MSP / Contingent LaborTalent Acquisition

A New Talent Model

Contingent labor is emerging as a critical talent pool helping companies stay flexible and resilient as the market rebounds from the pandemic.

By Marta Chmielowicz

Contingent labor has been critical to many organizations’ talent strategies for years, but the COVID-19 pandemic has forced employers to rethink their approaches. As companies have coped with extended lockdowns, shifting consumer demand, and historic levels of unemployment and economic uncertainty, many are turning to temporary labor to fuel their recoveries. But to succeed and come out of the pandemic with greater flexibility and resilience, new talent procurement and management strategies are essential.

A Snapshot of the Labor Market

The U.S. unemployment rate soared from 3.8% in February 2020 to 14.4% in April 2020, with service occupations hit the hardest. While unemployment has since begun to drop as economies start to reopen, many organizations are still relying on temporary workers to fill roles quickly. According to research from Mercer, more than 70% of HR leaders believe that the staffing industry will recover after the pandemic.

Overall, the number of job postings for contingent workers has declined, with a survey from Bullhorn indicating that 80% of staffing and recruiting organizations report fewer open requisitions from their clients. However, certain industries have seen an increase in COVID-19-related occupations to combat the pandemic.

Healthcare, pharmaceuticals, e-commerce, food processing, and logistics and distribution have all experienced increased demand for contingent labor during the pandemic. In particular, Mercer reports that demand has risen significantly for traveling nurses, food delivery services, and jobs that require moving, packing, and loading skills. By contrast, hospitality and catering have declined significantly over the past several months.

The Impact of Remote Work

The onset of COVID-19 forced companies across the globe to shift to remote work. These arrangements included contingent as well as full-time employees; during the pandemic, 81% of companies asked their temporary workers to work remotely. And the trend is expected to continue: 64% of staffing agencies agree that remote work will continue after the pandemic and that contactless recruiting will be more prevalent (57%).

The shift to remote work has increased the size of the available talent pool, giving employers the freedom to leverage technology to access the best candidates regardless of geography. Many companies are relying on online talent marketplace platforms like Freelancer, which saw job postings grow by 25% in the second quarter of 2020 compared to the first quarter, with 41% growth year-over-year.

Companies that wish to remain competitive in the new contingent labor landscape will need to consider different sourcing strategies, including direct sourcing marketplaces and vendor management systems.

However, moving from location-based contingent talent pools will increase risk and cost burdens for employers. Companies will need to implement cybersecurity measures to protect the intellectual property and personal information of employees; invest in new onboarding technologies to engage temporary workers; and implement processes to monitor the current tenure of their temporary workers, focusing on temp-to-permanent conversions.

By modernizing their contingent labor policies, organizations can build flexibility into their talent strategies and become more responsive to changing conditions as the economy recovers. With less certainty of future demand, employers are likely to continue to rely on their contingent talent pool instead of full-time workers to meet shifting labor needs.

Tags: April 2021, Magazine Article, MSP

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