What is a contingent worker? Types, benefits & differences

Contingent workers are professionals hired for specific projects, short-term needs, or specialized expertise without becoming permanent employees. They make up over 40% of the U.S. workforce, offering businesses flexibility and specialized skills without long-term commitments.

Types of contingent workers

Contingent work exists in many forms because business needs are not all the same. Some roles demand deep expertise for a fixed project. Others fill temporary gaps in staffing or scale teams during peak periods. The flexibility built into the contingent model lets companies bring in the right kind of help without committing to long-term headcount.

Freelancers and independent contractors

Freelancers and independent contract workers work on an hourly or project basis without being on the company’s payroll. They set their own schedules, manage their own taxes, and often juggle multiple clients at once.

Businesses turn to them for specialized skill sets like design, writing, engineering, and marketing without the overhead of a full-time hire. These workers typically sign a contract outlining scope, timeline, and payment terms but operate outside the company’s internal structure.

This category is growing fast. Around 64 million Americans performed freelance work last year, a 69% increase since 2020. The rise of remote work and digital platforms has made it easier for companies to tap into this talent pool.

Ramp’s vendor management tools help finance teams track contract terms, centralize documentation, and avoid classification risks by keeping gig workers and contractor data organized and accessible.

Seasonal and temporary hires

Seasonal and temporary employees support short-term spikes in demand. These workers fill roles for a set period, often during holidays, peak business cycles, or when covering for full-time employees on leave.

Most are brought on through staffing agencies, which handle payroll, onboarding, and compliance. This setup helps businesses scale headcount quickly without adding to internal HR or finance workloads.

In the U.S. alone, companies employ over 12.7 million temporary workers each year, according to the American Staffing Association. Retail, hospitality, manufacturing, and logistics rely heavily on this workforce during busy seasons.

Temporary hires are usually hourly workers with clearly defined start and end dates. Seasonal hires follow similar terms, but their timing aligns with specific annual needs, like holiday sales or summer travel peaks.

Consultants and project-based specialists

Consultants and project-based specialists use targeted expertise to solve specific business problems. Companies hire them for strategic initiatives, system overhauls, compliance audits, or change management efforts.

Unlike freelancers or temps, these workers often operate at a higher level, partnering directly with leadership or cross-functional teams. They’re typically hired under formal contracts with clear deliverables, timelines, and outcomes.

Ramp’s renewal reminders and contract tracking features help teams stay ahead of consulting agreements, so projects stay on time and within budget.

The global consulting market surpassed $130 billion a few years ago, reflecting a growing reliance on external experts to accelerate execution and reduce risk. Project-based specialists often focus on technical fields like IT, finance transformation, or ERP implementation. They might work independently or through boutique firms.

How contingent workers differ from full-time employees

Contingent workers and full-time employees fill different roles within a business, and the distinction matters for finance, HR, compliance, and operations.

Contingent workers are not on the payroll. They do not receive employee benefits, are not guaranteed hours, and often work independently. Permanent workers, on the other hand, are integrated into the company structure with set schedules, salaries, and long-term responsibilities.

Why companies rely on contingent workers

Contingent workers give companies the flexibility to operate in fast-moving environments. Whether they need help for a single project or to cover temporary gaps, businesses use contingent labor to stay productive without taking on long-term overhead.

Nearly 65% of business leaders plan to increase their use of contingent talent over the next two years. The reasons are practical, financial, and strategic.

• Faster hiring with fewer barriers. Contingent workers can often start within days. There’s no need to go through lengthy interview cycles, background checks, or benefits enrollment. This helps teams ramp up quickly, especially when speed matters more than long-term fit.
• Lower cost compared to permanent employees. Businesses pay only for the work performed, whether hourly or per project. There are no benefit costs, paid time off, or long-term salary commitments. This makes budgeting easier and reduces fixed expenses.
• Access to specialized skills not available in-house. Contingent workers have deep expertise in niche areas like regulatory compliance, systems migration, and financial modeling. Companies bring them in when internal teams lack the bandwidth or experience needed for specific challenges.
• Scalable staffing based on real-time demand. Depending on project load or seasonal spikes, businesses can scale headcount up or down. This flexibility reduces the need for hiring freezes, layoffs, or underutilized employees during slower periods.
• Broader talent pool without location limits. Many contingent workers operate remotely. This lets companies tap into talent across different regions or time zones without relocating teams or opening new offices. It’s especially valuable for companies expanding into new markets or working across geographies.

Financial and operational impact of contingent workforces

Finance and operations leaders are the first to feel the impact of a growing contingent workforce. While contingent labor gives teams flexibility, it also introduces forecasting, budgeting, compliance, and reporting challenges. These teams are responsible for tracking cost analysis and figuring out how contingent talent affects both short-term costs and long-term strategy.

Variable labor costs

Contingent labor costs change based on contract terms, hours worked, and project needs. These aren’t fixed salaries. The payments can spike during peak periods or drop off unexpectedly when projects end.

For finance teams, that volatility makes it difficult to forecast labor expenses with confidence. A delayed project start or unexpected contractor extension can throw off an entire quarter’s budget.

Teams need visibility into contract timelines, expected hours, and department-level plans to stay ahead. Without it, labor costs can quickly outpace projections.

Decentralized spend tracking

Unlike employees paid through payroll, contingent workers often receive payment through multiple systems:

• Accounts payable
• Procurement tools
• Corporate cards

This fragmentation makes tracking total spending difficult. Finance teams struggle to identify where labor dollars go or which departments drive costs.

The decentralization creates risk through inconsistent payment processes, which can lead to late fees, duplicate payments, or missed tax documentation.

Contract and invoicing complexity

Each contingent worker brings a contract, and every contract brings complexity. Terms, deliverables, and payment schedules vary across workers and vendors. Managing this volume of detail takes time and cross-team coordination. If even one contract is mismanaged, it can result in compliance violations or disputes over scope and cost.

Invoicing adds another layer. Payments depend on accurate invoices and timely approvals. A single bottleneck, like a delayed invoice or an absent approver, can disrupt cash flow and delay vendor payments. These manual steps slow down financial close and introduce reporting errors.

Accounting integration gaps

Many finance teams struggle to connect contingent labor costs to their ERP or general ledger. When data lives in spreadsheets or siloed systems, allocating spend accurately by department, project, or initiative is hard. This limits strategic decision-making and makes audits more painful than they need to be.

Without integration, there is no clear view of ROI. It is just a line item that is hard to explain and harder to optimize.

Why do contingent workforces give businesses a strategic edge?

Contingent workers now make up a significant portion of the global labor market. This shift isn’t on a temporary basis. Instead, it reflects how modern businesses are evolving to stay efficient and competitive.

Contingent workforces offer a direct way to scale expertise, reduce fixed costs, and respond faster to business needs. They let companies fill skill gaps, manage short-term demand, and support projects without the long-term financial commitment of full-time roles.

However, this model only works when managed strategically. Businesses need clear processes to handle contracts, payments, and classification. Without the right systems, contingent labor can introduce risk instead of value.

Contingent workforces can drive efficiency, but only if managed with structure and transparency. Ramp gives businesses the tools to do just that. It offers real-time spending insights, contract tracking, and automated reminders for upcoming renewals. With everything centralized, teams can reduce risk, improve planning, and make faster decisions about their vendor strategy.