The contingent workforce is expected to grow strongly to 10% of the entire U.S. workforce within two years, with pharmaceutical, biotech and retail sectors experiencing the largest growth in temporary and contract workers, according to a new report from Staffing Industry Analysts.

The 2007 Staffing Buyers Survey found that the Fortune 1000 will expand its use of contingent workers to manage variable or unpredictable workloads, to handle the strong overall growth at many companies, and to cope with the difficulty in finding quality workers in a low-employment environment.

Among the report's key findings:

- Demand for contingent labor in corporate America will grow strongly over the next three to five years. Seventy-seven percent of the companies surveyed in the report expect to grow their contingent workforce.

- As the expense of contingent labor reaches tens of millions of dollars, more companies will implement better management controls, including technology platforms such as Vendor Management Systems. Tech/engineering, energy/chemical and pharma/biotech will be the sectors most likely to add VMS systems.

- Procurement managers, rather than human resources professionals, will increasingly control the management of contingent labor programs.

- The Retail/Consumer sector, which has traditionally used less contingent labor than other segments of the economy, is likely to be among the fastest growing users of temporary workers in the short term.

"The 2007 Staffing Buyers Survey clearly shows that corporations plan to significantly expand the usage of contingent labor to an all-time high within the next two years," said Barry Asin, Chief Analyst of Staffing Industry Analysts. "As the contingent workforce grows, corporations will need to be much more sophisticated in managing this increasingly large expense. To handle this growth, corporations must look closely at crafting a well-conceived contingent workforce program, leveraging technology, and assigning talented managers to oversee this area of their operations."

Challenges for Managing Growth

Large companies face a number of hurdles in improving their management of this expanding worker population. The report found that decision-making about the contingent workforce is currently dispersed across several different corporate levels. The typical manager with responsibility for contingent labor decisions spends only 20% to 39% of his or her time on this task.

The report shows that these challenges are being addressed. In the next two years, more companies will be centralizing control of contingent labor decision-making to manage costs and ensure quality. Moreover, companies are increasingly turning to technology to help with their contingent workforce challenges. While approximately 34% are using VMS systems today, more than half will have a VMS in place within the next two years.