One of the key HR trends of 2025 and beyond is the continuing growth of the contingent workforce. The gig economy, valued at $556.7 billion in 2024, is projected to surge to over $ 1.8 trillion by 2032. Labor shortages and low employee retention rates indicate that this trend is likely to persist.
Engaging contingent workers enables organizations to best utilize their talent in meeting business objectives. A contingent workforce can fill immediate needs by providing on-demand skilled labor and the flexibility to scale up and down quickly for short-term projects.
What is a Contingent Workforce?
A contingent workforce comprises temporary workers hired by an organization when a specific skill set is required. A contingent hire can be on a contract basis, seasonal, or subject to completing a particular project.
Contingent workers are not considered employees since they do not work full-time. They do not have an ongoing employment contract with an organization, and they are not on the company’s full-time payroll.
Contingent workers generally do not receive company benefits and are less likely than employees to be protected by local labor laws. These workers can be hired directly or through a staffing agency (but generally not via an employer of record), and they can work either on-site or remotely, depending on the organization's needs.
Types of Contingent Workers
A recent Job Openings and Labor Turnover Survey by the Labor Department states that there are 10.824 million openings, equating to 1.9 job openings per available worker, or a gap of 5.13 million.
With employee-led activism on the rise, creating inclusive workplaces where everyone can be seen and heard will be key to winning the war for talent. Furthermore, the tight labor market and post-COVID economy will rely heavily on contingent work. A recent TaxAct survey in 2025 indicates that 92% of Americans anticipate an increase in individuals pursuing side hustles. Suffice it to say, now is a good time to brush up on your options regarding hiring contingent workers.
Here are the basic types of contingent workers companies can hire:
Consultants
Consultants are service providers who are experts in their chosen field. They can be part of a consulting firm, staffing agency, or work as independent professionals.
Consultants don’t need an employment contract to work for an organization, but there would be a service agreement with clear goals and KPIs for their service. Typically, consultants are brought on to streamline a process, manage a significant change in the company, or review the effectiveness of existing resources. These consultants usually work in specialized areas like technology, finance, marketing, and business planning.
Temporary Workers
Temporary workers, often referred to as temps, are filler employees hired by a company to work for a limited period of time. They are staffed by third-party agencies and are on the agency's payroll system. Temporary workers typically work on-site at the company’s location.
Hiring temporary workers benefits companies that require extra staffing for a short-term project, for seasonal work, or to fill a position while a permanent employee is taking time off.
Freelancers
Freelancers are self-employed individuals who are part of the gig economy and earn money on a project basis or per hour.
They do short-term, project-based work and are not employees of a company. Freelancers can work on projects for multiple organizations simultaneously. They can work remotely and typically choose their own working hours.
Short-term Contract Workers
Short-term employment contracts often function as if the person were a full-time employee. The contracted person would be on the company’s payroll for the duration of the contract and, depending on the contract, may enjoy some of their employee perks. However, this employment would only last for the duration of the contract. Usually three, six, or twelve months.
Companies employ workers on short-term contracts if they need skilled workers for a particular project timeline. This does not offer much job security for the employee, but it does maintain a clear expectation of how long their services will be retained.
Why Do Companies Hire Contingent Workers: The Benefits
Cost Savings to the Company: Most true of freelancers and temporary workers
Contingent workers don’t have the overhead costs that employees do, incur no cost while not actively working for the company, and don’t receive the company benefits or pension contributions that employees would. They also typically do not get the onboarding or skills training a permanent hire would. As a result, these workers allow companies immediate, affordable access to a talent pool in specialized areas when skill gaps need to be filled.
According to recent data, 84% of companies have experienced cost savings by hiring contingent workers.
Flexibility in Numbers and Skills-access: Most true of consultants, temporary workers, and freelancers
The contingent workforce is a valuable resource that benefits procurement, as companies can access expert talent as needed. Contingent workers enable companies to manage new projects and quickly adapt to shifting market demands. Unlike permanent employees, a contingent workforce can be quickly scaled up or down according to changing work requirements.
These highly skilled workers are often available at short notice. They can usually maintain a flexible working schedule, which improves their productivity and efficiency.
Testing Hire Viability: Most true of short-term contract workers
Hiring contingent workers offers organizations a chance to effectively address talent gaps. By bringing in a temporary worker, the company can gauge whether it needs a permanent hire in that role. Companies also have the opportunity to evaluate a contingent worker’s skill set on a short-term project and consider bringing that person on board full-time.
Efficiency: Most true of freelancers and temporary workers
The process for hiring and onboarding contingent workers is typically much shorter and easier than hiring permanent employees. This procedure doesn’t involve intensive recruiting, interviewing, or training. In the case of a temp-hire, staffing agencies can recommend the right contingent worker for a specific job.
There is little red tape involved with contingent work, especially when it comes to freelancers. Companies can find the right contingent workers, negotiate a rate for a project, and have them start working immediately.
Organizations can also use a contingent workforce to scale their projects quickly and efficiently without staff changes affecting work quality. Contingent workers provide a company with an experienced talent pool of available candidates who have the required skills to effectively complete projects.
Fresh Perspectives: Most true of consultants and short-term contract workers
A company’s key decision makers who have been with the organization for years will be used to the same day-to-day business operations. This makes it challenging for them to streamline business processes. For example, to optimize a production line or adjust to evolving markets.
Contingent workers with relevant expertise have unique ideas and insights that help augment an organization’s productivity. Contingent workers who have valuable knowledge but no previous dispositions to a company’s processes are more likely to think “outside the box”, which is useful to identify problems and come up with unique solutions.
The Drawbacks of Contingent Workers
Limited Control: Most true of freelancers and temporary workers
Contingent workers are not employees, which means that employers will have less control over their work.
Contingent workers might have autonomy over how they work on projects, including how much time they spend on a task and what methods they use to complete it. This makes it difficult to manage contingent workers and provide them with the necessary training to improve productivity.
Security Risks: Most true of temporary workers and short-term contract workers
Contingent workers might have access to private data, software, and company facilities. A lack of the ability to oversee them while they work on-site poses potential access management risks. These risks can include intellectual property theft, sharing confidential information, and network security breaches.
To mitigate these risks, employers can limit the person’s access to sensitive information, run a background check before onboarding them, or hire through a staffing agency that can vet the worker.
Lack of Organizational Commitment: Most true of temporary workers and short-term contract workers
Contingent workers are not bound to the company in the same way that permanent employees are, which can lead to commitment issues with employers.
Contingent workers could engage in “contract hopping,” where they jump from job to job before their commitment ends. This leaves companies with a sudden need to fill. A thorough screening process to analyze contract history and client feedback can help employers avoid these issues.
To avoid the unprecedented loss of these workers, companies can keep their contingent workers motivated. The best means to do so is to give them positive feedback and take measures to make them feel integrated as part of the organization.
Lack of Cohesion: Most true of temporary workers
Contingent workers hired for short-term work can be resented by employees who have been with an organization for years, and have trouble collaborating with a temporary colleague. This can lead to increased turnover and lower productivity.
Staffing agencies don’t always have the means to understand an organization’s cultural needs and might place a contingent worker in a situation that is a bad fit. To mitigate cohesion issues, employers can communicate effective ways to interact with contingent workers to foster acceptance and teamwork.
Contingent Workers vs. Independent Contractors
Both contingent workers and independent contractors are hired for their specific skill sets to do project-based work. They can be hired for a limited period of time, and the employer determines the length of their relationship. However, the relationships an employer would have with a contingent worker and an independent contractor are very different.
Contractors are self-employed people or sole proprietors who hire out their skills and resources at a set or negotiable rate. They are not represented by an agency and deal with the companies they work for on a B2B level, as opposed to having an employer-employee dynamic.
Contingent workers do temporary project work for a company that may be tied to ad hoc tasks or a specific timeline. Contractors are hired to complete projects.
Contingent workers sell their time and ability to do work required by a company. A contractor serves a similar function, but they won’t necessarily be the ones doing the work. Contractors are more likely to act as project managers and source the labor and resources they need to provide a service.
Contingent workers are, generally speaking, paid per hour or per unit of work done, depending on the agreement they have with the company. Contractors usually receive a lump sum payment after completing a project. Often, there would also be a deposit payable before they start. This is to finance the materials or resources they need for the project.
Contingent workers who have duties on-site might have office space and equipment given to them by the employer. Contractors will generally use their own office equipment or hire the resources they need to complete the project.
Tools to Manage a Contingent Workforce
To optimize the management, scheduling, and compensation of contingent workers, companies can take advantage of tools like freelancer management systems and workforce management software. These platforms enable visibility into key metrics that are important for short-term project completion. For example, it can provide detailed information about labor usage and task management to help optimize the work requirements over a project lifecycle. This in turn, can tell HR how a contingent hire is faring at their responsibilities, and when to get more hands on board.
Another great tool is workforce planning software, which helps companies forecast, analyze, and organize workforce supply and demand. This helps human resources organize their contingent workforce by ensuring the right people are available when needed to work on the right project.
Contingent Worker Statistics
The U.S. Bureau of Labor Statistics reported that 4.3% of employed individuals, totaling 6.9 million workers, held contingent jobs as their primary occupation. Notably, workers aged 16 to 24 were four times more likely to be in contingent positions compared to those aged 25 and older.
In terms of alternative employment arrangements, independent contractors represented 7.4% of all workers, followed by on-call workers at 1.7%, temporary help agency workers at 0.6%, and workers provided by contract firms at 0.5%. A comparison with traditional employment revealed that independent contractors tend to be older, while temporary help agency workers are more frequently Black or Hispanic.
Our Final Thoughts on the Pros, Cons, and Trends of a Contingent Workforce
Successful companies are diversifying their workforce in response to a rapidly changing US labor market.
In the past few years, there has been a shift in the requirements and expectations for both companies and workers to be successful. Organizations are incorporating strategic workforce planning, making staffing a core component of their overall goals. Because of the benefits highlighted in this article, and many more, these companies are building teams that include a substantial contingent workforce in addition to (and to complement) the talent pool represented by their full-time employees.
Will we see a future where contingent workers completely replace full-time employees? Probably not, but there is no denying the increasing value these skilled people are adding to the job market.
