6 November 2020

How the COVID-19 Pandemic is Impacting the Contingent Workforce

John Clark
John Clark

When we look back at the 2008 recession, or the ‘Great Recession’ as it is often named, we can see that it’s the real acceleration point in history where organizations moved from full-time employees towards the contingent workforce.

One in five employees in the US lost their jobs, as organizations dealt with plummeting revenues and rapid market changes. With a severe lack of job opportunities many workers turned to temporary jobs and contract positions, which offered a way for businesses to still hire talent but without the risk associated with full-time employees.

Following the Great Recession, the demand for temporary and contract workers increased dramatically. During 2010, for example, there were 307,000 temporary jobs added (Snelling). That was more than 25 percent of the 1.17 million private sector jobs added in total throughout the year. 

Companies inherently changed the way they did business after the 2008 recession, hiring workers on a non-permanent basis to make sure they could take on permanent employees as the economy recovered. 

In recent years this trend of the growth of the contingent workforce has continued, helping organizations to beat industry skills shortages, create flexible and agile workforces, move towards project-by-project business models and a plethora of other benefits. 

While the use of the contingent workforce has been growing steadily over the past 10 years since the end of the Great Recession, it’s likely that the COVID-19 pandemic is set to expedite that growth even further.

How will the COVID-19 pandemic affect the contingent workforce moving forward?

While the COVID-19 pandemic hasn’t resulted in a general financial collapse as bad as the Great Recession, there is one thing that both events have in common for the business world. Uncertainty. 

The uncertainty of the pandemic has forced large organizations to temporarily lay off part of their full-time workforce, while some small business sectors have been completely turned upside down by a lack of customers, particularly in the hospitality industry and the travel sectors.

Meanwhile of note is another trend, those companies which have transitioned their workforce to working remotely have seen significant improvements in productivity - for some people working from home is better than commuting to an office.

As a result, organizations are actively looking to reimagine how they get work done. Remote working has become viable and building a contingent workforce of highly-skilled workers is now allowing businesses to easily scale up or down depending on demand. The workforce seems to be comfortable transitioning to a project-by-project work model where they hire skilled workers as needed. All of these benefits allow businesses to prepare for disruptions across the market.

Use of the contingent workforce can help organizations;

  • become more flexible; 
  • lower workforce costs;
  • make more informed hiring decisions;
  • scale their workforce up as, and when, it’s needed;
  • access specialized skills that are difficult to find on a permanent basis;
  • And many other benefits!

The COVID-19 pandemic has left businesses with a completely different idea of how they view, and optimize, their workforce. Just like the 2008 recession, it’s very likely that the contingent workforce will grow significantly over the next couple years. 

As use of the contingent workforce continues to grow, so does the need to manage it effectively 

After the 2008 recession, the use of non-employee workers was largely from huge enterprise companies who turned to managed services providers (MSPs) or vendor management systems to manage their contingent workforce. 

As smaller and mid-market businesses started to realize that they could also benefit from the use of independent contractors and build their very own non-employee workforces, the contingent workforce started to grow even more.

There was one main issue. Many small and mid-market organizations didn’t realize the complexities involved in managing a non-employee workforce. The easiest option was to use manual methods (think spreadsheets) to manage their non-employees and the staffing agencies they used to source talent, which led to a lack of visibility and control of their non-employee workforce.

This lack of visibility has resulted in overspending, poor staffing agency decisions, uninformed hiring decisions and a general lack of a centralized approach across different departments within a business.

To compound this issue even more, there were no real solutions on the market that helped small and mid-market organizations. The software solutions out there were all targeted at large, complex enterprises, with high minimum spend requirements and incredibly expensive software implementation fees. 

Thankfully, this has now changed. Small and mid-market organizations now have more options when it comes to the solutions that help them effectively manage their non-employee workforce.

Take Conexis VMS, for example. We have developed the very first easy-to-use, vendor management system (VMS) with no minimum spend requirements, built specifically to help small to medium-sized organizations automate and improve how they manage their non-employee workers and consolidate their vendors.

Want to learn more? Contact us today. Our team of highly experienced contingent workforce experts would love to show you a demo of our platform or answer any questions that you may have.

Request a Demo

John Clark

John Clark

A Co-Founder of Conexis, and Staffing Industry Analysts’ (SIA) top 40 under 40 recipient, John has more than 15 years experience in the Contingent Workforce, Managed Service Provider and VMS technology space. John has designed, built and run dozens of client workforce programs across multiple industries, managing over $1bn in spend. John’s expertise sits in both program design and delivery as well as VMS technology implementation and management.

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