Are Independent Contractors Good for Companies in the Sharing Economy?

image source: www.insperity.com

image source: www.insperity.com

During March this year, tens of thousands of Verizon workers have been on strike, demanding better job security and a new labor contract for employees across the Northeast.

Additionally, thousands of janitors working at Facebook, Google and other Silicon Valley companies have recently voted to authorize a strike unless their union and cleaning service contractors agree on a new labor contract.

Shared job dissatisfaction among contract workers is nothing out of the ordinary, and it’s certainly nothing state-of-the-art. Over the past 15 years, independent contractors have replaced millions of traditional employees. According to a November 2015 article from the Harvard Business Review (HBR) magazine, “In the U.S. alone, companies are engaging roughly 6.4 million independent contractors, freelancers, and other types of contingent workers.”

Furthermore, a Deloitte 2016 Global Human Capital Trends study reveals that, “51% of global executives surveyed said their organizations plan to increase or significantly increase the use of contingent workers in the next three to five years; only 16% expect a decrease.”

So, in what ways are contract workers more desirable than traditional employees?

The chart below, provided by TechCrunch, indicates that human capital is often the largest expense for any services business, particularly for higher-end verticals. Hiring independent workers on a contingent basis increases business flexibility and agility, provides access to hard-to-hire specialized talent, and potentially reduces costs.

Screen Shot 2016-08-03 at 10.18.34 AM

The article also points to the Sharing Economy landscape and says, “Skill level has a meaningful impact on personnel expense.” Independent workers allow businesses to quickly and efficiently scale staffing up and down to meet shifts in demand and changing business circumstances in an increasingly volatile and always-changing global economy. Businesses are also turning to highly skilled independent workers due to difficulties in attracting and retaining employees with hard-to-find specialized talents.  

In other words, these independent contractors are in demand, and they know it.  So what do these highly skilled independent workers want from their clients?  

Being paid well and on time is obviously important to independent workers. Having the flexibility to work whenever and wherever you want is an increasing benefit. But as HBR authors, Steve King and Gene Zaino note, “Attracting, retaining, and managing these highly skilled workers will require new ways of thinking about talent management and the role that external talent plays.” Companies will need to become “the client of choice” for these high-end contractors and become more flexible to cater to the growing workforce that prefer to be a contractor than being an employee.

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