The Increasing use of Contract Staff and Temp Workers in the Corporate World

Hiring Temps and Contract Staff

Of late, a trend that has been noticeable in the corporate world pertains to the increasing use of contract staff and temporary workers or temps as part of the organization’s operations. The trend that started a couple of decades earlier has now accelerated into a phenomenon where nearly 25 to 30 percent of the workforce in major companies is made up of contract staff and temporary workers.

What was hitherto reserved for the peripheral functions like HR, Admin, Finance, and services has now spread to the core functions like project management, testing, and even whole teams being contracted out to outsourcing providers.

There are many implications of having contract staff and the key reason why many companies go in for contract workers and temps is the cost factor which is primary and the secondary factors like hiring at short notice, reducing overheads, and finding the right skills which the outsourcing providers can supply to the companies.

We shall examine each of these factors in subsequent sections. It would suffice to state here that the ongoing recession has also contributed to hiring more temporary workers as the convergence of cost and other factors combined with the fact that once the project is over, the temporary workers can be made redundant all are reasons for the upswing in hiring contract workers.

Advantages of Hiring Temps

Given the fact that cost is a key consideration for hiring temporary workers, it is natural that companies are tempted to hire them. The companies need to worry about paying for their healthcare or social security nor do they have to worry about contributing to pension funds and other benefits.

Added to this is the fact that hiring at short notice is often difficult for many companies because there is a lead-time to onboard new employees and by hiring temporary workers, the lead-time can be done away with. Further, sometimes companies might not find employees with desired skills who can be hired at short notice.

With outsourcing providers ready to step in such situations, it becomes easier for companies to rely on temporary workers who can ramp up quickly. Apart from this, they can be made redundant once the project is over which cannot be done in the case of permanent employees.

Moreover, some functions like testing and quality control require niche expertise that might not be available in-house and therefore, temporary workers can fill in this scenario.

Disadvantages of Hiring Temps

Of course, this does not mean to say that contract workers represent a magic bullet for the factors listed above. On the contrary, there are many downsides with hiring temps and these include accountability, adherence to policies, vague contracts leading to disputes, and overall responsibility and control over the resources.

For instance, in many companies, managers find that though the temporary workers work better than permanent employees because of the need to please the employer to get more work for their companies, the issue of overall control and accountability apart from responsibility needs to be addressed.

The point here is that temporary workers are after all part of another company and hence, critical functions and jobs cannot be assigned to them because of these aspects. Apart from this, disputes arise in case the temporary workers do not perform according to expectations and when they leave midway between projects.

There are many examples in the corporate world where the temporary workers have failed to fulfill their contractual obligations leading to protracted disputes between the companies and the outsourcing providers.

Next, many temporary workers do not have a sense of ownership with the project because they know that they are just in-between employees and this can lead to dicey situations as well.

Concluding Thoughts

Finally, after the positives and the negatives have been tallied, it is found that the practice of hiring temporary workers does add value to the companies and provided they are managed well and contracts drawn up in clear and unambiguous terms, the practice or hiring temporary workers can result in cost savings and increased productivity and profitability.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.

Human Resource Management