Who are external workers?

External workers are individuals or groups who aren’t considered permanent employees but are hired on a temporary or contract basis to complete specific tasks or projects.

What is an example of an external worker?

An example of an external worker is someone who was hired through a staffing agency for temporary assignments. This could be a payroll specialist covering for someone on maternity leave or a marketer hired to lead a specific campaign.

Types of external workers

External workers can be divided into two categories: Contingent workers and services procurement.

Contingent workers: Contingent workers are hired by a company for project-based work. Contingent workers include: independent contractors, consultants, freelancers, temps, or other outsourced labor. Businesses can hire contingent workers directly or source them through staffing agencies or freelance markets.

Services procurement: Services procurement, or services providers, are companies that send people-based services to enterprises, for example: consulting firms, marketing agencies, or facilities management companies. They are typically contracted for project-based work using a statement of work (SOW).

Names for external workers

External workers are known by many names:

• Contingent
• Flexible
• Freelancer
• Independent contractors
• Out-sourced
• Non-full time
• Offshore external
• Multi-channel workforce

What is external workforce management?

External workforce management describes the tasks and workflows that manage external workers from onboarding to offboarding.

External Workers: Definition, Pros, and Cons

Pros:

1. Businesses don’t need to add external workers to payroll: Instead of a payslip, workers can send an invoice receipt after completing the project.
2. Companies can save on operational expenses: External workers purchase their own resources to complete the assignment, software subscriptions, computers, and so on.
3. Access to a bigger talent pool: Hiring external workers means companies can tap into a wider candidate pool and access individuals with specialized skills.
4. Flexibility and scalability: Companies can scale their workforce based on project needs or seasonal demands.
5. New ideas and perspectives: External workers can offer new perspectives and ideas that spur innovation.

Cons:

1. External workers can have many clients: Though they need to stick to deadlines, external workers may not be as loyal to companies as employees.
2. Lack of visibility: Employers can’t dictate how and when contractors get things done, leaving them less visibility into the work.
3. Potential communication issues: Communication can be more challenging with external workers who aren’t familiar with the company’s internal processes.
4. Higher costs: External worker costs can be higher due to hiring fees, project management costs, and potential delays.