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    The Rise of The Temp Workforce

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      The Rise of The Temp Workforce

      The Rise of The Temp Workforce

      We have seen a dramatic increase in the demand for temporary and contract staff across London, specifically accounting and finance staff. Whilst the demand has always been consistent, over the last 2 years, generally, the bulk of requirements have been for “traditional” needs such as Year-end cover, maternity/paternity cover, secondment cover, etc.

      The tide seems to have shifted somewhat. Yes, we still see many requirements for the sorts of assignments above but the scope of contract hiring is now much wider.

      Much of this, of course, is market-driven. Companies generally grew headcount between 2021 and 2022, but other economic factors driven by many domestic and international influences saw hiring slow in 2023. How has this affected contact hiring? Well frankly, very positively. More and more businesses need the skills and physical support but are not in the position to add permanent headcount, with so many economic factors still uncertain. Most spending for contract hiring will come out of a different “pot”, and employers feel much more in control of the cost and take comfort in knowing that if budget constraints kick in or workload changes, they have the flexibility to manoeuvre staff accordingly without making more drastic changes like redundancies, which has a ripple effect on the rest of the team/business, notably morale and culture.

      Employers are often getting “overqualified” staff via the contract route to contribute quickly and efficiently without significant time spent on training, whilst they concentrate on BAU and focus on the development of their permanent staff. All these factors coupled with wider projects gaining traction that may have been “parked” since 2020, have meant the contract hiring is on the rise.

      Also, companies are now realising the myth that contract staff are “very expensive” is actually not all that accurate. Up front, you know the price per day that you are going to spend on this temporary support, which makes budgeting for this support quite straightforward. In a mirrored permanent scenario, whilst the salary will appear much lower in most cases, it’s the additional costs that are often overlooked:

      • Holiday allowance
      • Sick pay
      • Benefits such as car allowance, private health coverer, bonuses
      • Learning and development costs
      • Pension contributions
      • Employers National Insurance

      Anecdotally, here are some of the scenarios that clients I have worked with so far this year have identified as important benefits of having some flexibility in their workforce:

      Flexibility: Finance contract staff provide flexibility to organisations. They can be hired for short-term projects or to fill temporary skill gaps without the long-term commitment associated with permanent hires. This flexibility is particularly valuable in the fast-paced and dynamic environment of London’s financial sector.

      Cost-effectiveness: Employing contract staff can be more cost-effective for companies than hiring full-time employees. Contract workers typically do not receive benefits such as healthcare, retirement plans, or paid time off.

      Specialised Skills: Many finance contract staff possess specialised skills and expertise that are in high demand within the financial industry. These individuals often have niche skills or extensive experience in specific areas that either permanent staff don’t have or the business doesn’t have the time or resources to train

      Project-Based Work: London’s financial sector frequently undertakes projects such as system implementations, regulatory changes, or mergers and acquisitions. Finance contract staff are often brought in to support these projects, providing their expertise for the duration of the project and then moving on to the next opportunity.

      Market Volatility: The financial industry is susceptible to market fluctuations and economic uncertainties. During times of market volatility, companies may be more inclined to hire contract staff rather than make long-term commitments to permanent employees, allowing them to adjust their workforce more easily in response to changing market conditions.

      Global Talent Pool: London attracts a diverse pool of finance professionals from around the world. Contract staff may come from various countries and bring with them different perspectives, experiences, and skill sets, enriching the talent pool available to London-based companies.

      Overall, the growth and importance of finance contract staff in London reflect the changing dynamics of the financial industry and the increasing need for flexibility, specialist skills, and cost-effective solutions in today’s competitive business environment.

      Phill Westcott
      Senior Director