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October 2017 Payroll Channel

A new study shows significant trends in enterprise use of external contractors; growing enterprise demand for on-demand support, influx of highly skilled contractors into the workforce, business challenges, and increased individual interest in ...


The Gig Effect? Companies Hiring More White Collar Contractors Instead of FTEs

By Isaac M. O’Bannon, Managing Editor

A new study shows significant trends in enterprise use of external contractors; growing enterprise demand for on-demand support, influx of highly skilled contractors into the workforce, business challenges, and increased individual interest in flexible work structures. Together, the findings point to a universal movement toward an on-demand white collar workforce.

The research study, “On the Verge of a White Collar Gig Economy: On-Demand Workforce Trends According to Today’s Business Leaders,” was commissioned by Mavenlink, a provider of cloud-based software for the modern services organization and a Gartner Cool Vendor.

Top findings include:

  • 94% of business leaders plan to continue using or expand their use of skilled contractors for specialized roles in the next year.
  • 79% of executives state leveraging contractors is a competitive advantage, citing an increase in agility as the primary benefit.
  • 47% state they are looking to hire contractors to fill management and senior executive roles, including c-suite contractors.
  • 69% of organizations have inadequate support structures and policies for managing on-demand talent, and 77% state they do not understand what changes are required to better manage contractors.
  • 63% of executives would switch to a contract model, given the opportunity.
  • Job security–not benefits–is the number one reason full time employees remain in their role. 62% of white collar workers prioritize security, while only 23% rate benefits as the most important.

Trend One: On-Demand Workers: A Competitive Advantage

Business landscapes are changing at an unprecedented rate, and the accelerated pace of work has made rapid adaptability crucial for success. Traditionally, enterprises have heavily valued in-house resources, but those structures no longer function as effectively. Companies need to evolve, expand, and change direction faster than they can hire and train, or implement new processes. As a result, they’ve turned to third-party contractors for on-demand support.

According to the research found in “On the Verge of a White Collar Gig Economy”, 61% of business leaders consider agility critical to success, and 79% consider the use of contractors to be a competitive advantage. All of these also intend to increase their utilization of contractors over the next year. This will allow them to scale at will, accessing a broader pool of talent and workers with more specialized skills, without heavy financial or time investments.

Trend Two: Expert-Level Workers in Demand

Demand for contractors is not limited to low-level positions. 47% of executives are seeking temporary hires for management, senior executive, and even c-suite roles. The two qualities leaders value most in potential candidates are specialized degrees (35%) and a decade or more of experience (29%). These highly skilled upper-level workers add immediate value in strategic areas, without requiring lengthy onboarding. The most heavily demanded specialty is IT expertise.

Trend Three: Employers Grappling with a Changing Workforce

Business strategy has outpaced business structure, and companies frequently engage contractors without a clear system for managing them. Business leaders are tasked with overseeing a disparate and rapidly changing workforce, coordinating strategy and ensuring consistent performance. This requires insight and control, and articulated policies to stabilize work. However, 69% of participants in the study considered their current processes for managing contractors inadequate, and 34% had no relevant policies at all.

Trend Four: Executives Want In

Employees also stand to benefit from a contract structure, gaining both lifestyle benefits such as schedule flexibility and professional benefits like exposure to a wide array of job experiences. These advantages have prompted high interest in temporary roles: 63% of study participants stated that they would leave their current full time position for consistent contract work.

The primary motivation that business leaders listed for maintaining a full-time job was a sense of security (62%), while only 23% cited benefits and only 10% said salary. 56% of executives had already contracted in the past–a number that is likely to increase in the coming years.


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