The workforce has always had some contractors and freelancers. The sea change has been on the rise in absolute numbers; an NPR poll found that one in five jobs is held by a contractor and this could reach half of the workforce within a decade. Almost 95% of the new jobs created between 2005 and 2015 were non-traditional. The numbers are even higher in tech. Let’s look at the reasons why contract work is becoming the norm in the tech sector.
The scarcity of Talent in Tech
The scarcity of technical talent has caused many businesses to rely on contingent staff to meet their needs. A survey of a thousand hiring managers found that nearly nine in ten say it is hard to find technical talent while more than a third said it was “very” challenging. Contract work is one way to find talent. Hiring contractors who work remotely enables businesses to hire talent outside of their area to fill in gaps on the team or secure the subject matter expertise they need for the time frame they need them. And businesses are increasingly relying on contract workers to fill in the team.
In a 2016 CIO survey, one in ten IT leaders said they used contractors to fill in more than three-quarters of their team. Many businesses use contract workers with specialized skills. The potential cost-savings of only retaining them for as long as they’re needed for a project instead of keeping them on the payroll full-time also contributes to contracting work in IT.
Another benefit of contract work in tech is that it gives employers a way to bring in top tech talent and try them out. Firms have the option of offering full-time work to contractors, and when they do, they already know that the person is qualified for the position and familiar with the rest of the team.
The Business Case for Contract Work in Tech
Businesses are seeing the need to be able to adapt quickly to changing markets and environments. Businesses need to be able to hire needed talent immediately when required, and they must be able to let go the people they don’t require any more to remain efficient.
Contractors maintain their skillsets and credentials to remain competitive in the marketplace, and they compliment established employees familiar with legacy systems while eliminating the need to retrain existing staff. Contract work allows businesses to find people with the most up to date skill-sets and cross-pollinate existing teams with that expertise, only paying for the time and talent as required.
Businesses save money, too, because they don’t have to provide the same benefits to contract workers or maintain the same level of administrative overhead as they would for a similar number of permanent workers. For example, contractors don’t require relocation costs. Contract workers may provide their own equipment, whether or not they can work from home. They typically don’t receive benefits like health insurance or unemployment, so many contractors pay for their own insurance or de facto benefits. Contractors are often covered by their own tailored insurance plan, providing liability insurance to cover the costs associated with mistakes.
Businesses have found that distributed contract workforces can continue working despite local disasters. Furthermore, remote workers are often able to provide 24x7x365 coverage for business operations since they don’t have to be located in the same time zone as the employer or the customer. Having teams working around the clock is now practical, thanks to contract work done by distributed workforces. Someone on another continent won’t have a problem working through the night because their work day just started.
Technology Is Enabling Contract Work
Technology allows an increasing number of people to work remotely. While this benefit is being used more often by permanent employees, businesses are taking advantage of the same technology to outsource certain jobs to contract workers who may never step into the company’s offices or even be known to Human Resources.
This shift requires breaking down work into very small components that can be distributed through crowdsourcing platforms before reassembling them on-site. This allows businesses to outsource non-core functions.
Core functions will remain the purview of permanent employees who interface with Human Resources. Non-core functions and the associated work is completed by an army of crowd-workers located all over the world. Businesses are becoming better at farming out non-core work and managing the flow of such work, though this requires the business model itself shifting from relationships to transactions. Yet the benefits to the business are clear. When they can outsource simple or even menial work to the crowd, tech workers are free to dedicate themselves to complex tasks or knowledge work that cannot be outsourced.
As isolated skillsets are automated or taken over by artificial intelligence, companies that adopt this business model can easily shift more work to the crowd or AI and reap the cost savings. And as technology changes, they’re able to keep up with the changes because the remaining core team consists of multi-skilled professionals with deep institutional knowledge.
Contract work has been enabled by technology. And the high cost of skilled tech talent along with the evolution of technology and business models keeps many firms from adding permanent team members.