Understanding the role of contingent workers in bridging the skills gap

Defining contingent workers and their place in the modern workforce

The rise of flexible talent in today’s business landscape

In recent years, the concept of the workforce has evolved far beyond traditional full time employees. More companies are turning to a mix of talent sources, including contingent workers, to meet their changing business needs. But what exactly are contingent workers, and how do they fit into the modern employment picture?

Contingent workers are individuals who provide services to a company on a non-permanent basis. This group includes temporary workers, independent contractors, freelancers, consultants, and those engaged through service providers or statement of work (SOW) agreements. Unlike employees on the company payroll, contingent workers are typically brought in for specific projects, seasonal demands, or to fill skills gaps that can’t be addressed internally.

Why companies rely on the contingent workforce

The shift toward a blended workforce is driven by several factors. Businesses face rapid changes in technology, fluctuating market demands, and the ongoing challenge of finding the right skills at the right time. Contingent labor offers flexibility, cost savings, and access to specialized expertise that may not be available within the existing employee base. In the United States and globally, organizations are increasingly leveraging vendor management systems (VMS), services procurement, and direct sourcing to manage this external workforce efficiently.

• Flexibility: Contingent workers allow companies to scale up or down quickly in response to business needs.
• Specialized skills: Many contingent workers bring niche expertise that is difficult to find among full time employees.
• Cost efficiency: Engaging external talent can reduce costs related to benefits, long-term employment, and training.

Managing contingent workers requires a different approach compared to traditional workforce management. Companies often use workforce management systems and vendor management solutions to track, evaluate, and optimize their total workforce, including both employees and external talent. This approach helps organizations stay agile and competitive in a rapidly changing environment.

For businesses looking to build a thriving colleague ecosystem that bridges the skills gap, understanding the role of contingent workers is essential. Learn more about building a thriving colleague ecosystem to bridge the skills gap and how it supports workforce agility.

How contingent workers help address the skills gap

Rapid access to specialized talent

One of the main ways contingent workers help address the skills gap is by giving businesses quick access to specialized talent. When a company faces a sudden need for expertise—whether in technology, project management, or services procurement—contingent labor can fill those gaps efficiently. This is especially true for roles that require up-to-date technical skills or certifications, which may not be present in the existing full time workforce.

Flexibility in workforce management

Contingent workforce management systems (VMS) and direct sourcing strategies allow organizations to scale their workforce up or down based on project needs. This flexibility is crucial in industries where demand fluctuates or where new technology creates sudden shifts in required skills. By leveraging temporary workers, independent contractors, or service providers, companies can respond to market changes without the long-term commitment of traditional employment.

Cost savings and efficiency

Utilizing a mix of contingent and permanent employees can lead to significant cost savings. Businesses can avoid the overhead costs associated with hiring full time employees for short-term projects. Services procurement and statement of work (SOW) contracts help companies manage expenses while ensuring access to the right skills at the right time. This approach also enables better allocation of resources and more efficient project delivery.

Bridging the gap with external expertise

Contingent workers often bring fresh perspectives and up-to-date knowledge from working across different companies and industries. This external workforce can introduce best practices and innovative solutions, helping businesses stay competitive. In the United States and globally, the contingent workforce is increasingly seen as a strategic asset for bridging critical skills gaps.

• Vendor management systems (VMS) streamline the process of sourcing and managing contingent talent
• Services procurement ensures access to specialized skills without long-term employment commitments
• Direct sourcing helps companies build a pool of pre-vetted contingent workers for future needs

For a deeper look at how unique training paths can help bridge the skills gap, see this resource on how military training for civilians can bridge the skills gap.

Challenges of relying on contingent workers for skills needs

Complexities in Integrating Contingent Talent

While contingent workers play a crucial role in bridging the skills gap, relying on them comes with its own set of challenges. Businesses often turn to contingent workforce solutions for flexibility and access to specialized skills, but integrating these workers into the existing workforce is not always straightforward. The management of a blended workforce—where full time employees and contingent labor collaborate—requires careful planning and clear communication.

Risks in Workforce Management and Compliance

One of the main concerns is compliance with employment laws and regulations, especially in regions like the United States where rules around independent contractors, temporary workers, and services procurement can be complex. Misclassifying a contingent worker can expose a company to legal risks and financial penalties. Vendor management systems (VMS) and workforce management technology can help, but only if implemented correctly and consistently across the business.

Knowledge Transfer and Continuity Issues

Contingent workers often join projects for a limited time, which can lead to gaps in knowledge transfer and continuity. When contingent talent leaves, valuable expertise may walk out the door, making it harder for the company to maintain momentum. This is especially true in project-based work or when using statement of work (SOW) services. Companies need robust onboarding and offboarding processes to capture and share knowledge effectively.

Challenges in Managing Engagement and Culture

Another challenge is ensuring that contingent workers feel engaged and aligned with the company’s culture. Unlike full time employees, contingent workers may not have access to the same benefits, training, or career development opportunities. This can impact their motivation and the quality of their work. Workforce management strategies must address these differences to foster collaboration and productivity.

Balancing Cost Savings with Quality

Cost savings are often cited as a benefit of using contingent labor, but focusing solely on cost can undermine quality. Service providers and procurement teams must balance the need for savings with the importance of securing the right talent. Direct sourcing and effective use of management systems can help, but only if the company invests in proper oversight and continuous improvement.

For organizations looking to maximize the benefits of a contingent workforce while minimizing risks, building a strong support network is key. Leveraging resources such as coaching and mentoring networks can help bridge gaps in knowledge and engagement, supporting both contingent and permanent employees.

Key skills often filled by contingent workers

In-demand expertise filled by contingent talent

Contingent workers play a critical role in filling gaps where businesses lack specific skills or need extra support for a limited time. Companies often turn to the contingent workforce when they need to quickly access talent that is not available among their full time employees. This approach is especially common in the United States, where the external workforce is a significant part of total workforce management. Some of the most common skills and roles filled by contingent workers include:

• Technology and IT services: From software development to cybersecurity, contingent labor brings in-demand technical expertise for projects or system upgrades.
• Project management and consulting: Many organizations use contingent talent for short-term projects or to provide specialized advice, often through services procurement or statement of work (SOW) agreements.
• Creative and digital roles: Graphic designers, content creators, and digital marketers are frequently engaged as independent contractors or through direct sourcing to support campaigns or product launches.
• Healthcare and life sciences: Temporary workers and service providers help fill urgent staffing needs in hospitals, clinics, and research organizations.
• Manufacturing and logistics: During peak seasons or when launching new products, companies rely on contingent workers to scale up operations efficiently.

Why companies choose contingent labor for key skills

The main benefits of engaging contingent workers include cost savings, flexibility, and rapid access to specialized talent. Vendor management systems (VMS) and workforce management technology make it easier for businesses to find, onboard, and manage contingent workers. This allows companies to respond quickly to market changes without the long-term commitments of traditional employment. In addition, services procurement and effective management systems help organizations track the performance of their contingent workforce, ensuring that business goals are met while maintaining compliance. By leveraging both internal employees and external workforce, companies can create a more agile and competitive talent strategy.

Managing skill gaps with the right mix of talent

To maximize the benefits of contingent work, companies need to align their workforce management strategies with their business objectives. This often involves integrating vendor management, direct sourcing, and technology platforms to ensure seamless collaboration between employees and contingent workers. Ultimately, the right mix of full time employees and contingent talent helps organizations stay competitive and responsive in a rapidly changing business environment.

Best practices for managing contingent workers to close the skills gap

Building Strong Relationships with Contingent Talent

Effectively managing contingent workers is crucial for businesses aiming to bridge the skills gap. Unlike full time employees, contingent workers—such as independent contractors, temporary workers, and service providers—require a tailored approach to workforce management. Clear communication, well-defined expectations, and streamlined onboarding processes help ensure contingent talent can quickly contribute to business goals.

Leveraging Technology for Efficient Management

Modern workforce management systems (WMS) and vendor management systems (VMS) are essential tools for tracking, engaging, and evaluating the external workforce. These platforms allow companies to monitor performance, manage compliance, and optimize services procurement. By integrating technology, businesses can gain visibility into their total workforce, including both employees and contingent labor, making it easier to identify and address skills gaps as they arise.

Aligning Procurement and HR Strategies

Collaboration between procurement, HR, and business leaders is key when managing contingent workers. Aligning strategies ensures that services procurement and direct sourcing efforts are focused on acquiring the right skills at the right time. This approach helps companies balance cost savings with the need for specialized talent, especially in sectors where skills shortages are acute.

Ensuring Compliance and Mitigating Risks

Managing contingent workforce arrangements, such as statement of work (SOW) contracts or independent contractors, requires careful attention to employment laws and regulations. In the United States and other regions, misclassification risks can lead to legal and financial consequences. Regular audits and clear documentation help mitigate these risks, protecting both the company and the contingent worker.

Fostering Engagement and Inclusion

Even though contingent workers are not traditional employees, including them in company culture and communication channels can boost engagement and productivity. Providing access to relevant training, resources, and feedback mechanisms ensures that contingent talent feels valued and aligned with business objectives. This inclusive approach benefits the entire workforce, supporting long term workforce management goals.

• Use a robust vendor management system to streamline contingent labor processes
• Establish clear policies for services procurement and contingent work arrangements
• Regularly review and update workforce management practices to reflect evolving business needs
• Promote collaboration between HR, procurement, and business units for unified talent strategies

Future trends in contingent work and the evolving skills landscape

Shifting Dynamics in Workforce Management

The landscape of contingent work is evolving rapidly, driven by technology, changing business needs, and a growing emphasis on agility. Companies are increasingly blending their full time employees with a diverse external workforce, including independent contractors, temporary workers, and service providers. This shift is not just about filling gaps but about building a flexible talent strategy that can respond to market changes in real time.

Technology’s Expanding Role

Advancements in workforce management systems (WMS), vendor management systems (VMS), and services procurement platforms are making it easier for businesses to source, onboard, and manage contingent workers. These tools offer greater visibility into the total workforce, helping companies track skills, performance, and cost savings. As technology continues to improve, expect more seamless integration between employee and contingent worker management, making it easier to leverage the right talent at the right time.

Direct Sourcing and Talent Pools

Direct sourcing is becoming a preferred approach for many organizations. By building their own talent pools of contingent workers, companies can reduce reliance on third-party agencies and improve the quality of their external workforce. This trend supports faster access to specialized skills and better alignment with business goals, especially in industries facing acute skills shortages.

Focus on Services Procurement and SOW Engagements

Services procurement, including statement of work (SOW) engagements, is gaining traction as businesses seek more strategic partnerships with external service providers. This approach allows organizations to access niche expertise and manage complex projects without expanding their permanent headcount. It also requires robust management systems to ensure compliance, quality, and cost control.

Balancing Flexibility and Integration

As the contingent workforce grows, companies are rethinking how they integrate contingent labor into their broader workforce management strategies. The goal is to balance flexibility with the need for consistent company culture, compliance, and employee engagement. Forward-thinking businesses are investing in training, onboarding, and benefits for contingent workers to ensure they are productive and aligned with organizational objectives.

Regulatory and Market Influences

In the United States and globally, evolving employment regulations and market pressures are shaping how companies engage with contingent workers. Compliance with labor laws, tax regulations, and worker classification rules is critical to avoid risks. At the same time, the demand for specialized skills and cost savings will continue to drive the use of contingent labor as a strategic business tool.