In today’s dynamic business environment, the workforce landscape is transforming rapidly. Freelancers now represent 46.6% of the global workforce, and 38% of the U.S. workforce is contingent, with projections indicating this figure will rise to 50% within the next decade. As organizations increasingly turn to flexible staffing solutions, understanding how to effectively manage contingent labor has become a critical competitive advantage. 

What Is Contingent Labor?

A contingent worker is a non-permanent employee hired on a temporary basis, including freelancers, contractors, consultants, temporary employees, and part-time workers. Unlike traditional full-time employees, contingent workers are engaged for specific projects or timeframes, offering companies flexible staffing solutions to optimize when needed. The key distinction is that their employment is contingent on specific project needs, providing businesses with the agility to scale their workforce as market conditions change. 

Related Content – Guide to Contingent Labor Management: Transform Your Workforce Strategy 

The Benefits of Contingent Labor 

The strategic use of contingent workers offers significant advantages including cost efficiency, workforce flexibility, access to specialized skills, and enhanced productivity. According to recent data, 84% of companies have experienced cost savings by hiring contingent workers, while 90% of corporations cite flexibility as the key benefit. These workers contribute 15% to total workforce productivity, demonstrating their substantial impact on business success.

Related Content – Six  Major Benefits of Temporary Staffing 

Effectively Manage Contingent Labor

Successfully managing a contingent workforce requires strategic planning, clear processes, and the right tools. Here are four proven strategies to optimize your contingent labor management:

1. Implement Technology Solutions and Vendor Management Systems

A Vendor Management System (VMS) simplifies managing contingent workers by centralizing data, managing contracts, and ensuring compliance. Organizations spend $4.5 billion annually on VMS platforms to support efficient management and provide analytics to optimize spending and performance.

Key Actions:

• Invest in a robust VMS platform to streamline contingent labor management

• Utilize technology to track performance, maintain compliance, and gain visibility into spending

• Implement real-time reporting to monitor cost, productivity, and compliance

• Leverage automation to reduce human error and ensure faster processes

Related Content from Partner Broadleaf Results – Vendor Management Systems

2. Develop a Standardized Onboarding Process

A standardized onboarding process quickly integrates contingent workers onto the team, ensuring they become productive from day one.

Key Actions:

• Provide clear guidelines on roles, responsibilities, and access to necessary tools and resources

• Ensure training is available to help workers become productive immediately

• Follow a consistent process including compliance documentation and clear expectations

• Create communication protocols that integrate contingent workers appropriately

3. Prioritize Compliance and Risk Management

Managing compliance in contingent workforce management is becoming more complex as governments implement stricter regulations around gig workers. Labor laws around contingent work continue to evolve, making compliance a critical priority.

Key Actions:

• Stay informed about changing labor laws and regulations impacting the contingent workforce

• Invest in compliance tools and technology to automate tracking and ensure adherence

• Ensure proper worker classification to avoid fines and legal troubles

• Develop a risk management strategy that includes contingency plans for shifts in employment law

Related Content from Partner Broadleaf Results – Independent Contractor Compliance 

4. Create Strategic Workforce Planning and Integration

Effective management requires viewing the workforce as an ecosystem and aligning contingent labor with business objectives.

Key Actions:

• Identify which roles to fill with contingent workers through workforce planning and skills gap analysis

• Develop a strategy that sets out how, why, and when contingent workers will be most beneficial

• Foster a collaborative environment between contingent and full-time employees

• Set key performance indicators (KPIs), conduct regular check-ins, and make contingent workers feel valued through feedback and recognition

Looking Ahead

The contingent workforce represents the future of work. 65% of companies plan to increase their use of contingent workers within the next two years, with the gig economy valued at $646.77 billion in 2025, projected to surpass $2.1 trillion by 2033. 

Organizations that implement strategic approaches to managing their contingent workforce—through technology adoption, standardized processes, compliance management, and thoughtful integration—will be best positioned to harness the full potential of this flexible talent pool.

At Acara Solutions, we understand the complexities of contingent workforce management and are committed to helping organizations build agile, compliant, and effective workforce strategies that drive business success in an ever-changing talent landscape.