How Contractors Can Insulate Businesses from the Global Financial Crisis
Stock markets around the globe have had turbulent weeks, with some of the worst losses in the past 30 years. Not only did Wall Street see one of its biggest plunges, but sweeping containment measures have disrupted markets around the world.
As we grapple with the current economic maelstrom, the Coronavirus outbreak has definitely started questioning our ability to combat the global downturn, which might worsen if the outbreak continues to take a bad shape.
Foreseeing the possibility of a catastrophic financial crisis, many countries are trying to come up with several solutions that can best fight the economic upheaval caused due to the outbreak.
Contract-based work or hiring remote staff is a solution that most companies are taking into consideration if the pandemic continues to rage across various parts of the globe in the future as well.
Hiring Contract Employees – A Smart Business Move
At a time when global markets are volatile, economists are slashing any kind of forecast, supply-chain disruptions are adding on and business overheads are increasing, employers are looking for ways to overcome the financial meltdown and sustain themselves. Hiring contract employees, during these turbulent times, is one of the solutions that many businesses are focusing on.
Contract workers usually work remotely, which is from their home offices. They do not demand employer-paid benefits. In addition, employers can hire contract employees on an as-needed basis to complete essential projects. All this helps employers significantly cut down on their overhead costs.
Contractors can help businesses survive and sustain during financial meltdowns. They can massively transform global economies, businesses, and individuals and serve as a life raft for everyone. But, before we delve deep into it, let’s look at what causes businesses to decline during economic depressions.
Why do Businesses Fail to Survive During an Economic Slowdown?
During a global economic slowdown, unemployment rates shoot up. This leads to a significant decrease in consumer spending, which in turn decreases business demand. The overhead costs of businesses rise while the sales figures drop, resulting in thin margins and a poor bottom line.
Some of the reasons which cause businesses to decline during global recessions are:
- Increased Rental Costs
- Higher Resource Costs
- Flawed Business Strategies
- Long Commutes
The high office rental and maintenance costs pose a real threat to businesses during global economic crunches. Fully-serviced offices include state-of-the-art office furniture, phones, high-speed Internet, staffed reception, printers, scanners, photocopiers, ergonomically-designed meeting rooms and other utilities which require daily maintenance. And the cost involved in managing such office utilities during global economic depressions takes a heavy toll on businesses.
The process of going ahead with new recruitments during recessions becomes a bane for companies. At a time when consumer spending is low and profit margins are thin, it becomes difficult for businesses to hire and retain new staff members with yearly salary commitments and other professional benefits.
Sadly enough, many companies, during global recessions tend to focus on staff lay-offs. However, this can be a flawed business strategy. Reducing the labor force down to just the skeleton staff to meet the increasing overhead costs, during recessions, without a suitable follow-up plan, might not be helpful. It’s like throwing cargo off a sinking ship, which simply doesn’t improve the situation but delays the inevitable.
The time and money involved in commuting to work daily can hamper the mental and physical well-being of employees, which in turn, leads to poor performances and low production standards. Long and stressful commutes, requiring 2-3 hours each day, negatively impact business outputs, during financial slowdowns.
All in all, businesses struggle to keep pace during global meltdowns because of a lack of innovative solutions that can ensure a business continuity plan.
How Can Businesses Survive During a Global Crisis?
Tapping into the potentials of contract employees can help businesses improve profit margins, survive and eliminate the above costs.
Contract workers can provide businesses access to niche expertise at the drop of a hat. Contract employees are usually equipped with home offices and utilize their own resources, thereby, significantly cutting down on business supply costs and other expenses such as health expenses, retirement benefits, social security, etc.
Moreover, contractors usually come prepared with handling multiple gigs or contracts previously. Therefore, they know how to approach a project intelligently with little hand-holding or minimum supervision. This eliminates the constant need for the managers to supervise the contractors, thereby, offering the managers ample time to focus on core business areas during recessions.
Since contractors are hired on a temporary basis, they remain motivated to put their best foot forward and deliver superior performances during their short stint. This improves business outcomes automatically.
Talented contract employees can be sourced within one or two days. There are multiple recruitment consultancies that help source remote workers or contractors at short notice, which significantly cuts down on time and cost, which are otherwise involved in hiring full-time workers.
Businesses, looking to establish a safety net during the slowdown, can integrate remote workforce and even scale the team. They can start with small projects, for instance, they can hire contractual graphic designers for designing sales campaigns or landing pages. With time, they can invest in hiring contract employees for more complex projects that involve coding, app designing or testing.
All in all, hiring contractors can prevent businesses from closing or collapsing during economic depressions. And given the fact that there are over 1000 contract-based job categories in the market, finding suitable talents for specific projects shouldn’t be an issue for businesses across the globe.
How Can Individuals Survive the Economic Crisis?
During a recession, businesses tend to become reluctant to invest in traditional staffing. Contractors can tap on this opportunity and step up their chances of employment during such times.
Remote work was accelerating across the US much before the Coronavirus pandemic struck. As per the Federal Reserve, the share of the remote staff tripled in the past 15 years.
The current Covid-19 outbreak has only re-established the significance of the remote working or contract-based working model.
Businesses are undergoing a seismic shift with flexible policies becoming the norm. Each day, new businesses are trialing the benefits of remote work models to ensure a safety protocol and tackle the meltdown.
The question is:
- Will the Covid-19 outbreak dramatically transform the working landscape hereon?
- Will this promote video-conferencing and other forms of online communication?
- Will it eliminate travel-required meetings and tiring commutes?
- Will this bring forth more eco-friendly and sustainable working models?
We’ll find out in the next few years.
Until then, stay safe and stay healthy!