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What is a Contingent Workforce?

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  • Written By: Judith Smith Sullivan
  • Edited By: Susan Barwick
  • Last Modified Date: 24 August 2016
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    Conjecture Corporation
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A contingent workforce is the group of individuals or businesses which is employed by another company on an as-needed, temporary basis. Contingent workers are a significant part of the global workforce, and many businesses find that using a contingent workforce is cost efficient and an effective means of achieving their goals. Anyone who is hired on a temporary or contract basis is a contingent worker. For instance, a freelance writer who gets paid per article is part of the contingent workforce of a magazine. A lawyer or doctor who provides occasional consulting is also a contingent worker. Virtually every area of expertise has individuals working on a temporary basis.

Temporary workers have always been an integral part of staffing, but the contingent workforce grew exponentially when the Internet became readily available in the late 1990s. Many contingent workers can work entirely from home, using their own computer or telephone to communicate with their client. Electronic payments through direct deposit to the worker's bank or to an online payment account make it easy for businesses to pay their contingent workers.

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There are many reasons to become part of the contingent workforce. Some individuals find the flexibility of working by contract, instead of on salary, to be more conducive to their lifestyle. Others may find that they can make more money as a consultant for multiple companies than as a full-time worker for one company. Other people might become contingent workers to supplement their income from a permanent position.

Individuals may find jobs on their own or through a staffing company. Staffing companies usually charge companies a fee to supply the necessary worker, although some of them, especially online databases, charge the business and the individual a fee.

The advantages of using a contingent workforce for a business are often financial in nature. Since contingent workers are contracted by a company, they do not receive benefits, such as medical insurance or unemployment compensation. Contingent workers are technically self-employed and must pay their own taxes. Businesses do not have to withhold taxes for them. These reductions in expense usually save the business a great deal of money.

There are some disadvantages to the use of a contingent workforce. Since they are not permanent employees, contingent workers may not have any loyalty to a company. They may have trouble integrating with permanent staff and cause a disruption in the morale of the workplace. Since contingent workers have only temporary contracts, there is also no guarantee that their services can be extended if the need arises.

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