4 Ways the Contingent Labor Provides Workforce Solutions for Financial Services

Across the globe, we’re seeing organizations become increasingly reliant on contingent labor and more people are opting in to become part of the contingent workforce. Sapient Insights Group has found that 30%–40% of the global labor market is participating in some form of contingent work, with estimates rising to 50% or more within the next few years. 

As many as 30% of workers in some financial organizations can be identified as contingent labor, and are expected to increase as dynamic workforce models become more common.

Leveraging Contingent Labor as a Solution to Financial Sector Challenges

There are many factors within the finance space that we anticipate will continue to drive the need to engage with the contingent workforce in a growing capacity. Below are the four drivers pushing the financial sector into taking a more serious look at contingent labor. 

• Workforce agility. Companies within the industry are more focused on workforce agility than ever before, with 81% of them focusing on workforce agility to execute their strategies, up from 74% in 2022. Businesses are seeing the advantages of adopting methods that enable them to continually flex and address workforce needs beyond continuous and unsustainable hiring practices.

Companies in the space are looking at ways to pivot with methods such as upskilling and internal mobility opportunities. In conjunction, contingent workers add to an organization’s ability to adopt an agile workforce strategy. They offer companies the means to scale the workforce up and down as needed, while equipping organizations with the ability to tap into specialized skills for a set period of time.

• Access to necessary skills. Skills gaps now and in the future within financial services are cause for concern. Leaders need a plan of action in order to address these gaps. With this in mind, 35% of financial organizations plan on changing the composition of the workforce between permanent and contingent staff to address these potential skills gaps over the next five years. When looking at strategic projects and the skills required to fulfill these, firms within the industry should start to broaden their view of where to find these skills. For example, cybersecurity initiatives are top of mind, but only 35% of finance organizations are concerned about the shortage of cybersecurity talent. Contingent labor could offer a solution to pain points such as this.

• Aging workforce. Cause for concern across multiple industries is the aging workforce, with 55% of executives worried about the turnover of older workers. There is a strong appetite for retiring early in the financial services sector specifically, with 32% of workers saying they would opt to retire between the ages of 50 and 55. This could mean a gap in available skills to fill open roles in the sector over the next number of years, and the industry needs to prepare and plan for this. Contingent workers offer a solution here by enabling companies to enlist the services of external skills, or put the offer out to retirees to come back on a contract basis to leverage their knowledge while more permanent coverage plans are put in place. 

• Economic uncertainty considerations. With economic uncertainty top of mind in the sector, financial institutions are in a position where they need to balance financial resilience and operational resilience through the decisions they make. Budgets are constrained, so using available funds effectively and investing in the right projects and areas is hugely important to remaining competitive. 

Businesses in the space should consider the cost-effectiveness of hiring contract labor versus full-time employees to get the most from budgets. If there are specific projects that require specialized skills for a set period of time, bringing in external workers to cover the project timeline can help avoid unnecessary full-time hires that will incur more costs over time. In addition, companies can utilize external workers to ensure business as usual is in operation while they wait out these periods of uncertainty before investing heavily in permanent hiring plans.

As the financial services industry continues to face rapid economic changes and a new labor market, the enterprises embracing external workers as a way to build resilience and fill skills gaps are going to come out ahead. By utilizing the contingent workforce at many different levels within your organization, you can bolster the performance of individual teams, scale as rapidly as the marketplace changes, and continue to grow through labor shortages.