Reasons for the heightened use of temps, contractors and the like begin with the shaky business climate. Despite growth and profits, companies have been loath to hire full-time and part-time staff in case the economy suddenly tanks again.
Using temporary workers at the start of a recovery is nothing new. But other factors behind the contingent expansion are less tied to the business cycle. These include cost-savings. Although contractor fees can exceed the hourly wage of a regular employee, especially in the United States where employer-provided health care is standard, the total compensation of a regular employee typically exceeds that of contingents.
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Another emerging rationale for contingent labor is business agility. That is, temps and contractors can help companies respond rapidly to changes in the competitive landscape, which are coming ever-more quickly. Roughly 15 percent of respondents to a recent Workforce Management survey of nearly 1,200 readers said a primary reason for hiring contingents was to "be faster in shifting business strategy." A related motive to turn to contractors is to find scarce abilities. In the Workforce survey, the most-cited reason for the use of contingent labor was to "access specialized skills." Four out of 10 respondents selected that factor.
The quest for specialty skills includes demand for professionals in fields ranging from technology to health care to events management to human resources itself. Despite the high unemployment rate overall, companies have complained about the difficulty of filling niche positions, and they are turning to contingent labor to meet those needs.
"The demand is increasing for the higher-level skill sets," says Joanie Ruge, chief employment analyst with staffing firm Randstad. "It's going to get more and more competitive to find top talent."
Better-performing companies are particularly interested in highly skilled contingents. Research firm the Institute for Corporate Productivity in 2010 found that 23 percent of higher-performing organizations—those better on a variety of business measures—had contingent workers in highly skilled functions such as engineering and science. That was roughly twice the rate of lower-performing organizations.
Although many contingent workers would rather have the security of a full-time, regular staff position, some—including high-skilled professionals—are choosing to make their living as free agents. More and more may go this route now that the U.S. Supreme Court has left the 2010 health care reform law largely intact. It promises to make people less-dependent on companies to get health insurance—freeing them up to join the "free-agent nation" and put additional pressure on companies to work with contingents.
Ed Frauenheim is Workforce Management's senior editor. Comment below or email email@example.com.