What Most Companies Get Wrong About Hiring Independent Contractors

By Debra Timmerman, President, Global MSP Solutions at KellyOCG

A company gains access to specialized dermatology expertise for product research without the overhead of a full-time physician salary and benefits. A marketing project gets completed by a specialist who has delivered similar campaigns across multiple industries rather than someone learning on the job. An AI implementation moves forward with an expert who has already solved similar challenges dozens of times instead of trial-and-error approaches.

What connects these scenarios? All involve independent contractors (ICs)—and all represent the kind of talent access companies can overlook because of outdated assumptions and challenges finding and managing IC talent.

Key Takeaways

• Independent Contractors (ICs) Are a Growing Force: The share of independent workers has surged from 27% in 2016 to 36% by the early 2020s, with freelancers contributing $1.5 trillion in earnings. Companies can no longer afford to overlook this dynamic talent pool.
• Superior Talent and Expertise: ICs often bring premium skills and cross-industry experience, offering competitive advantages. With 54% of freelancers possessing advanced AI proficiency, they frequently outperform full-time employees in technical and human skills.
• Efficiency and Focus Drive Results: Contractors are results-driven, with a clear focus on deliverables and timelines. This approach often accelerates project completion and enhances the quality of outcomes compared to traditional employment models.
• Digital Platforms Revolutionize Talent Access: Technology has made it easier for skilled professionals to connect with opportunities, shifting the landscape from desperate job hunting to strategic career choices. This evolution is particularly evident among Gen Z workers, who increasingly favor freelance work.
• Challenges in Managing ICs: Companies face obstacles in vetting, compliance, and administrative management of ICs. Overcoming these challenges requires structured solutions that streamline processes and leverage the full potential of independent talent.
  

There’s no doubt about it; ICs are on the rise. The share of workers identifying as independent grew from roughly 27% in 2016 to 36% by the early 2020s. Upwork's 2024 Future Workforce Index found more than one in four (28%) U.S. knowledge workers now freelance, generating a collective $1.5 trillion in earnings. The Bureau of Labor Statistics counted 11.9 million independent contractors in July 2023, representing 7.4% of total employment, compared to 10.6 million (6.9%) in May 2017.

Yet most companies still approach this massive talent pool with a skeptical eye and inadequate processes, missing opportunities to access some of the most skilled professionals in the market. Here’s how to reframe your thinking to align with the realities of today’s job market, and what to do if you’re struggling with hiring Independent Contractors who will meet the growth goals of your business.

ICs bring premium talent and expertise

A damaging myth in workforce planning suggests ICs represent some kind of professional second tier. This thinking assumes people work as contractors because they couldn't secure permanent positions; when accomplished professionals increasingly choose contractor status to optimize their expertise, control their schedules, and focus on work that matches their specialized skills.

Education and earnings rival full-time employees

Studies show 80% of freelancers hold a bachelor's or advanced degree, and 4.7 million U.S. independent workers earned over $100,000 in 2024, up from 3 million in 2020. Nearly half of all freelancers engage in knowledge services requiring specialized expertise like computer programming, consulting, and legal work.

Cross-industry experience creates competitive advantages

Independent Contractors often bring broader expertise than permanent employees because they work across multiple organizations and industries. When you hire an AI specialist for a six-month implementation, you're accessing someone who has completed similar projects for different companies, not just the limited perspective of someone who worked on AI initiatives at a single organization.

AI skills and technical proficiency exceed employee averages

More than half (54%) of freelancers report advanced AI proficiency compared to 38% of full-time employees, while 29% have extensive experience building, training, and fine-tuning machine learning models versus 18% of full-time employees. Freelancers also excel in human skills essential for working alongside AI, including communication (47% vs. 40% of full-time employees), critical thinking (43% vs. 38%), problem-solving (49% vs. 44%), and adaptability (41% vs. 37%).

Results-driven focus accelerates project completion

Contractors understand their reputation depends entirely on delivering exceptional outcomes. They can't coast on office politics or employment security—their next project depends on current performance quality. This creates intense focus on results with clearer deliverables and tighter timelines than permanent employees. Analysis shows independent contractors are "more focused and distraction-free," often moving projects forward faster and yielding higher-quality deliverables on tight timelines.

How technology is making high-caliber IC talent more accessible

For years, talented professionals who wanted independence faced a discovery challenge. Hanging out your shingle meant hoping clients would somehow find you, and most couldn't afford that uncertainty.

Digital platforms changed everything by solving the visibility problem. Now a specialist can choose between multiple project opportunities instead of scrambling to find any work. This shift fundamentally altered who enters the contractor market—from desperate job seekers to strategic professionals making deliberate career choices.

Younger professionals drive much of this growth, with more than half of skilled Gen Z workers choosing freelance work. As this generation moves into their peak earning years and represents nearly one-third of the workforce by 2030, contractor engagement will become even more important for talent access. Over one-third (36%) of full-time employees are considering freelancing for better opportunities, while only 10% of freelancers want to return to traditional employment.

The oversight challenge: Why it's hard to self-manage ICs

Despite expanded access to talent, companies attempting to manage contractor relationships on their own face significant obstacles that prevent them from capitalizing on this opportunity: 

• Finding and vetting specialized talent proves difficult without proper infrastructure. Where do you find specialists across multiple skill sets? How do you evaluate qualifications without deep industry knowledge? Even with improved platforms, companies face a daunting task navigating this expanded talent pool alone.
• Classification and compliance complexities create legal risks most organizations can't properly assess. Someone in your organization hiring a marketing specialist has no framework for evaluating contractor classification risk or understanding what type of work arrangement puts the company at legal risk.
• Administrative overhead overwhelms internal teams trying to handle contractor relationships alongside their regular responsibilities. Companies struggle with basic tasks like organizing billing, managing invoices, ensuring accurate payments, and handling all the compliance documentation that comes with contractor relationships.
• Management approach mismatches diminish contractor effectiveness. Many organizations remain hesitant to embrace high-caliber contractor talent because of management approaches that equate physical presence with productivity. Companies trying to apply standard employee management approaches to contractors often create friction that diminishes the very focus and autonomy that makes contractors valuable.
• Process control issues reflect inexperience with contractor management. The most common mistake involves wanting to maintain too much control over the process—wanting to see 20 proposals when three qualified candidates would suffice, or trying to be involved in every step of sourcing when they should focus on their core business.

Structured solutions address these challenges

After eight years working across every industry Kelly serves—from life sciences to financial services—I've seen how these challenges play out repeatedly. Rather than speak theoretically about contractor management, let me share what we accomplished for a major global beauty company as a concrete example of how structured solutions address these pain points.

This client needed to manage over 1,000 independent contractors ranging from makeup artists traveling between trade shows to physicians providing specialized dermatology expertise. Each group required completely different approaches.

We built an aggregated sourcing system that pulled talent from multiple platforms into one interface. Instead of their hiring managers jumping between different freelance sites for hours, they could review vetted candidates from all sources in a single dashboard.

We handled all classification and compliance work by certifying that both the job requirements and working relationships met independent contractor standards. This removed legal risk from their internal teams who had no framework for evaluating contractor classification requirements.

We took over complete administrative management including billing, invoicing, payments, and compliance documentation. Their teams could focus on project work instead of getting bogged down in contractor paperwork.

We customized our management approach for each contractor type. Makeup artists working 15-hour days at trade shows needed mobile-friendly time tracking since they never sat at computers. Physicians required white-glove service with dedicated support staff handling administrative tasks they couldn't be bothered with.

We proved our vetting quality through results rather than promises. Once they saw our candidate screening effectiveness, they stopped wanting to review twenty proposals and trusted us to bring them the three best options for each role.

Taking advantage of today's largest talent pool

The independent contractor market represents one of the largest untapped talent pools available to employers today. The professionals choosing this path bring advanced skills, focused delivery, and proven results—but only when companies have the right infrastructure to find, vet, and manage these relationships properly. Organizations that continue viewing contractors through an outdated lens will keep missing access to specialists who could solve their most pressing business challenges.