As organizations plan their 2026 workforce strategy, they’re facing a workforce equation that looks very different from just a few years ago. Critical work is increasingly being delivered by people who aren’t on the traditional payroll: contractors, freelancers, and independent specialists.
This shift is being driven from both sides of the labor market. Employers are under pressure to do more with less, while AI reshapes roles, automates some tasks, and creates new demand for skills they don’t always have in-house. At the same time, many professionals are choosing autonomy and flexibility over a single full-time job, building portfolio careers that span multiple clients and projects.
HR now sits in the middle of this transformation. Practitioners are expected to manage a blended workforce (employees and non-employees) while keeping pay, compliance, and risk under control. The extended workforce is no longer a niche category; it reflects a structural change in how work gets done and how people want to work.
The New Economics of Work
Economic uncertainty is one of the biggest catalysts behind the rise of contingent work. Leaders must align talent with fluctuating demand without overcommitting fixed costs. Project-based work is now common in IT, digital transformation, marketing, finance, and operations. AI is accelerating this trend by changing which tasks belong in a permanent role and which are better suited to short, intensive engagements.
Contingent talent gives employers a way to plug gaps quickly. They can bring in a specialist for a defined project or time without adding permanent headcount, an attractive option when future demand is hard to forecast, or budgets are tightening.
Workers are leaning into the same dynamics. Independent professionals can choose projects that match their skills and interests, work with multiple clients, and often command higher effective rates. Instead of waiting for internal promotions, they are structuring careers on their own terms.
The numbers show how mainstream this has become. Almost 73 million Americans now work independently. The number of full-time independents has nearly doubled since 2020 – growing from roughly 13.6 million to 27.6 million – and this segment contributes more than $1 trillion annually to the U.S. economy. Organizations are already redirecting spend to this talent pool to secure critical skills and maintain agility.
Why “Contingent First” Is Gaining Ground
Three forces are pushing organizations toward a more “contingent first” mindset: widening skills gaps, shifting worker preferences, and ongoing market pressure.
As AI and digital initiatives move faster than many organizations can hire and reskill, contingent professionals offer a way to keep strategic projects moving. Instead of waiting months to find the perfect full-time candidate, employers are engaging independent experts who can deliver outcomes now.
At the same time, generational expectations are changing. Many Gen Z and younger Millennial workers begin their careers in freelance, contract, or gig roles. They expect flexibility in when, where, and how they work, and are comfortable building careers outside of traditional employment structures.
Layer onto this the reality that economic conditions remain uncertain. Even when companies slow or freeze full-time hiring, their strategic priorities don’t stop. Contingent talent becomes a way to protect margins while continuing to execute transformation, innovation, and growth.
Together, these dynamics are changing both how organizations supplement their workforce and, more so, how they design it.
The Hidden Risks of a “Shadow” Workforce
While contingent work is attractive, it introduces complexity and risk – much of it landing on HR.
Many organizations still manage contingent and independent workers through spreadsheets, email threads, and disconnected systems. Traditional HR tools were built for employees, not contractors or project-based talent, so visibility into the extended workforce is often incomplete. The result is a “shadow workforce” that is essential to operations but difficult to track.
Misclassification is one of the most significant risks. As more work shifts outside traditional employment, it becomes harder to determine when a role should be treated as an employee versus an independent contractor. Misclassifying workers can lead to costly legal disputes, penalties, and reputational damage.
Inconsistent compensation and terms are another concern. When each department negotiates its own rates and contracts, organizations struggle to control costs or ensure equity. Budget owners may not know how much they’re spending on contingent labor overall, and HR may not see where contingent workers are carrying out sensitive or business-critical work.
These blind spots are especially problematic in a tight talent market. Forty-five percent of U.S. hiring managers report difficulty finding qualified talent for open roles. Contingent workers can help fill those gaps, but only if HR and business leaders have the visibility to deploy them effectively and manage them responsibly.
From Patchwork to Strategy
Organizations that are getting ahead of this shift aren’t treating contingent labor as a last-minute fix. They are building a holistic strategy that integrates extended workers into workforce planning.
That starts with understanding today’s reality: What percentage of work is being done by non-employees? In which functions are contingent professionals most critical? Where is contingent talent the right answer, and where is a permanent role a better fit? Asking and answering these questions moves contingent work from “extra” to “expected,” and turns it into a deliberate part of the workforce model.
Culture is part of the equation as well. Contingent professionals who are brought into teams, given clear goals, and treated as valued contributors tend to perform better and stay engaged for longer assignments. HR must balance inclusion with appropriate boundaries to manage co-employment risk, but ignoring engagement is no longer an option when so much critical workflows through the extended workforce.
Technology as the Backbone
Managing an extended workforce at scale requires more than policy changes. It requires technology that can centralize and streamline many moving parts.
Modern Vendor Management Systems (VMS), especially those enhanced with AI, are becoming the backbone of extended workforce management. They provide a single view of non-employee talent across functions, business units, and geographies, and help standardize processes such as requisition creation, candidate screening, onboarding, time tracking, and offboarding.
They also support compliance at scale. Classification rules, tenure limits, rate structures, and approvals can be managed consistently instead of being reinvented in every department. Analytics reveal where contingent spend is rising, which suppliers are delivering the best results, and where skills gaps are likely to emerge.
When HR has this level of insight and control, contingent work stops being a risk to contain and becomes a lever to pull strategically.
Preparing HR for 2026 and Beyond
The World Economic Forum estimates that thirty-nine percent of current skill sets will become outdated within five years. Against that backdrop, the extended workforce is not a temporary workaround; it is a core part of how organizations will stay current, competitive, and resilient.
For HR leaders, the mandate is to build an accurate picture of the total workforce, integrate contingent labor into planning and budgeting, and invest in platforms that centralize extended workforce management. The question is no longer whether to use contingent workers. It’s how to engage and manage them in a way that protects the organization, supports workers, and keeps critical projects moving, with the right people, in the right roles, at the right time.
Elijah Bradshaw is CHRO at Beeline.