As companies look into the possibility of restructuring their workforces, various questions arise around the role that contract staff will play in the "new normal" of how we work. Ian Tyler, the Chief Strategy Officer of IT recruitment specialist Talent International, shared some thoughts with People Matters around the changes that contractors, particularly the highly skilled and specialized professionals in the IT sector, might expect in terms of opportunities, remuneration, and benefits. Here are the highlights of the conversation.
What trends have you seen in the treatment of contractors before, and now during, COVID-19?
By and large, the vast majority of organizations treat contractors somewhat differently. Organizations are prepared to pay a little bit more to get the job done, which means that contractors could have a slightly higher remuneration if there is a high expectation of deliverables.
But the downside for the contractors is that often, there's a feeling of isolation. They're not necessarily invited to the Christmas party, if you get my drift. They don't necessarily have access to the health and well-being benefits that are available to permanent employees. And in the current global skills economy, the expectation of the contractors' ramp-up time is almost painful. They are expected to come in, get running immediately, and start the very same day. In contrast, a permanent hire would have a proper induction into the team, have a period of practice mapped out in their onboarding process, and have the opportunity to build some connections between them and their coworkers. Contractors do not have any of that.
How can companies help contractors cope with these challenges, rather than leaving it up to them?
We need to look at their physical, mental, financial, and educational well-being.
Educational well-being is around what organizations can do to provide these contractors with the ability to continually develop their skills. This is a gap that we have actually been working on closing, in partnership with Skillsoft. We created a platform that gives contractors access to a huge range of online courses, so that they have the opportunity to upskill or learn additional skills whilst on contract. The overarching objective is that when an organization engages us to supply contract workers, those contract workers will stay longer and perform better.
Financial well-being is around ensuring that contractors have access to benefits including support around their insurance, leasing, and other financial matters. And then there is support for their physical and mental well-being, which is so important especially during this period of isolation that we've all had to endure. We have a partnership with an organization called Headspace, that provides an app that allows people to recognize signs of stress in themselves and gives them tools for handling that stress. And during this COVID period, we saw an excess of 300 percent increase in the uptake of that app.
That uptake actually is a massive proof point as to why stress management is so important. For contractors, the expectations are constantly there, yet their employment is not permanent. Let's say that XYZ organization has engaged contractors and a crisis hits, whether financial or pandemic. And if the contractors are not on a fixed term appointment and the project they are supposed to deliver gets parked for whatever reason, well, that is it. There's no direct employment relationship between them and that organization. So there is this constant fear around where their next opportunity will come from.
Will that fear lessen as companies start restructuring their workforces around the new paradigm COVID-19 has created—will more opportunities open up for contractors as a result?
Organizations will still by and large want to have a permanent workforce at their core, in order to maintain a certain culture and a degree of stability. But the skills that have been in high demand and low supply, or the skills that are not so central to the business, such as marketing and communications—organizations could become increasingly accustomed to having those on contractor or freelance basis rather than in house. And of course some skills like finance and technology have always been in that contracting space.
Then you have remote working, and this might be a little controversial, but I think that COVID-19 has made organizations reconsider the location requirements for the roles they are hiring for.
Let's say I need a software engineer or an application architect or a project manager, whatever the role or skillset may be, and I was looking for that person in a particular location, whether it be Singapore, Hong Kong, Adelaide, Sydney, or London, and I couldn't get that skill at the right time or for the right price. But now that person could actually be based in South Africa and performing that role perfectly well, with the help of the collaboration tools that were already there, that people just didn't use to the extent that they are today. Does that mean that the job that is currently being hired for could be performed by anybody, anywhere?
I think organizations will no longer just tap into the talent pools of their particular city or within the particular radius where they've typically recruited. I think the talent pool now is a global one.
And if organizations are going to embrace the opportunity to look at the full potential of flexible or remote workers, that's going to be very interesting to see over the next six to 12 months.
What about remuneration? We're seeing news about pay cuts practically every day these days—how are contractors being affected?
There are a couple of different angles to that. Firstly, contractors that are already deployed on a contract and have already been deemed as a contractor. For the most part, contract rates have held up. There might be some discussion around saving on project costs, with the result that everybody on the project, from the permanent project manager to the software engineer to the architect, would probably take a small hit but stay employed.
Viewed through a talent lens, I think this is because we operate in a high demand, low supply talent pool.
A software engineer position for instance, requires a really high degree of skill. It's difficult for us to acquire these talents if we pay them less than the market level. We have to pay them the same. And where some organizations couldn't sustain their projects and those contractors are now out in the market, other organizations are taking the opportunity to get the skills that they didn't have access to before.
Going forward, I believe that contractors will continue to be paid at the same rates that they were leading into COVID. That's because if an organization is building products, that might be funded through capsulized expenditure versus how fixed-time equivalent is counted. What that means is that contractors' remuneration will by and large be wrapped up into a project cost, and so what you pay them will depend on what kind of work they are doing. And I think if we fast forward, perhaps the next six to 12 months, we'll start to see incremental increases in the rates for highly skilled, highly specialized contractors, because at that point they will be in high demand and there's a very low supply.