Will the rise of contracting continue?

Contract working is more popular than ever. According to our research, surveying nearly 5,000 STEM specialists, at least six in every 10 professionals now do some form of contracting work. Is this a recent trend, or a longer-term pattern?

“I think the demand has always been there, but one of the things that really highlighted it recently has been the move to hybrid”, says Lawrence Doe, UK Senior Sales Director at SThree.

Contracting had been gradually growing in popularity for decades, Doe says, helped on by technical advancements like the development of high-speed internet in the 2000s, or by major disruptions such as the financial crash of 2008.

It was the pandemic, however, that marked the biggest shift. “Companies had no choice but to accelerate the ability of their workforce to work remotely, through things like providing laptops and investing in collaborative remote software”. This, says Doe, made contracting increasingly attractive.

“It’s the way the world is going – it’s all about flexibility”, says Cliff Sidhu, who is a Senior Director managing the DACH region at SThree.

Cliff Sidhu, Director - DACH Region, SThree

“In Germany we have seen a shift with many companies traditionally employing native speakers before the pandemic now looking at contractors from around the world, because they know they can get hold of the skills they need that way.” Cliff Sidhu, Senior Director - DACH Region

Takeover or turnover?

“In a downturn, the market for permanent roles tends to go down, but contract roles stay steady”, says Doe. Sidhu agrees: “The demand for contracting is constant – what evolves over time is what sectors are growing and what skills are in demand.”

So, will contractors replace full-time workers and end up outnumbering them? It’s not as simple as looking at it like that, says Sidhu. “There will always be a market for both contracting and permanent staff, but in what guise and how will be sector or industry dependent.”

“In a downturn, the market for permanent roles tends to go down, but contract roles stay steady”

“It could happen in some areas, but not others”, adds Doe.

Lawrence Doe, Contracts Director - UK, SThree

“For some jobs, you just need someone to come in, get the task done and move on. For others, you need a bit more continuity to develop a culture, so permanent has its place.” Lawrence Doe, Senior Sales Director - UK

One of the biggest factors behind the continued growth of contracting is the flexibility it offers workers. Recent research shows flexibility is more of a priority than ever with 54% of professionals stating it is the second most important factor when considering a new role, behind salary and benefits. “It’s all about how the contractor wants to work”, says Sidhu. “You have some contractors who want to prioritise their income, so they choose to work consistently and often, which of course they earn good money for. Then there are others who might work for part of the year, and then spend the rest of the time doing their own thing, like studying or travelling, for example. That is the beauty of it – you can make it fit your lifestyle.”

There are benefits for employers too. Employing contractors gives businesses access to niche skills, as and when they are needed, which supports employers moving to become output rather than input-focused. Project-focused thinking keeps businesses efficient, dynamic, and ready to adapt to change.

Owning your destiny

Another benefit of the flexibility contracting offers is the skills exchange that happens between temporary and permanent workers. As well as adding value in a financial sense, contractors share their knowledge and experience with permanent staff. “It’s a transfer of skills – for example, a contractor will either directly train permanent staff or alternatively might be able to recommend what further training or technology would benefit their progress. Contractors are seen as part of the team now.”

For contractors, career development is “in your hands”, says Sidhu. “You’re in control of your own career, of your own destiny really! There’s no ceiling to what you can learn, as a contractor, you are not relying on any company and its management or its framework to dictate what you can learn – it is down to you.”

“You’re in control of your own career, of your own destiny really! There’s no ceiling to what you can learn"

The best of both

As independent contracting continues to be increasingly popular, so too does SThree’s Employed Contractor Model (ECM), especially in countries like Germany, where it is based on the German temporary employment act, Arbeitnehmerüberlassungsgesetz (AÜG).

This applies to skilled workers in STEM of different experience levels, from relatively novice University graduates to more highly skilled specialists. They can choose to engage in temporary assignments, with the major difference being SThree acts as the legal employer, taking complete responsibility for its “employee”. This includes continuous payment, especially during unproductive times such as holiday and sickness pay, as well as other employer compliance concerns such as taxes and insurance (e.g., social security contributions etc).

The principles around this model allow the candidate to be fully integrated into the client’s organisation, ensuring they are treated and at least paid equally compared to permanent staff. Often on completion of the assignment, our clients make permanent offers of employment to these candidates, so the benefits are many, especially in terms of still maintaining flexibility whilst ensuring a lot of security. Through our ECM service, employees and employers alike can have the best of both worlds

Although permanent employment still rules in certain situations, there is no doubt that contracting’s popularity will continue to grow, as workers now expect flexibility.

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