CHAPTER 9 - Contingent Workforce Management

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The gig economy, freelancers, and contingent workers require different HRM strategies for blended workforces. According to Gartner (2023), contingent workers can now make up 32 percent of the global workforce. Managing a contingent workforce is possible, but the management should perform consistent management of flexibility, compliance, engagement, and knowledge retention (Cappelli and Keller, 2013). 


The rise of the contingent workforce shifts employment to a fundamentally different structure and has ramifications. Standing (2011) identifies the "precariat," who endure chronic insecurity with diminished protections. Being classified as independent contractors is a rationale used by organizations to avoid certain labor obligations and transfer risk to workers. Examples of these types of organizations can be seen with companies like Uber and DoorDash where drivers are responsible for costs and lack protections (Rosenblat and Stark, 2016). Additionally, a two-tier system is developed when contingent workers perform the same work for less pay without benefits. Global regulatory is inconsistent and creates the opportunity for exploitation.



Technology as the Backbone: Integrating Systems for Efficiency

A modern contingent workforce management program leans heavily on technology in ways such as centralizing operations and streamlining processes. Instead of maintaining a set of disparate spreadsheets or vendor-specific systems that are disconnected from each other, an organization will use a CWMS integrated with core HR, procurement, and financial systems. In this way, consistent vendor vetting, centralized tracking of contracts, and a single source of the truth regarding all contingent labor are assured. With this single platform, visibility is also greatly improved into spending patterns to monitor and forecast costs in real time. It is not only superior administrative efficiency but also more effective compliance that is supported by such an integrated system due to automated alerts on contract renewals, legal classifications, and policy violations.


Legal and Classification Risk Mitigation

The biggest challenge in contingent workforce management is proper worker classification. The improper classification of contractors as independent workers and vice versa can have quite serious legal and financial repercussions.
Companies can reduce these risks of co-employment liabilities, fines, and reputational damage by setting clear policies, training managers, and auditing classifications regularly. A powerful CWMS would automatically enforce the rules of classification, notify when misclassification could potentially occur, and record an audit trail in detail. Secondly, legal safeguards, such as role-based access for contractors and periodic reviews of their contracts, give assurance that sensitive data of the company is kept safe and labor laws have been followed.


Performance Management and Contingent Talent Engagement

While contingent workers are often short-term by nature, capturing value from these engagements remains connected to effective performance management. Companies need to define clear performance metrics, KPIs, and deliverables for the contingent staff in much the same way as for full-time employees.
Regular check-ins and feedback loops help not only maintain quality but also make contingent workers feel appreciated, which improves retention, especially when they're engaged on recurring projects.
Moreover, a properly developed onboarding process-even for freelance workers-means they have necessary access to systems, understand organizational processes, and can meaningfully contribute from the very first day. Recognition-even a small acknowledgement of contributions-develops a positive working relationship, encourages repeat engagement, and supports better continuity.


Financial Visibility and Strategic Forecasting 

One of the powerful benefits of contingent workforce management is better control over labor costs. Since contingent labor does not follow predictable patterns, organizations need to be able to track real-time spending proactively. With integrated systems, they can create detailed reports on a vendor, project, or worker level. These insights feed directly into more accurate budget forecasting, enabling businesses to align workforce planning with business cycles, seasonal needs, or project timelines. Furthermore, being in a position to see and adjust the contingent labor spend empowers leaders to make strategic decisions on scaling up for growth without overextension, or scaling back quickly when demand drops. This flexibility reduces financial risk and supports agile and resilient workforce planning.


Theory for Contingent Workforce Management

Resource-Based View (RBV) Theory (Barney, 1991)

The Resource-Based View states that an organization gains competitive advantage when it effectively utilizes valuable, rare, and inimitable resources-human talent included. Contingent workers can become strategic resources that provide specialized skills without commitments to long-term costs. 


How the RBV connects with Contingent Workforce Management

Example: 

A software company engages freelance cybersecurity experts during a product launch. The company reaps the benefits of contingent experts only when necessary, thus reducing costs while enhancing the value of scarce skills. This strengthens competitive advantage by using expert talent as flexible resources.



References 

  • McRae, E.R., 2025. 9 Future of Work Trends for 2025: Harnessing AI, inclusion and innovation to drive organisational success and resilience. Gartner. [online] 8 January. Available at: https://www.gartner.com/en/articles/future-of-work-trends
  • Academy of Management, 2025. Journal Information. [online] Academy of Management. Available at: https://www.aom.org/publications/journal-information/
  • Standing, G., 2011. The Precariat: The New Dangerous Class. London: Bloomsbury Academic. [Online] Available at: https://www.researchgate.net/publication/256485856_Guy_Standing_2011_The_Precariat_The_New_Dangerous_Class_London_Bloomsbury_Academic_1999_pp_198_pbk
  • Rosenblat, A. & Stark, L., 2016. Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers. International Journal of Communication, 10, p.27. [online] Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2686227
  • Barney, J. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99–120.

Comments

  1. Lakshika HerathNovember 23, 2025 at 1:15 AM

    Excellent article! You perfectly framed the paradox of the contingent workforce: they represent a key flexible strategic resource (per the RBV Theory) while simultaneously creating profound ethical and social risks.

    Your discussion on the 'precariat' and the classification issues seen with companies like Uber is crucial. CWM isn't just about efficiency; it's about Legal and Classification Risk Mitigation to ensure fairness. The key takeaway is that strategic CWM uses technology to gain Financial Visibility, but must always be governed by strict ethical and compliance frameworks. Great analysis!

    ReplyDelete
    Replies
    1. Nimesh MadhusankaNovember 24, 2025 at 7:18 AM

      Thank you! I really appreciate your perspective. You’re right. The contingent workforce offers immense strategic flexibility, but balancing efficiency with ethical and legal responsibilities is essential. Highlighting the precariat and classification challenges really underscores why CWM must be managed thoughtfully and responsibly.

      Delete
  2. Gayangi ThennakoonNovember 23, 2025 at 2:35 AM

    Great chapter on managing a contingent workforce. I liked the example of Uber and DoorDash drivers — it shows the real challenges. Using a system to track freelancers and improve compliance makes a lot of sense. Checking in with contingent workers regularly is a smart idea. This chapter makes it clear that fair treatment and good management go together. ✌

    ReplyDelete
  3. thamaliNovember 24, 2025 at 3:08 PM

    Insightful article on contingent workforce management! Managing freelancers and gig workers effectively is becoming increasingly important. Your approach to flexible workforce strategies is practical and timely. Thanks for sharing!

    ReplyDelete
  4. Kelum RajasingheNovember 25, 2025 at 10:15 AM

    A really relevant chapter in today’s gig-economy age — insightful look at how contingent workers can add value.

    ReplyDelete
  5. Kushani SenanayakeNovember 26, 2025 at 2:08 AM

    This post provides a clear and comprehensive look at managing contingent workforces. I like how it emphasizes the strategic use of technology, proper classification, and performance management to maximize value while mitigating legal and financial risks. Linking it to RBV theory nicely shows how contingent talent can become a flexible, competitive resource.

    ReplyDelete
  6. Nilakshi NilushikaNovember 26, 2025 at 10:00 AM

    Great analysis of contingent workforce management! I like how you highlighted technology integration, legal compliance, and performance engagement. The RBV theory connection really shows the strategic value of contingent talent.

    ReplyDelete

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