A growing number of employers are turning to freelancers for help during the current labor shortage, and self-employed professionals are reaping the benefits of higher demand, according to a new report from MBO Partners, which provides back-office services to freelancers.
The average enterprise company reported that “contingent” labor now makes up 28% of its workforce, according to The Contingent Labor Imperative: How Agile Enterprises Succeed in a Modern Workforce Model. “Contingent” refers to non-permanent labor, such as temporary agency workers, internal temporary workers, freelancers, independent contractors, and “statement of work” consultants.
Miles Everson, CEO of MBO Partners, which found that more enterprises are hiring “contingent” … [+]
“We don’t see this trend going away any time soon,” says Miles Everson, CEO of MBO Partners, a provider of back-office services to freelancers. “There’s a human capital scarcity challenge in this country. With that human capital scarcity challenge, the balance of power has shifted to the employee—from the employer to the worker. Now employees are realizing they can work for multiple companies on their own. There is such demand for those that are highly skilled that they are choosing to work as independents. This is not just because of the pandemic. The pandemic perhaps accelerated it. It’s not the root cause.”
82% of the organizations surveyed said that more than half of their contingent labor force is made up of skilled contingent workers. The top reasons for turning to contingent labor are meeting temporary workload needs, increasing productivity, getting tasks done more quickly and getting access to specialized skills and hard-to-hire talent, the survey found.
And the picture is going to get better for free agents who want to stay fully occupied. 67% of corporations expect their use of contingent workers to increase substantially (33%) or somewhat (44%) in the next 18 months. Only 6% project a decline in their use of contingent workers.
As a result, MBO Partners predicts that the share of enterprise workforces will rise from 28% today to 33% in 18 months and 36% in five years.
Some firms will see their share rise much more substantially. Among those where more than 50% of workers are contingent, 91% plan to increase their use of contingent labor over the next five years. 69% of those whose labor force is 25% or less contingent labor plan to up their use of contingent labor in that same period.
Many of the companies that are upping their commitment to working with contingent labor are putting formal systems and processes in place to manage them. However, the majority are “direct sourcing,” or reaching out directly to freelancers. More are using internal independent talent worker marketplaces, as well.
For freelancers, this could mean career options that are more attractive than working in a traditional job. “If you work for a company, you are beholden to the manager you report to,” says Everson. “They determine your destiny. When you are an independent and there is such a demand for workers, you get to choose who you work for.”
