Buyer Preferences When Engaging Independent Contractors
Recent research conducted by nextSource in partnership with Chateau Consulting and Worksome provides insights into the buying patterns and priorities of companies when engaging independent contractors. This research, conducted in the summer of 2024, defined independent contractors as self-employed individuals who perform services under a direct contract. This includes consultants, freelancers, gig workers, and more.
When asked “What problem are you trying to solve when engaging independent contractors?”
an equal number of respondents (17%) chose access to new or hard to find skills, completing projects with a specified duration, or effectively manage compliance risk. A smaller percentage (6%) stated that they were attempting to manage the workload without sacrificing employee headcount. Nearly half of respondents (44%) indicated that all these challenges apply.
To determine timing for addressing these challenges, the survey asked, “What issues are critical to resolve within your organization over the next 12-18 months?” More than a third (35%) indicated a need to increase access to specialized skills. One out of five (21%) will take steps to increase visibility into headcount and spend across their entire workforce. An equal number (14%) will focus on mitigating independent contractor classification risk, rationalizing their list of specialized technology partners, and streamlining independent contractor onboarding and offboarding.
The survey also explored the use of third-party assistance when managing an extended workforce. In response to “If you were to consider a third party to manage all or some portion of your independent contractor talent, what components would you outsource to a third party for assistance?” Nearly a quarter of respondents (23%) would seek assistance in ensuring compliance; 18% would outsource management of a network independent contractor platforms; an equal number (9%) would look to a third party to establish a talent community or continuously nurture the community; and 41% would seek assistance in all these areas.
When asked which of these outsourced services would yield greatest value, the overwhelming response was compliance assistance (42%), followed by a quarter of respondents placing greatest value in guidance and management of all talent buying activities. 17% selected technology assistance in managing the network of platforms. Little value (4%) was placed on nurturing talent pools.
Further exploring the assistance sought by the survey audience, they were asked what they perceived to be the greatest challenge in utilizing the help of a third party. One-third responded with each of the three options: Lack of clear strategy, vision, and objectives of the program; need to change established ways of working across the client organization; and resistance from internal teams or stakeholders to engage a third party for category support.
Independent contractors are rapidly becoming a dominant part of our entire workforce population. In 2022, the U.S. Bureau of Labor Statistics reported 31.9 million independent workers, doubling the number two years earlier, and more than tripling the number five years prior and estimates for the current year are as much as double that of 2022. Of these workers, two-thirds work full-time, exclusively as independent contractors. One out of every five independent contractors are in professional occupations such as healthcare, IT, R&D engineering, and other highly sought after skills. Highly skilled workers, especially those categorized as Gen Z or millennials, constitute the majority (combined estimates are as high as 70%) of all independent contractors, indicating that continued access to great talent requires an effective independent contractor strategy. To learn more about how nextSource can provide a high impact, worry-free approach to engaging independent contractors, reach out to us.