3 Contingent Workforce Priorities Leaders Can’t Ignore

There’s no denying that the global economy has been on a rollercoaster in recent years. Yet the continuous need for companies around the world to acquire great talent has never fluctuated — even as the types of workers and skills required are constantly evolving. With the rise of advanced technologies and increasing AI integration, organizations are now adapting their talent strategies to not only meet the shifting demands, but also to leverage cutting-edge solutions for greater efficiency and innovation.

If your company is like many businesses across the globe, the skills you seek may increasingly come in the form of non-employee talent: a contingent worker, contractor, freelancer or outsourced service. The opportunity to achieve business value through the contingent workforce is great, flexibility is essential and the scope of available skills available is significant.

Engaging contingent talent has changed dramatically over the past five years, and applying yesterday’s thinking to current conditions is risky at best. As AI tools become more common in workforce management, companies must address challenges like candidate fraud and compliance. Additionally, today's hiring climate demands strong background checks, identity verification and ongoing compliance monitoring — alongside a focus on skills-based hiring to ensure the right talent.

To address the demands of a complex landscape and leverage the contingent workforce, organizations need to understand the dynamics at play as they refine their approach to talent engagement. To help guide the conversation, we have identified three opportunity areas where companies can reposition their contingent workforce strategy for a competitive advantage:

1. Understand how contingent talent delivers strategic value to help achieve your business goals
2. Dig into the details of your contingent workforce
3. Strategically optimize processes to build workforce readiness

1. Understand How Contingent Talent Delivers Strategic Value to Help Achieve Your Business Goals 

The current challenges facing workforce leaders are complex. Whether you sit in HR, procurement or the business, you’re balancing the same things: speed, cost and outcomes. To navigate this environment, it’s crucial to clarify what needs to be accomplished and identify the channels available to achieve those goals. An integrated, scalable process that connects seamlessly to these options is key. Without it, adoption suffers and organizations risk missing out on essential skills and flexibility.

As businesses navigate this evolving landscape, it is essential to evaluate business goals and recognize how the contingent workforce can serve as a vital source of talent, delivering value while supporting those goals and driving success. Consider the following implications that may influence your workforce transformation strategy.

Expanded Scope: Traditional Hiring No Longer Supports an Entire Talent Strategy

As many companies reconsider whether acquiring new employees is the best solution for their talent needs, they often realize that a fixed job role with a long list of responsibilities and permanent addition to the payroll may not be the only answer.

Exploring the contingent workforce provides a flexible solution to many of today’s workforce-related challenges. Contingent resources have the skills companies need. They can solve immediate demands. They can be scaled back as needed. As a result, contingent workers are no longer a nice-to-have option; they are a core necessity for doing business.

Different Landscape:  AI Reshapes Competition for Critical Skills  

The demand for specialized skills continues to outpace supply, and the rapid rise of AI has only accelerated that gap. Organizations are not only trying to identify new skills but also determining how to build and validate them quickly. AI is playing a growing role in how companies find and evaluate talent — helping identify skills faster, expand access to nontraditional candidates and improve speed to hire.

At the same time, AI introduces new complexities. We’re seeing increased risk around candidate fraud, particularly in remote hiring environments, which puts more pressure on identity verification, compliance and ongoing monitoring.

Just as important, AI shouldn’t operate in isolation. The most effective organizations are pairing AI-driven insights with human judgment, using experienced recruiters and workforce leaders to validate fit, interpret data and make decisions in context. Technology can uncover options, but people ensure those decisions align to business needs.

Used well, AI helps identify transferable skills across industries and broadens access to talent. But it’s the combination of technology and human oversight that ultimately drives better outcomes.

The Takeaway: Question Everything You Assumed About Contingent Workforce Practices

To address the changing priorities of the workforce, companies have begun to rethink their assumptions about attracting, engaging and retaining flexible talent in our ever-fluctuating business environment.

• Ask what hiring really means: That next hire could just as easily be a flexible worker as a traditional employee — the mindset among all stakeholders must be open to all options. Start the conversation to bring HR, procurement, line-of-business managers and leadership into the same mission.
  
  
• Leverage contingent workers for more than stop-gap solutions to talent needs:  Contingent talent includes more than on-demand workers to fill open low-skill, high-volume requisitions. With many hard-to-find skills more readily available through contract labor than employee talent, organizations cannot afford to limit their use to traditional temp work. Look to the contingent workforce as a potential source of talent for all types of roles and skill levels.
  
  
• Protect your business from candidate fraud: During the hiring process, it’s essential to recognize that a resume may contain exaggerated credentials or misrepresented experience. To safeguard your organization, all stakeholders must adopt vigilant verification practices. Initiate collaborative efforts between HR, procurement, line-of-business managers and leadership to establish robust protocols for identifying authentic candidates, utilizing advanced screening tools and maintaining thorough documentation. By prioritizing compliance and accountability, you can reduce the risk of candidate fraud and ensure your workforce is built on genuine talent.
  
  

2. Dig Into the Details of Your Contingent Workforce

Whether they recognize it or not, organizations find themselves adjusting to a new world of work and a new set of values that the contingent workforce brings to the table. It is a world of work that evolved over two decades of steadily improving technologies and practices.

 Now more than ever, businesses must dig into the details of their labor force, especially their contingent workforce, to ensure they have a clear strategy in place. This means understanding exactly who their workers are, how those roles are defined and why the organization is choosing to engage in this way. Without this level of insight and purpose, companies risk missing out on the full advantages that contingent talent can offer. 

How do companies connect today’s pressures on business to the changes they need to make to their talent strategy? The answer requires an understanding of the growth and trajectory of the extended workforce and, most importantly, how that direction will position the relationship between organizations and their workers. Consider the following trends that underscore the new realities of contingent worker talent.

Expanding Visibility: Managing the Growing Impact of the Contingent Workforce 

For full-time employees, organizations typically have clear visibility and control over headcount, cost and location. These metrics are tracked, reported and carefully managed as part of workforce planning and budgeting. However, when it comes to the contingent workforce, those lines are far less defined — making it difficult for organizations to fully account for their contingent talent.

The numbers tell a compelling story: contingent workers now make up 38% of the US workforce, with projections suggesting this figure could reach 50% by 2035. In large enterprises, nearly 30% of their workforce operates outside the boundaries of traditional, permanent employment. For Fortune 1000 companies, contingent labor accounted for a substantial 25% of overall workforce expenses in 2023.

This demonstrates that a significant share of labor costs is directed toward a workforce segment that is often inconsistently managed or overlooked. According to SIA, statement of work (SOW) labor represents about 66% of the broader contingent workforce market, making it not only the largest but also the fastest-growing area of external labor spend. Despite its prominence, SOW labor remains, by many accounts, one of the least regulated segments in the market.

Today, the term contingent worker still includes traditional temporary labor, but it also typically refers to a broader spectrum of workers supplied through a staffing partner. As organizations compete for a short supply of talent with critical skills, their reach to contingent workforce continues to grow, making it imperative to address the gaps in visibility, governance and strategic management of this substantial segment.

The Takeaway: Embrace the Full Scope of Contingent Workforce for Strategic Talent Readiness 

As organizations continue to adapt to evolving workforce values and expectations, talent leaders must re-examine and respond to the shifting priorities that define today’s contingent workforce. Keys to success include a clear understanding of the major issues at play and a willingness to adjust to changing demands. Organizations must recognize that external labor comes from a wide variety of sources — far beyond traditional staffing suppliers.

Contingent talent sources are often hidden throughout the organization, making it easy for companies to overlook who their workers really are or why they’ve chosen to operate this way. Many businesses go out to bid for external labor without fully understanding the definition of their workers or the strategic reasoning behind their approach. This underscores the importance of having a deliberate, well-defined strategy for utilizing contingent talent.

• Look at the extended workforce as more than contingent workers and agencies: The contingent workforce encompasses the entire universe of extended worker talent. By acknowledging the full scope of external labor sources – often dispersed throughout the business – organizations can more thoughtfully identify talent needs and then determine the best fit based on the ability to deliver the right outcomes.
• Rethink what qualified means: Traditional notions of jobs and job requirements are also evolving, as organizations think more in terms of outcomes than in responsibilities. First, skills evolve quickly, and in many cases, the relevance of a particular skill may only last several years. Second, traits such as flexibility, aptitude for learning and interpersonal skills may take precedence in projects where changing demands are expected. In an environment with so many avenues of contingent labor, redefining what qualified means is crucial for harnessing the full potential of external talent.
  
  Rethink “qualified” as “having potential and able to learn quickly” and then provide the resources to enable the worker to do just that. The result will be a more agile workforce, and the ability to act quickly on changing business demands. The approach applies to contingent workforce suppliers, with a great example from CareerCircle which provides assessment, support and learning resources to help workers identify areas of aptitude and develop relevant skills.
• Focus on cultivating talent readiness: Thanks to the dynamics of business today, three- and five-year strategic plans are giving way to quarterly strategies. Organizations that can shift quickly to meet changing talent demands enjoy a competitive advantage over those who cannot. That advantage is what defines talent readiness. It not only refers to the ability to access new people with new skills but also being able to quickly assess that talent from every part of the extended workforce — no matter where it’s sourced or how it’s engaged.  

3. Strategically Optimize Processes to Build Workforce Readiness  

Effective engagement of talent and management of contingent workforce spend requires processes that align closely with your engagement model and the specific type of work needed. Historically, companies have sought ways to optimize these processes for greater value, leading to the development of the managed service provider (MSP) solution as a response to the demand for process improvement.

However, it is essential to recognize that engagement processes differ across various contingent labor categories, such as freelancers, independent contractors, MSPs, SOWs and outsourced teams. Each category requires thoughtful consideration of the most suitable engagement model and process. Managing all contingent workforce suppliers and their budgets under a single umbrella – such as an MSP – enables consistent processes and pricing that can deliver cost savings.

Today, process optimization goes further. Multiple processes tailored to different talent needs are valuable, and technology tools and automation support easier management across categories. Compliance is critical for all workers, whether they are on a one-day assignment or shift work. Certain roles, especially in healthcare and life sciences, demand certifications and robust credential management. Tracking contingent worker performance and establishing redeployment mechanisms are essential for efficiently re-engaging proven talent, ensuring readiness and maximizing business outcomes.

To realize the full potential of an advanced contingent workforce strategy, look at the evolution of practices over the last few decades. By understanding the approaches and reasons for applying them, procurement and HR planners can implement the right strategy to deliver results with predictable costs and reliable performance. However, it’s critical to recognize that the contingent workforce program you implemented on day one should not remain unchanged by the end of year one. Continuous review and optimization are essential — especially as technology evolves and business priorities shift. Regularly revisiting and refining your processes ensures they stay aligned with your strategy and goals, enabling your organization to adapt and drive progress.

Optimization Isn’t Optional: Moving Beyond Ad-Hoc, Siloed Workforce Engagement  

Hiring workers to address tactical needs will always be an important part of business operations. In the past, hiring managers directly engaged their contingent workforce suppliers at the department- or line-of-business level. With little connection to other managers or departments making similar engagements, managers paid widely varying rates for people to do the same work.

Today, this remains a problem for organizations that don’t actively seek ways to optimize their contingent workforce spend. With modern tools and visibility, there’s no excuse for paying different prices for the same worker in different parts of your business. Optimization isn’t optional — organizations must leverage available data and technology to ensure consistency and efficiency in workforce engagement.

Historically, as companies grew sophisticated in directing their contingent workforce spend through centralized strategies, managers continued to find ways of securing workers on their own. The temptation continues today, as managers naturally seek familiar paths to get work done quickly, and in some cases, attempt to allocate spend outside the view of procurement oversight. An effective workforce strategy must provide the means to keep managers on track and avoid rogue spend, delivering the same convenience along with improvements in speed, cost and results.

Optimization is a necessity, not a luxury, and modern solutions make it easier than ever to ensure managers are aligned with enterprise-wide goals while maximizing value and performance across the organization.

Advances in Processes: Cost-driven Strategies Focus on Enterprise Savings

To better manage the growing network of contingent workforce suppliers, MSPs help companies standardize bill rates and drive accountability.  While cost savings often draw attention, it’s essential to benchmark these rates against those paid by other companies hiring the same skills in the same geographic area. This comparison ensures that organizations remain competitive in attracting top talent. If the primary goal is to secure talent quickly, rates may need to be set at or above the market average to entice skilled workers and reduce time-to-fill. Conversely, if minimizing costs is the top priority, rates can be aligned with the lowest acceptable market levels, but organizations must recognize the potential impact on speed and quality of hires. Ultimately, aligning your pricing strategy with broader business objectives – whether prioritizing rapid access to talent or cost efficiency – is crucial for agility and success in workforce engagement.

The traditional MSP model supported by vendor management system (VMS) technology is often viewed as a cost-savings tool. However, leaders must consider whether their rate strategies are competitive compared to market peers and support timely access to talent, rather than simply extending time-to-fill. Regularly comparing practices and rates with those of similar companies in the area ensures that savings do not undermine the quality or speed of hiring, allowing organizations to maintain both a strong talent pipeline and operational efficiency.

Moving forward, the use of contingent workers, regardless of cost, must contribute to an organization’s ability to adapt to changing – sometimes unforeseen – demands on the business. With that in mind, leading MSP solutions and their customers bring workforce readiness and agility into the equation, giving organizations the capability to adjust rapidly to business demands.

A Next-Generation Focus: Companies Look for a Complete Strategy for Talent Readiness

Companies continue to work toward being more flexible in their talent strategies and doing so in a way that is natural to the way work gets done. Managers should not be limited to their own contingent supplier network or to their channels for freelancers, services providers or other sources for the talent they need.

The next-generation approach makes all channels to talent available through a common system and program. Organizations can access the right resource, not simply the resource that is available in their view. Advances in technology help make this level of visibility into the contingent workforce possible, as innovations in data science and AI applications navigate all talent sources through one field of view.

Takeaway: Turn the Contingent Workforce into a Core Talent Readiness Function

Today’s companies are embracing a holistic contingent workforce strategy as the path forward in an environment shaped by both predictable trends and unpredictable events. Modern solutions enable organizations to align managers with enterprise-wide objectives while maximizing value and performance across the organization. By leveraging centralized data, expert guidance and advanced technology, organizations gain the agility needed to adapt rapidly and consistently deliver business value.

• Reach beyond isolated, incremental improvements: Transformation is the driving force in a contingent workforce strategy. Improvements in technology, processes and organizational structure must be integrated into a unified system, enabling managers to make proactive decisions based on insights — not just cost savings. By bringing together disparate sources of data, organizations can identify resources and re-evaluate their operational processes. These actions deliver value that goes far beyond tactical cost savings and isolated outcomes.
  
  
• Make the hiring manager happy: The transformation of workforce engagement should empower hiring managers with seamless access to talent. Advanced data platforms, such as the Acumen® Intelligent Workforce Platform, and expert advisors simplify the experience, guiding managers toward options that may not have been previously considered. Can an outsourced service deliver results more reliably than a collection of individual contingent workers? Is a freelancer better for the job? Or should the work be divided differently into tasks that spread to more specialized talent to execute?

  Human expertise, powered by real-time data and AI-driven insights, ensures managers face minimal obstacles in securing workers and achieving project goals. The talent advisor can provide the right answers for a practical approach, simply and clearly, based on data about the skills required and the available solutions.
  
  Looking ahead, advanced technology and processes will define the rules of smart engagement, but human expertise will be the central driver of adoption, user satisfaction and results. 

• Give the candidate and contingent worker a reason to commit: Engagement and retention of contingent talent are just as important as with traditional employees. For example, consider why a prospective job applicant should choose your organization as a place to work. Now, adjust the same question to a contingent candidate: why should someone take the assignment you are offering instead of others that may be on the table?
  
  The “assignment value proposition” is the reason contractors will choose your organization for their next gig. Are you giving them a challenge that will expand their abilities? Do you have a great team or support for skills development and access to other opportunities within your company? Do your contingent workforce suppliers provide the right opportunities to attract talent with a commitment to candidate care? The answers make a difference in creating better access to the talent supply and adjusting quickly to new demands for skills and resources.
  
  

Unlocking Potential: Empowering Stakeholders with a Unified Extended Workforce Strategy 

Aligning technology, resources and talent supply – and humanizing a complex engagement process to make it user-friendly – is no easy task. But that is what organizations will need to do as they engage the contingent workforce to its full potential.

Even today, most MSP capabilities cover different aspects of contingent workforce best practices yet fall short of putting all elements together to deliver true workforce readiness. Closing that gap requires more than capable tools in isolation; it calls for outcomes that deliver measurable value to the organization. Stakeholders across procurement, HR, and leadership need access to real-time data and decision-making tools, empowering them to drive strategies forward and achieve meaningful wins. These outcomes include cost savings, strategic impact, compliance, speed and the agility to meet evolving business needs. 

• For procurement, a win is the opportunity to provide real numbers on cost savings or their contribution to business value. It is also the ability to provide strategic impact beyond the traditional expectations as budget gatekeepers. The right contingent workforce function arms procurement with the means to document key results such as the delivery of services, expansion of resource management, speed of response to a business need and compliance with evolving regulations.
• For HR, a holistic contingent workforce strategy can align best practices, such as employer brand, candidate experience and worker engagement, with a previously unconnected contingent workforce population.
• For leadership, numbers matter. Are projects being brought to completion on time and on budget? Are initiatives staying on track with the people needed to deliver the work? Does the company have the right headcount, cost strategy and skills to support strategic goals?

The key to creating stakeholder champions is communication, data and results. An effective strategy supported by an advanced MSP partnership provides the right tools for all involved decision-makers to achieve the successes they seek in each of their roles.

Allegis Global Solutions’ holistic approach to the contingent workforce brings all extended workforce categories into a single management process. The framework is powered by Acumen, which consolidates data from all sources together for a unified view of the resource supply and helps companies drive informed, decisive strategies that match the right resource to the desired outcome.

By equipping stakeholders across procurement, HR and leadership with real-time decision-making tools and actionable insights, this approach enables organizations to tackle engagement and management challenges, unlock the full potential of their contingent workforce and adapt strategies for greater impact. Since every organization is unique, a comprehensive solution depends on a provider that delivers access to all the tools needed for ongoing success and business growth.