Effectively managing a workforce starts with understanding the key differences between permanent and contingent employees. Contingent workers, who aren’t permanent staff, bring diversity and flexibility to a company. They can help businesses scale quickly, provide specialised skills, and adapt to project or seasonal needs.

Given the fluid nature of this workforce, ensuring a positive experience for contingent workers is essential. These individuals often have numerous opportunities elsewhere, and if they disengage, there’s no certainty they’ll be available when needed again. Effective management and carefully designed contingent workforce program can help maintain access to this valuable talent pool.

A contingent workforce program is a strategic approach that organisations use to manage their non-permanent workforce effectively. This program oversees the recruitment, engagement, management, and compliance of contingent workers such as freelancers, independent contractors, consultants, temporary staff, and gig workers.

The goal of a contingent workforce program is to ensure businesses can access the talent they need while maintaining flexibility, optimising costs, and minimising risks related to worker misclassification or non-compliance with labour laws.

Key components of an effective contingent workforce program

• Recruiting: A well-structured contingent workforce program begins with an effective talent acquisition strategy. This involves sourcing and hiring contingent workers through a variety of channels, such as staffing agencies, direct sourcing initiatives, and online freelance platforms. Staffing agencies and Managed Service Providers (MSPs) offer access to a wide network of pre-vetted talent, while direct sourcing allows organisations to build their own talent pool of qualified candidates for future needs, reducing reliance on external vendors.
• Onboarding: A key component of a contingent workforce program is onboarding which ensures that contingent workers can quickly become productive and aligned with the organisation’s goals. Streamlining the onboarding process is essential, as contingent workers are often engaged for short-term projects or specific tasks, requiring them to start contributing immediately. This involves simplifying administrative procedures, such as contract signing, tax documentation, and compliance training, while ensuring all necessary information is shared efficiently. Providing workers with timely access to essential tools, systems, and resources—such as project management software, communication platforms, and company-specific guidelines—enables them to perform their roles effectively.
• Compliance across markets and industries: A contingent workforce program must be compliant with local labour laws and regulations. Proper classification of contingent workers, such as distinguishing between independent contractors, temporary employees, and freelancers, is essential to avoid legal and financial risks. Misclassifying a worker can lead to penalties, back taxes, and lawsuits.
  This becomes more complicated when a company operates in different countries, as labour laws and tax rules vary between countries, states, and regions. For example, some country might require contingent workers to get specific benefits or legal protections. A good contingent workforce program includes processes to handle these differences and ensure contracts, pay, and benefits comply with local laws.
• Streamlined payroll management: The payroll servicein a contingent workforce program simplifies the management of your contractor workforce, reducing the burden on your business. It ensures that payments are processed accurately and on time, without the need for your internal team to handle the complexities of contractor compensation. By using technology and automation, the process becomes more efficient, providing a smooth experience for both your contractors and your HR or finance teams.
• Business intelligence: Business intelligence is a key component of a contingent workforce program, as it helps organisations make data-driven decisions and optimise their workforce management. By leveraging business intelligence tools, businesses can gather and analyse data related to their contingent workforce, gaining valuable insights into various aspects of the program.
  For example, business intelligence can provide insights into talent sourcing, showing which channels (staffing agencies, online platforms, or direct sourcing) are most effective at bringing in high-quality candidates. It can also highlight cost trends, helping organisations track spending on contingent labour and identify areas where savings can be made, such as negotiating better rates or optimising sourcing strategies.

Contingent management solutions provide businesses with the technology, support, and strategies needed to engage, track, and optimise the performance of contingent workers, while ensuring compliance with legal, regulatory, and organisational standards.

Organisations can choose from several approaches to streamline contingent workforce management, depending on their needs and resources:

1. Business process outsourcing (BPO)
   BPO allows companies to delegate specific tasks to third-party professional services providers under an agreed contract. The service provider oversees the work, employing its own staff or subcontractors, ensuring delivery within a set budget and timeline. This model offers a hands-off approach while focusing on predefined outcomes.
2. Vendor management system (VMS)
   A VMS is a cloud-based software solution that centralises data and automates processes for managing contingent workers. While it provides valuable insights and operational efficiency, its effectiveness depends on accurate data input and robust governance. Organisations can manage it in-house or through specialised workforce solutions providers.
3. Managed service provider (MSP)
   Engaging an MSP offers a comprehensive solution where an external provider handles all or part of contingent workforce recruitment, often in conjunction with a VMS. MSPs bring expertise in compliance, vendor management, and technology, making them a preferred choice for organisations seeking a streamlined and expert-driven approach. These options provide flexible pathways for companies to optimise their contingent workforce strategies, ensuring efficiency, compliance, and scalability.
4. Employer of Record (EoR)
   An Employer of Record (EoR) is a third-party organisation that acts as the legal employer for a contingent worker, handling all administrative and compliance responsibilities associated with employment, while the worker performs services for the client company.

In a contingent workforce management solution, an EoR allows businesses to engage contingent workers without directly hiring them as employees, which can be especially useful when hiring workers in different states or countries with varying labour laws and regulations.

These options provide flexible pathways for companies to optimise their contingent workforce strategies, ensuring efficiency, compliance, and scalability.

A contingent workforce management system (CWMS) is a software solution designed to help organisations efficiently manage their non-permanent workforce, which includes freelancers, independent contractors, temporary workers, consultants, and other flexible labour.

The system streamlines the entire lifecycle of managing contingent workers, from sourcing and hiring to onboarding, tracking performance, processing payroll, ensuring compliance, and offboarding.

What does contingency mean?

In the workplace, “contingency” refers to a type of work arrangement where a person is paid based on achieving a specific goal or outcome. This outcome is usually agreed upon by both the worker and the employer before the work begins. Essentially, the worker only gets paid when they meet the agreed-upon target or success measure.

Contingency hiring process

Contingent hiring process refers to the steps involved in hiring workers on a temporary or non-permanent basis. The hiring process with contingency usually involves these steps:

• Identify workforce needs: The first step is determining the need for contingent workers. This could be for a specific project, a temporary increase in workload, or for a specialised skill that’s not available in-house. The company outlines the job description, expected outcomes, and duration of the assignment.
• Sourcing candidates: Companies source candidates for contingent roles through various methods, such as working with staffing agencies, using online job boards, leveraging freelance platforms, or direct outreach. Sourcing is often faster and more flexible than traditional hiring processes, as companies are looking for short-term or project-specific skills.
• Screening and selection: Once candidates are sourced, the next step is screening. This may involve reviewing resumes, conducting interviews (often shorter or more focused on specific skills), and evaluating the candidate’s experience to ensure they can meet the project’s requirements. Companies may also check references or request examples of previous work.
• Negotiating terms: After selecting a candidate, terms are negotiated, including compensation, job expectations, and the length of the contract. Contingent workers often have different pay structures compared to full-time employees (e.g., hourly rates or fixed project fees), so clear agreements are made upfront.
• Onboarding: While contingent workers typically have a shorter onboarding process than full-time employees, they still need to be integrated into the team and provided with the tools, resources, and information necessary to complete their assignments. This may include access to systems, project guidelines, or brief training sessions.
• Management and performance tracking: During the assignment, contingent workers are typically managed by project leads or team managers. Performance is often tracked through specific deliverables or milestones, and regular check-ins may be required to ensure progress and resolve any issues.
• Offboarding and feedback: Once the contingent worker’s assignment is complete, the offboarding process takes place. This includes wrapping up any final tasks, ensuring that all deliverables are met, and conducting feedback sessions for both the worker and the employer. Offboarding helps assess the success of the project and identify areas for improvement in future contingent hires.

Contingent workforce jobs

This refer to roles that are filled by workers who are not permanent employees but are hired on a temporary, contract, freelance, or project basis. These jobs are typically for a specific period of time or until a particular project or task is completed.

Types of contingent workers

Independent contractors (IC)
An independent contractor is a self-employed individual who works on a contract basis for an employer, typically handling project-based tasks. They may work as freelancers, self-employed consultants, or through a single-member business entity, such as an LLC or sole proprietorship. Independent contractors issue invoices, receive payments, and manage their own self-employment taxes.

Freelancers
Freelancers take on project or task-specific work for compensation, generally as independent contractors. They are hired or retained for specific tasks by a client or organisation.

Consultants
A consultant evaluates a business’ needs and provides specialised advice for a specific area of expertise, usually for a short-term engagement. Consultants may be supplied and managed by a consulting agency or directly sourced by the hiring organisation. They can bill the employer either on an hourly basis or at a fixed rate tied to specific deliverables or milestones, particularly in Statement of Work (SOW) agreements.

Temporary workers
Temporary workers, or “temps,” are hired to provide services for a defined period, with a clear start and end date. They may be hired directly by an organisation or through a staffing agency.

Agency contractors
Agency contractors are sourced, managed, and compensated by staffing agencies. The hiring organisation pays a fee to the staffing agency once a contractor is successfully placed.

Gig workers
A gig worker is not a specific employment classification but refers to workers engaged for temporary, task-based jobs. Gig workers include freelancers, temps, and consultants, typically sourced through online platforms. Payment is often made on an hourly basis or upon completion of a specific task or project.

A contingent workforce offers numerous advantages for organisations looking to stay competitive in today’s fast-paced business environment. Here are some of the benefits of engaging in contingent workforce.

Access to talent

A contingent workforce offers organisations the ability to tap into a wide range of skilled professionals with specific expertise for short-term or project-based needs, helping to fill talent gaps quickly and efficiently.

Flexibility

Contingent workers provide the flexibility to scale your workforce up or down based on project demands or seasonal requirements, allowing businesses to adjust rapidly to changing needs.

Offsetting a skills gap

By engaging contingent workers, companies can access niche skill sets that may be missing from their full-time staff, enabling them to address skills gaps without the long-term commitment of hiring permanent employees.

Expanding the talent pool

Utilising a contingent workforce broadens access to diverse and specialised talent pools, offering fresh perspectives and innovative solutions to business challenges.