By Sarah Nicastro, Creator, Future of Field Service
As we look to determine not only what the role of the service workforce of the future looks like, but how we’ll fill those roles with talent hard to come by, we’d be remiss not to factor in the contract workforce. Some companies have already embraced the contract model, even exclusively. Others have been hesitant to do so for a variety of reasons. But recent trends discussed here may weigh into your strategy.
There are many factors at play: aging workers, a Covid-sparked recalibration among workers when it comes to what they want out of a job, and preferences of younger talent that want a lot more flexibility. According to a recent study from on-site talent management platform Field Nation and research firm Radius, one impact of these factors is an increase in talent preferring an independent contractor role.
I recently had a chat with Mynul Khan, founder of Field Nation, about the trends they are seeing in the IT services sector. Their recent study found that larger numbers of IT service professionals are opting to become independent contractors – 98% of respondents said they preferred independent contracting or a hybrid set-up to a traditional full-time position. (You can download the study here.)
Q: People may think of IT as a market that might face less recruiting challenges than other skilled trades. What is driving the shortage of field service techs in the IT sector?
Mynul Khan: Finding and retaining skilled labor is a significant challenge across all industries, from manufacturing and construction to insurance and high tech. Some reports estimate an industry-wide deficit of 3 million workers across the skilled trades over the next five years, and according to Service Council research, 50% of field service organizations currently face a shortage of resources to meet service demand. And the IT field services profession is no exception.
Today the IT field service industry has more work than ever before, with digitization of customer experience growing exponentially, and not enough skilled professionals who can do the work. That’s what we have been seeing and hearing from the industry consistently over the last couple of years.
There are three major trends in the market that are present, creating that perfect storm, and here for the long-term contributing to the labor shortage crisis.
The first is often referred to as the “Silver Tsunami” which means there is an aging population in field services with one-third of workers 50 years of age or older. This finding is consistent with Service Council’s field engineer survey results – 50% of IT techs are 45 years or older. Whether IT, electricians, plumbers, carpenters, you name it, this issue is plaguing trade workers across the market and the entire community.
Another trend is low unemployment sitting at just below 2% (CompTIA). There are options for people of all demographics to choose in terms of the work they do. Why they are not choosing to get into the IT field services business is not something covered in our research but my experience and in hearing from technicians and customers reveal there are a few things that could drive support – creating more flexibility and autonomous work environments, which is what we heard from the independent contractor study, and the importance of mentorship to drive community and skill-building.
And finally, this unprecedented boom in technology deployment. Massive amounts of technology is being deployed everywhere from retail to home to offices to restaurants to warehouses. And all of these require an expert to install, maintain and refresh, and devices connected to the network. Then comes the infrastructure work with cabling networks and connecting it all to back-office servers.
What’s encouraging is the growth and preference to be and to stay an independent contractor for years to come. From retirees lending their skills to side hustles to professionals choosing to contract as their full-time career, our study found workers of all backgrounds are looking for something that works for their lifestyle, with one-third sharing their desire to stay working for 11-plus years. Embracing a new way to think about your labor model and aligning to your organizational goals is the only way to get ahead of competition and deliver profitable growth.
Q: What has made contract work more appealing for the technicians?
Mynul Khan: According to our recent State of Independent Contracting in Field Services Report, flexibility (36%) and control and autonomy (27%) top the list for technicians in 2023. While income is still a consideration (20%), having the ability to control their work and life, create a schedule that works for them and their families, is at the heart of why field service workers are choosing independent contracting. That insight is critical when designing roles for today’s workforce.
More importantly, these independent IT field service professionals are increasingly satisfied with their decision. 82% say they are satisfied or highly satisfied with their work.
Q: What about the downside? How are techs grappling with things like benefits/insurance, reliable income, and business management?
Mynul Khan: Just like with any role, these are all considerations for independent contractors. Unpredictability in income and schedule were shared as the most difficult things about being a contractor. In some ways, this is the other side of the coin in that flexibility and having autonomy are the top reasons to be an independent contractor. This, along with healthcare, retirement and other benefits, in particular, are something to consider when making the shift to this kind of work. These are difficult issues to work through and our commitment is staying engaged in the conversations with key trade associations, our technicians and customers.
In terms of reliable income, the great thing about working as an independent contractor is you can pick up work where and when you want. These people can also work with more than one client at a time, mitigating risk. If one client cuts budget and goes in a different direction, the contractor may have a couple other clients to lean on. Some of these independent contractors have several sources of revenue, too – IT and field service work is just one stream.
Q: For businesses hiring these contractors, what are some of the key advantages? What makes the use of contractors or a blended workforce more or less appealing?
Mynul Khan: In some ways, companies are being forced to adopt a blended workforce model. IT spend as a factor of revenue has increased 40 to 50% since 2019 (according to research and advisory firm IHL group), which is driving businesses to find new ways to ensure schedule flexibility and widespread availability of IT professionals across locations.
For the businesses that are ahead of the curve, they’re already recognizing that a blended workforce helps them meet temporary workload needs, increases productivity, provides a reliable solution for completing tasks, and keeps costs down. And maybe the most important benefit to hiring contractors right now is the ability to access specialized skills and hard-to-hire talent, nationwide.
However a field service leader decides to divvy up the work is really up to them, but it starts with taking a deep dive into how they can achieve their goals in the most effective and efficient way possible.
Q: How are independent technicians connecting with employers? What technology is helping make this transition easier for businesses and contractors?
Mynul Khan: Increasingly, contractors are turning to digital labor platforms (full disclosure: Field Nation is one such platform). The availability of these digital labor platforms has increased fivefold in the last 10 years, and businesses have taken notice.
According to MBO Partners’ State of Independence in America Report 2022, 41% of independent contractors who provide services to businesses reported finding work on labor platforms, up from 15% in 2015 and just 3% in 2012.
Like anything, being an independent contractor has both tremendous benefits and a few challenges. Finding what works for you is most important. Independent contractors are passionate about their craft, spending time in both the front-end and back-end tasks – from selling and marketing to invoicing and collecting. Over time this becomes burdensome and takes away from the work and quality outcomes they could be bringing to businesses. That’s why on-demand labor platforms are so enticing.
Q: Are there particular market conditions that might change the dynamics of the demand for contract work, either tipping the industry toward more freelancers, or pulling them back toward full-time positions?
Mynul Khan: Market conditions are constantly shifting. So, it’s tough to say what, specifically, would tip the industry one way or another. However, I do think it will continue to tip toward companies using more independent contractors. The average contingent labor share of enterprise workforces is expected to increase from 28% today to 33% in 18 months, and 36% in 5 years, according to the Contingent Labor Imperative Report.
While this shift in labor model is growing, the reality for companies that are moving from W2s to independent contractors is feeling secure in knowing quality outcomes for customers is unchanged which means trust in a tech representing their company like an employee would is critical.