The global contingent workforce management industry generated $171.5 trillion in 2021, and will reach an estimated $465.2 trillion by 2031, a CAGR of 10.5% from 2022 to 2031. According to Allied Market Research, the growth is driven by an increasing demand for flexible workforces, shifting demographics and labor force participation rates.
However, challenges come along with that growth, says the firm’s report, Contingent Workforce Management Market: Contingent workers are likely to have difficulty incorporating themselves into the organization and may suffer from low morale compared to their full-time colleagues. In addition, contingent workers don’t have the same commitment to their employer as do full-time workers. And although such issues may restrict market growth, the continued emergence of AI will present new growth opportunities for the market in coming years.
The Impact of Covid
The Covid-19 pandemic pressured the contingent workforce management business because of layoffs that took place in a number of companies. Also adding weight, social distancing practices and closed borders across countries such as China, India and the U.S., the report said.
At the same time, Covid spurred a dramatic increase in remote work, which in turn fueled demand for contingent workers. Today, businesses are focusing on workforce flexibility and offering more remote work options to employees. Some of these approaches to work are likely to become permanent in the coming years, Allied predicted.
In terms of type of work, the flexible staffing segment contributed the largest share – nearly four-fifths – of the contingent workforce management market in 2021. During the forecast period, Allied expects the segment to maintain growth as HR and other departments use contingent workers instead of permanent employees to solve changing business and operational challenges.
Allied predicts the business/professional services segment will see the fastest rate of growth, with a CAGR of 14.1% from 2022 to 2031.
North America saw the highest share of the contingent work market during 2021, Allied said, accounting for more than half of the sector’s revenue. The report expects that will continue because of rapid industrialization and rising labor force participation, which has increased the demand for flexible workforces in a variety of industries.
Meanwhile, Asia-Pacific is projected to see the fastest CAGR, of 15.1%, from 2022 to 2031. This stems from most of the region’s IT companies favoring contingent workers.