Hong Kong is seeing a boom in contracting as companies and employees wake up to the benefits of contingent workforce.
While firms enjoy faster hiring times and access to a greater pool of talent, individuals can use contracting to tap into exciting opportunities and accelerate their careers.
Angus Washington, managing partner at recruitment firm Wellesley, says: “We are experiencing increased demand from both our clients and candidates for flexible work arrangements.”
This rise in demand mirrors a global recruitment trend that has seen the market for temporary workers expand to be 10 times that for permanent recruiting in recent years, according to the CIETT Economic Report 2016.
The increased appetite for contingent labour in Hong Kong led to Wellesley diversifying its offering 18 months ago to include contract services alongside executive search and specialist recruitment.
The group, which has been operating in Asia for 13 years, is seeing an increased demand for contingent labour across a range of different industries and functions, but the trend is particularly marked among financial services companies.
Washington says: “Generally, financial services are ahead of the curve, particularly the blue-chip banks.
“They are used to using contingent labour globally. The US and European banks are leading the trend and some of the Asia-based banks have started to use these services as well.”
But it is not only the banking industry that is aware of the benefits of contingent labour, with demand also growing in the insurance, retail and consumer sectors, as well as in the area of technological change and digital transformation.
Washington says: “We have also seen demand grow in administrative and compliance functions, and for project-based work, particularly technology change projects, where a workforce needs to be dialled up and dialled down appropriately.”
There are a range of factors causing companies to turn to contingent labour, including managing variable work levels, coping with rapid growth and filling internal skill gaps.
Washington points out that the practice is particularly beneficial for firms that are bringing staff in for particular projects.
“Clients are able to capitalise the project cost rather than put it through their operating expense, and it doesn’t affect their fulltime equivalent headcount as a business,” he says.
Another advantage of contingent labour is that the administrative burden is outsourced to firms like Wellesley, and companies do not have to worry about the payroll, Mandatory Provident Fund or the associated insurances that come with fulltime employees.
Washington says: “The time to hire can also be a lot less than for a permanent employee, particularly if you have vetting or you need to run a very thorough process which can take a substantial amount of time and put the existing workforce under pressure.”
But the advantages are not one way, and there are also distinct benefits for individuals to take on contract labour roles.
Washington explains: “It typically gives people access to work, particularly if it is a project-based role, that they may not have got in a permanent position.
We are seeing clients being more flexible on contractor requirements, so they may get an opportunity to step up into something they had not done previously from a career perspective.”
He adds that this type of working is appealing to younger workers, particularly Millennials, who tend to want to work on exciting projects.
“Contracting is a great way to access this type of work through a flexible arrangement,” he says.
In fact, a US study carried out by Edelman Intelligence found that 79% of contract workers preferred freelancing to having a traditional job with an employer, while 54% said they earned more than they had previously.
Despite the benefits, Washington thinks Hong Kong lags other regions in its use of contingent labour, but it is in the process of catching up.
“Every client we introduce the concept of contracting to is very interested to understand how it would work,” he says.
“It is something that previously they may not have considered, particularly among small to medium sized businesses. It is an option we are educating our clients about.”
He adds that culturally contingent labour has previously tended to be seen as a less desirable option for employees in Hong Kong compared with permanent recruitment, but this is also starting to change.
“The risk of losing staff to other permanent vacancies can be a major downside for companies, but we have seen a number of clients who have implemented project competition bonuses to incentivise people to commit and see through their initial obligation,” he says.
Overall, Washington thinks demand for contractors is going to continue to grow in Hong Kong.
“With the unemployment rate in Hong Kong being quite low and the access to skills being in demand, employers have been forced to think more laterally about their workforce and how they manage the overall component of fulltime, part-time and contractor mix,” he says.