As laid out in our recent blog, “What a Strange Trip It’s Been,” when it comes to satisfying the demand for contract labor in their organizations, labor buyers have been on a rollercoaster ride for the past two years. Netting out the volatility of the ups and downs, though, most companies saw demand grow—in many cases, furiously. At the peak (from November 2021 through March 2022) there were roughly 15% more contingent workers on assignment in the U.S. than pre-pandemic. This increasing demand, exacerbated by tightening labor markets and inflationary pressures, has pushed up bill rates and slowed the sourcing process.
Labor buyers are frustrated, and understandably so, for two main reasons:
Reason 1: Contingent Work is Now 9-11% More Expensive
Managers out in business units are keenly aware of their budgets and available funding to achieve the outcomes they need. Since the beginning of 2021, U.S. contingent bill rates have been rising on average, requiring managers to allocate 9-11% more of their budgets to the same amount of contingent work (see Figure 1).
Figure 1. U.S. Contingent Bill Rate Trends by Category (January 2021 – July 2022)
Our models show continued upward pressure on average IT and Light Industrial assignment bill rates into the fall. Interestingly, average bill rates for U.S. based Non-IT Professional assignments seem to have peaked in April and are now declining (see Figure 2).
Figure 2. U.S. Contingent Bill Rate Trends by Category (January 2021 – Forecasted October 2022)
Reason 2: Time to Source and Onboard a Contingent Worker Has Doubled
At the same time that bill rates have been rising, hiring managers have had to cope with lengthening timelines to find and start contingent workers. The average time to find and start a contingent IT worker has increased from 38 business days at the beginning of 2020 to now 70 business days (an 84% increase). For Light Industrial roles, the time to find and start a contingent worker has increased from 19 business days to 43 business days—a whopping 226% increase (see Figure 3—dark blue at the bottom is average time to fill and light blue is average time to onboard).
Figure 3. Time to Fill, Onboard, and Start U.S. Contingent IT and Light Industrial Roles (Q1 2020 – Q3 2022)
Notice that, while times to fill have increased, it’s those times to onboard that have really ballooned. A blog by our colleague Vanessa Mulcahey explains how we’ve been helping our customers diagnose their own situation and helping them understand approaches to reduce both time to fill and time to onboard.
If you would like help reducing your time to find and start contract workers or reducing your spending on those workers, please contact us at www.brightfield.com/contact.
Brightfield’s TDX provides the world’s most trusted market intelligence on the Extended Workforce. We track bill rates, pay rates, and supplier markups based on actual transactions of 1,400+ contract labor job titles at the city level in over 40 countries. Our customers can also see recent trends and forecasts of rates for individual job titles, locations, levels, etc. If you would like to learn more about the power of this market intelligence and other TDX tools, request a demo below.