Some may find it surprising to learn that the concept of permanent jobs is a relatively new one. Before the industrial revolution, people mostly worked for themselves, and part-time jobs were the norm. It was only after the birth of machines that corporations came into being, and the concept of full-time jobs became relevant. Although part-time jobs still remained, they were mostly associated with menial work.
Rise of a Robust Gig Economy
The concept of the permanent job is still alive, but what has changed is the growing prevalence of temp and contractual jobs. According to a report by US Government Accountability Office, 40% of the US workforce is now part of contingent labor which is divided into two categories – skilled and unskilled.
An SIA report about The Gig Economy And Human Cloud Landscape, illustrates the current state of this huge, emerging market:
Why the Change in Worker Preference?
There are two sides to this answer. On one hand the average employee now demands more flexibility and autonomy inhis/her job profile, while on the other hand, companies are also looking at ways to cut costs, and provide less expensive solutions. Contingent workforce solutions offer an efficient way to scale up according to an organization’s needs at an affordable cost. This is especially good for startups that usually need to scale either gradually or rapidly depending on their position.
A Changing Workforce is Resulting in New Business Models for Startups
Previously, companies (small or big) would hire contingent workers just to supplement their permanent workforce, but over the past few years the role of contingent workers has increased considerably. Contingent workers are now seen as a way to form leaner teams that could provide less expensive solutions to the client.
Startups Can Easily Come up to Scale
By reducing training costs, overhead and travel costs, companies are devising a new working model that sees equal contribution from both sides of the coin – contingent and permanent workforce. A total talent management approach is now taking shape, which involves using a single recruitment strategy to manage all types of workforce.
A Borderless Workplace is the Future
According to Deloitte’s concept of Open Talent Economy Continuum, borderless workplaces will be the future, and every workforce will comprise of a balanced mix of full-time, part-time, freelance, and contractual employees.
Due to advances in technology, a company headquartered in the USA can easily bid for a project in Germany. For firms that work on solutions that are global in scope, having a borderless workplace has become a necessity. It is much easier for firms to meet their talent requirements for global projects in-house through their contractual workforce rather than using outsourcing or placing a permanent employee on the payroll in unfamiliar territory.
In fact, start-ups can attain a lot of flexibility and save a lot of money by employing a temp workforce for the duration of a specific project. Upon completion of the project, the workers’ contracts can be extended or they can be shifted to a different role or project altogether.
Trends for Startups Looking to Embrace Contingent Workforce
These are some of the emerging trends for startups who wish to make use of the contingent workforce model.
Access to a Scalable Workforce: Lean startups inherently understand the need for access to a quality on-demand workforce. Companies with access to a on-demand workforce can take on as many projects as they like, scale up or down without facing too many issues. When the project ends they can either utilize these resources elsewhere or again start from scratch.
Digital Collaboration: With the rise of the borderless workplace, the demand for digital collaboration tools is increasing. These tools allow for virtual collaboration between employees so that everyone is on the same page. Startups need to have access to the digital collaboration networks that align to their team’s needs.
Rise of Total Talent Management: It’s evident that organizations need to adopt a Total Talent Management strategy in order to maintain the perfect mix of temporary and permanent employees. This will not only give them better visibility into their workforce but also result in significant cost savings. The responsibility to manage this kind of program either lies with the HR department, or it can be outsourced to a reputed staffing firm.
Comprehensive Recruitment Strategy that Involves Automation and Analytics: Organizations that embrace technology will be better suited to compete as the worldwide business landscape changes. Not only does this require them to install the contingent workforce model, but it also requires that they use analytics, mobility, automation, business intelligence, and artificial intelligence with the attitude of being open to any further technological developments.
5 Reasons Why Startups are Embracing Contingent Workers
There is no doubt that having a strong pool of temporary workers can help startups deal with the challenges of business fluctuations. These are some of the reasons why startups are embracing contingent workers.
1. Better access to qualified candidates: Having a contingent workforce setup can help startups have better candidate outreach. It can also help accelerate the time to fill at scale. Apart from this, it can also lead to a high quality candidate pipeline for the organization.
2. Well Trained and Pre-screened: Contractual workers are pre-screened and well trained for short gigs. Companies hiring through a staffing firm also get a full report about every candidate’s score on various assessment tests conducted by the agency. Most importantly, hiring the right contingent workers can really improve the productivity of a company.
3. Cost Savings: One of the biggest advantages of utilizing a temp workforce is the cost savings associated with it. Since contractual workers are usually not entitled to benefits like paid holidays, health insurance, and sick leave, the cost savings can be significant.
4. Try Out Future Hires: One of the biggest reasons why startups embrace contingent workers is the ability to test future hires for technical proficiency, culture fit, interpersonal skills and overall acumen. This is a great way to see which candidate fits into your organization’s culture and skill set perfectly.
5. Reduced Burden on the HR Department: By opting for contingent workforce solutions through a staffing provider startups can reduce the burden on their in-house HR department (hiring, laying off, on-boarding etc). The time saved could be utilized elsewhere leading to new opportunities.
Contractual or Full-time Workforce?
There is no doubt that employing a temp workforce can give a startup the advantages of scalability and flexibility, which are hard to overlook. It is also important that we keep in mind that hiring contingent workers requires technological expertise, and a culture fit is never guaranteed.
The deciding factor of whether or not to employ a contingent workforce depends on a business’ position and needs. Overall startups can be successful by knowing what their internal needs are, what the best possible options for addressing those needs are and being vigilant about technologies that could possibly solve their problems.
