How to Integrate Independent Contractors into Your Business in 2024

By MBO Partners | January 9, 2024

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Key Points

Companies report that contingent labor makes up 28% of their workforce.

Independent contractors offer business workforce flexibility, enhanced efficiency and productivity, and cost savings.

Successfully incorporate independent talent by staying compliant, understanding what drives them, using the latest technology, and planning for the future.

Independent contractors are the solution for many organizations when faced with disruption, competition, and labor and skill shortages. The average company reports that contingent labor makes up 28% of their workforce, and this proportion is expected to grow to 38% by the end of 2027. As this sector of the workforce increases, it is worth examining the benefits of incorporating independent talent and how to effectively do so.

3 Benefits of Independent Contractors

1. Workforce Flexibility

One of the biggest advantages of using independent talent is the ability to create a flexible, on-demand workforce. Companies that have a core base of full-time employees in addition to a more transitory base of independent contractors can act and react faster to changes in the market.

Independents can provide enterprises with access to temporary workers with in-demand skills. This is a great way to supplement a full-time workforce. On-demand workers can take on one-off projects, conduct a more traditional consulting assessment to solve a problem, test out a new line of business, or provide the additional labor needed to complete a project more quickly.

2. Enhanced Efficiency and Productivity

Independent contractors are small business owners, who have a roster of clients they have built based off their particular set of skills. Many of these independents have a wealth of experience and skills that are highly sought after.

Independents require less onboarding time than hiring a brand-new employee, because they are engaged to complete a specific task that they already possess the skills for. This helps to increase both productivity and efficiency.

3. Lower Cost of Employment

The financial benefits of independent contractors take many forms. Because independents are a different classification of worker, companies are not required to provide benefits or pay the employer or employee portion of Social Security and Medicare (FICA). Independent talent need minimal training, tend to work remotely, and by law require little oversight and management.

16 Benefits of Hiring Contractors vs Employees

How to Integrate Independent Contractors into Your Business

Follow Laws and Regulations

If your company decides to experiment with engaging independent contractors, it is first important to understand the many laws and regulations that apply to this group of workers. Independents are a different class of worker than a W-2 employee in the eyes of the IRS, and it is important to ensure that every worker you hire is properly classified. The compliance side of working with independent contractors can be complex, so working with a firm that specializes in independent contractor engagement can be helpful if you don’t have in-house council that is familiar with these laws.

Learn What Drives Independents

Understanding what drives independents to do what they do is almost as important as the compliance piece of the puzzle. As more businesses engage independent contractors, competition for top talent increases. This means that independents have a pretty big choice when it comes to picking the clients they work with.

If your company is familiar with the needs and desires of independents—feeling like a member of a team, having a positive work environment, working with a client who values their work, having reasonable processes and procedures, and having opportunities to learn and build skills—your company will be much more appealing to the best talent as a place to work.

Use an Online Marketplace

An online marketplace connects independent talent with project opportunities. Hiring managers can search for talent who have the skills they need and reach out to them directly, and talent can also apply to jobs they are interested in.

Marketplaces are growing in popularity—40% of independents who provide services to businesses reported using a talent platform to find work in the past year—and they can be a helpful way to find great talent without the cost of using a third party.

Think Long-Term

At first, it can be easy to piece-meal the integration of independent contractors into your business, engaging people here and there for projects. But if your company is serious about creating a long-term solution, building a scalable independent contractor engagement program is the way to go.

A program considers all business units, setting rules for identifying, engaging, and managing independents. By building visibility around independent contractor engagement, you can better track and save costs, answer questions and resolve issues, and grow with your company needs.

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