employed in line with fluctuations in demand without adding to the long-term cost of retaining these particular skills.

 

Relevant Developments in the Recruitment Industry

In parallel to the growth of regular recruitment agencies, Managed Service Providers (MSP’s) have been a major development in the recruitment industry, linked directly to the growth of contingent staffing practices globally. Staffing industry analysts define an MSP as “a company that takes on primary responsibility for managing an organisation’s contingent workforce programme”. Generally MSPs provide their clients with a Vendor Management System (VMS), which is “an internet-enabled contingent worker sourcing and billing application”. We have a number of the major global MSPs operating in Ireland at present and this is again symptomatic of the nature of large scale contingent workforce management practices.

 

To give an idea of the scale of the global market for contingent staffing it was estimated $100 billion is spent globally on contingent staffing under management through a VMS, an MSP, or both and the figure is continuing to grow. The estimated global temporary agency staffing labour in 2013 was $327 billion. It is important to point out however that the growth in the use of contingent labour is not only in large MNC’s but in small and medium-sized indigenous companies also. These trends indicate that this paradigm of contingent work is here to stay and if anything set to increase in prominence.

Posted by Recruitment Consultant, Sigmar on 7 December 2017

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