CXO

Over 70% of global employers now use contractors to help fill IT skills shortages

A new report found that 40% of US businesses now have a hybrid workforce of permanent and contract IT employees to fill talent shortages and fast-changing technical skill needs.

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Image: iStockphoto/tonefotografia

If you're running a company in the US, there's a good chance your next IT hire will not be a permanent member of the team. A new report from Experis found that 40% of US companies now have a hybrid workforce of permanent, freelance, and contract employees—the highest percentage of hybrid workers globally.

Hiring IT contractors has become more popular worldwide, with 71% of employers across ten countries currently using contract talent—likely due in part to increased shortages in skilled IT workers. In the US, just 41% of companies rely solely on permanent IT staff.

"Faced with talent shortages and fast-changing skills needs, companies are getting more sophisticated when it comes to workforce solutions, particularly in IT," said Sean Costello, senior vice president of Experis, North America. "Having been through the cost-cutting of the recession, many are now reevaluating and reengineering their workforce."

SEE: Is tech turning contract work into the future of employment?

Rather than sticking with business-as-usual, companies are recognizing the need for more customized sourcing strategies, Costello said. Contractors can offer more efficiency and flexibility for companies working on tight-deadline projects and innovative new ideas that require technical skills that are not found in-house, he added.

Companies in each of the 10 nations surveyed varied greatly in in-country IT hiring practices. The countries with the highest numbers of permanent employees were:

  • Germany (63% permanent)
  • India (62% permanent)
  • Australia (58% permanent)

When it comes to hiring IT talent overseas, employers preferred using a mix of contractors, freelancers, and permanent workers, more so than at home, the report found. Companies don't usually have the same level of legacy infrastructure overseas as in their home market, Costello said. Many find that working with contractors or buying staffing solutions through partnership arrangements offers a fast, efficient way to ramp-up operations overseas.

Hiring contractors

One in 5 US employers plans to increase their use of IT contractors, the report found.

"The contractor model appeals to many people, particularly in the IT space, who are looking for greater flexibility and variety in the work they do," Costello said. These roles tend to attract self-motivated individuals who prioritize on-going skills development, he added.

Companies hired contractors most often for development solutions and infrastructure service, the report found—two areas in which the technical requirements shift rapidly and require the most up-to-date skills. "If a legacy workforce falls behind the curve, organizations often look to contractors to bring the added technical know-how to get the job done," Costello said.

Contract work is appealing to companies because of its flexibility, the report found. "With tighter margins and tougher competition, all organizations are looking for ways to be more nimble and shift more easily as markets change," Costello said. "Contract work offers the ability to quickly ramp-up and test-drive projects without the same level of risk. It is tailor-made for innovation in this period when companies are still a little cautious after the recession."

These workers can also be more cost-effective: When a project has a fixed timeframe, it is often easier to find contractors that can fill an immediate need, rather than finding and training a permanent employee, Costello said.

Contractors can also be a way to tap underused talent, including minorities, women, and older workers, Costello said.

"By implementing a diverse workforce strategy, blending permanent and contingent workers, companies are finding ways to be both more agile and cost-competitive," Costello said. "It is a new way of thinking about workforce management."

The 3 big takeaways for TechRepublic readers

  1. Use of contract workers is increasing worldwide, with 71% of employers across ten countries currently using contract talent, according to a new report on IT workforce trends from Experis.
  2. Contractors can offer more efficiency and flexibility for companies working on tight-deadline projects and innovative new ideas that require advanced technical skills.
  3. Some 40% of US businesses now feature a hybrid workforce of permanent, contract, and freelance employees, representing the largest such workforce globally.

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About Alison DeNisco

Alison DeNisco is a Staff Writer for TechRepublic. She covers CXO and the convergence of tech and the workplace.

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