Insights for technology professionals

3 Common Challenges of Contingent Workforces: How MSPs Can Help

Posted on November 21, 2017 by Jack Trompert


The trend is clear: blended workforces (teams made up of full-time and contingent workers) are growing in popularity. In fact, it’s estimated that 40% of today’s workers are contingent. Many point to the 2008 recession as the genesis of the growing “gig economy,” as widespread layoffs pushed a wave of freelancers into the workforce. Over the years, the trend has continued thanks to advancements in telecommuting technology, the Affordable Care Act and an increasing number of flexibility-demanding millennials.

Why companies like hiring contingent workers

For companies hiring engineers and IT professionals, employing a blended workforce is a lucrative option. Employers can bring in experts for specific projects and part ways with them once the scope of work is complete.

This allows companies to get more bang for their buck by saving on items like office space and  operating costs. Contingent workers also bring an outside perspective that can be good for projects. They may catch things their full-time coworkers don’t or have different approaches to solving problems.

Most importantly, employers have the ability cancel a contract (without fear of legal action) if a contingent worker ends up being a problem or isn’t performing. They don’t have to worry about social security or severance payments. On the other hand, if an organization wants to bring someone on full-time, starting them out on a contingent basis allows employers to test the waters and see if they’re right for a permanent position.

The benefits of a contingent workforce are clear. But that’s not to say the arrangement is without difficulties. There are three common challenges we see companies face when employing a blended workforce. The good news? A good Managed Services Provider (MSP) can solve each of them.

Finding the right candidate

Having your internal team sift through stacks of resumes and interact with a giant list of candidates can often create unnecessary stress within your organization. Because of this, some companies try to work with multiple staffing agencies to help them fill a position.

Unfortunately, this often compounds the problem, as the hiring manager must coordinate with more involved parties and manage even more lists of contacts. If that wasn’t enough, getting potential hires coming toward you is only the beginning. You also need a way of making sure they’re the right person for the job.

There are plenty of questions to consider, such as:

  • Does the worker have the right skill set?
  • Is their resume legitimate?
  • Do they have experience working as a contractor?
  • Are they trustworthy?
  • What’s their availability?

You’ll need to hold interviews, run background checks and eventually trust that you’ve found the right candidate. Working with a managed service provider can be a simpler way to find the right people.

A good MSP will have already done the work to find talent with niche skillsets that fit your industry. They’ve handled the interviewing, performed the quality checks and have built an actual relationship with the contingent worker so that they have a full understanding of their capabilities and character. That means less effort on the employer and a faster acquisition of proven talent.

Hiring and onboarding contingent workers

As mentioned above, there are plenty of details to consider when looking for a new team member. Once you’ve found that candidate, you have to handle the associated paperwork, get them up to speed on the project and integrate them into your team. It’s common for companies to waste precious time and money during this period. In fact, one study found that it takes companies more than 58 days to fill an engineering position.

An experienced managed services provider, however, will have their onboarding process down to a science. They should be able to sit down with you and iron out the necessary skills and experience for the position, priorities for the role, the necessary timeframe for the new hire, and the expected length of assignment.

Once these elements are in place, the MSP can select the proper candidate and handle all aspects of onboarding — from orientation, badging and documentation, to payroll and benefits. This way, the employer has minimal involvement and the contractor is ready to hit the ground running on the assigned project.

Classifying and paying contingent workers

Employing contingent workers means dealing with different classifications and varying rates of pay. It’s no surprise that navigating the federal classification guidelines and establishing equitable pay rates is a common challenge for internal teams. One study in 2009 estimated that misclassification cost the United States $54 billion in underpayment of employment taxes.

To avoid getting hit with unexpected penalties and fines, you can work with a managed service provider to handle these details. The MSP will have a thorough understanding of the industry and be able to handle all staff augmentation, 1099 Independent Contractor (IC) qualification and sub-contract vendor management — easing the workload on your hiring manager and ensuring documentation, classification and payment is appropriate and timely.

If you feel that your company could benefit from a contingent workforce and would like to streamline your hiring, onboarding and payment processes, working with a managed services provider could be a great option. Be sure to check out our services page to see how Talent 101 helps our clients optimize their workforce for maximum productivity and output.

Jack Trompert

In 2010, Jack and Janet Trompert started Talent 101 with a clear new vision on how to deliver talent to the marketplace. To work at Talent 101 is to be a part of something creative and big. From our modest roots as an ambitious startup, to becoming a global workforce solution provider to the world’s most recognized semiconductor companies, our growth and momentum owes a lot to our strong company culture of customer service, can do attitude, sense of urgency and always focus on the client and talent.