Enterprises’ Use of Contingent Workforce Grows and Business Case is Strong, The Economist’s Research Arm Finds

talent management

Most procurement practitioners and contingent workforce managers won’t be surprised by the assertion that employing contingent workers can have a significant upside for companies despite some costs and a fair amount of preparation, according to The Economist Intelligence Unit’s February 2019 report, “Sourcing and Managing Talent in a Gig Economy.” But it always helps to have another set of reliable data to support this view and perhaps gain a few new insights in the process.

Based on a survey conducted by the Intelligence Unit last year and sponsored by Northhighland Worldwide Consulting, the study uses the term “gig workforce” in a general way that would correspond to our use of the term “contingent workforce” — which includes staffing agency temps, independent contract workers and professional services firms’ workers. Consequently, we will substitute “contingent workforce” for “gig workforce.”

Below we review the characteristics of the survey respondents and their companies. In any survey, the sample composition has a big effect on findings and our perceptions and understanding of them. We also briefly review and comment on the responses to five of the 20+ survey questions that provided key fundamental insights, while recommending reading the report for additional important and more specific findings on topics such as on-boarding approaches, time to value, etc.

The Survey

In 2018, the Intelligence Unit surveyed “executive decision-makers at 210 U.S. and U.K. companies with at least 2,000 employees.”

  • Respondents titles: EVP/SVP/VP (24%), Director (38%), Head of Department or Business Unit (14%) and Senior Manager (24%).
  • Respondents functional roles: Broad distribution, with top 10 roles accounting for 83% of respondents: Human resources/talent (11%), Customer service (10%), Finance Operations (10%), Sales (10%), IT/technology (9%), Production (9%), Marketing (9%), Procurement (7%) and General management (6%)
  • Organizations locations: U.S. (74%), U.K. (26%)
  • Organizations # employees: 2,000 to fewer than 5,000 employees (64%); 5,000 to fewer than 10,000 employees (21%); and 10,000 employees or more (15%)
  • Organizations’ primary industries: Broad distribution ranging from Manufacturing to Agriculture and agribusinesses; with top 10 industries accounting for about 75% of organizations: Manufacturing (10%), Retail ( 10%), Financial services ( 9%), Technology/IT ( 9%), Food/Beverages/Consumer packaged goods ( 8%), Healthcare and life sciences/Pharmaceuticals/Biotechnology ( 8%), Telecommunications ( 7%), Energy, utilities, natural resources ( 6%), Transportation/Warehousing (5%) and Government/Public sector (5%).

Some Key Findings

We selected five of the 20+ survey questions that we believed provided key fundamental insights.

To what extent does your organization currently employ contingent workers?

Almost 60% of the responding companies indicated that their contingent workforce represented at least 20% of their total workforce. Only 17% indicated that their contingent workforce represented less than 10%.

Source of charts: The Economist Intelligence Unit’s report “Sourcing and Managing Talent in a Gig Economy.”

Why does your organization employ contingent workers?

The top three reasons for employing contingent workers were cost savings, project-specific needs and more agility (that latter three of these are perhaps related to the response, “We lack certain skills that we need to execute”).

In the next five years, how do you expect the proportion of contingent workers in your organization’s workforce to change?

A full 61% of respondents said they expected the proportion of contingent workers in the organization would increase somewhat (33%) or increase significantly (28%) in the next five years. In sharp contrast, only 9% of the respondents said they expected a decrease.

In your experience, what are the main benefits of employing contingent workers?

More flexibility was, by far, the most frequently cited benefit of employing contingent workers  (cited by 46% of respondents). Seemingly inconsistent with the responses to an earlier question, the benefit of decreased cost was cited by only 30% of respondents. Enhanced capability of a business function or organization, talent discovery, and fast access to talent were also cited by 23% to 26%.

What are the biggest drawbacks of employing contingent workers for your organization?

The drawbacks of employing contingent workers, with at least 21% of respondents saying so, were: lack of the right skills, security concerns, on-boarding time, unreliable, cost, and lack of culture fit.

Summing Up

While contingent workforce can deliver many kinds of significant benefits to organizations, everything comes with off-setting costs. And many of these costs arise because organizations today have quite some way to go in establishing the right processes, capabilities and culture for effectively engaging contingent workers (particularly for engaging contingent workers that do not come through temp staffing agencies).

The study notes that “as companies master the art of on-boarding and integrating gig workers, they are discovering that the greater flexibility and lower costs more than offset the increased risk and burden on management.” The use of contingent workforce is not new, the study continues, but it is changing: “What is changing is the fact that a sizable, semi-permanent (contingent) workforce is becoming the norm” (which we interpret to mean as normal and as important as the FTE workforce — in other words an indispensable, integrated component of an effective enterprise).

We would perhaps take it up a notch and say that for organizations, the contingent workforce is rapidly becoming not only multipurpose but strategic. And to derive maximum value from it, organizations must be ready to approach it with an open, innovative and transformative mindset.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.