As the contingent workforce continues to grow and evolve, program managers around the world must stay informed about key megatrends that are reshaping the industry. These trends have significant implications for cost, quality, efficiency and risk management.

This article explores the most impactful developments that contingent workforce program managers should be monitoring closely.

Downturn in the US staffing market. The US staffing market has experienced a notable decline in temporary worker placements over the past 24 months, even as the broader economy expanded. The temp penetration rate — temporary jobs as a percentage of total nonfarm employment — dropped to 1.72% in May 2024, a significant decrease from its peak of 2.10% in March 2022. This downturn has caused widespread challenges for staffing firms and related sectors including job board operators, payroll funding providers and staffing software vendors. Contributing factors include unsustainable growth levels, sector-specific weaknesses, client caution and labor shortages.

Despite these challenges, the staffing industry remains resilient, having weathered numerous technological disruptions in the past. The industry’s adaptability suggests that while the current downturn is difficult, it is not indicative of the sector’s demise.

AI disruption in staffing. Artificial Intelligence is poised to disrupt nearly 40% of manual processes in the staffing industry within the next three years. Key areas affected will include candidate screening, skills assessment, matching and selection, and redeployment. While AI promises to enhance efficiency and the candidate experience, it also presents challenges such as worker displacement and evolving skill requirements. Contingent workforce management professionals must strategically prioritize AI implementations to stay competitive and maximize the benefits of this technology.

Gig economy growth. The gig economy is expanding rapidly, offering companies greater flexibility and access to a global talent pool. This trend enables organizations to scale their workforce up or down as needed, which is crucial for cost management. However, the gig economy also brings increased competition for talent and regulatory challenges. Program managers must balance the benefits of workforce flexibility with the risks of non-compliance and the complexities of managing a gig workforce.

Regulatory and compliance changes. Governments around the world are re-evaluating labor laws, especially those related to gig and contingent workers. Regulations such as California’s AB5 and the European Union’s platform worker regulations could significantly increase costs by requiring organizations to offer benefits or reclassify contingent workers as employees. These changes present a dual challenge: maintaining profitability while managing the risks associated with non-compliance, including potential fines and legal challenges.

Remote and hybrid work models. The shift toward remote and hybrid work models has broadened the global talent pool, enabling organizations to hire contingent workers from anywhere. While this flexibility enhances access to talent and can drive innovation, it also introduces challenges in managing distributed teams and ensuring cybersecurity. The cost savings from reduced physical infrastructure may be offset by increased investments in technology and remote management strategies.

Workforce diversity and inclusion. Diversity and inclusion are becoming increasingly important for organizations, not just for full-time employees but also within the contingent workforce. Diverse teams are linked to better decision-making and innovation, but managing inclusivity across different worker types requires careful attention. Investment in diversity initiatives can enhance organizational performance, though it may also require significant resources.

Economic uncertainty and recession risks. In times of economic instability, contingent workers offer organizations a flexible solution to manage labor costs. However, relying too heavily on contingent workers can impact quality and continuity. Program managers need to carefully balance short-term cost savings with long-term stability to navigate these uncertain times effectively.

Skills shortages and talent scarcity. The rapid pace of technological advancement is creating a skills gap, particularly in fields like IT, data science and cybersecurity. Organizations must compete fiercely for top contingent talent or invest in upskilling their workforce, both of which can drive up costs. Securing access to specialized skills is critical for maintaining competitiveness and driving innovation.

Sustainability and ESG expectations. Stakeholders increasingly demand that organizations adhere to sustainability and environmental, social and governance (ESG) criteria, including in the treatment of contingent workers. Companies that fail to meet these expectations may face reputational damage and loss of business. While implementing sustainable practices may increase costs, these can be offset by long-term savings and improved efficiency.

Challenges and Opportunities

These megatrends present both challenges and opportunities for contingent workforce program managers. By staying informed and proactive, managers can navigate the complexities of the evolving landscape, balancing cost, quality, efficiency and risk to drive success in their organizations.

The reports referenced in this article links to are available to CWS Council members.