What Is an On-demand Workforce? Guide for Small Businesses

An on-demand workforce is a group of people who can be hired as and when needed—sometimes beginning work the same day. They can be a solution if you’re just getting started, need administrative support, or require technical expertise to help you get a project across the finish line. Small businesses often use on-demand staffing agencies to locate employees, independent contractors, and freelancers. They can help your small business hire faster for both routine and complex work.

On-demand Workforce vs Other Worker Classifications

On-demand staffing isn’t the answer for every situation. If you need to fill a position for several months to cover someone out on medical leave, you may want to hire a temporary employee instead, as on-demand staffing works best to fill small, quick gaps.

There are several types of workers you can hire. Here’s a quick breakdown of each type.

	On-demand Workforce	Traditional Employees	Temporary Employees	Freelance Workers
Time to Hire	Same-day is possible	Depends on position, can be months	Usually filled in less than a week	Varies
Overhead	Covered by on-demand staffing agency	Payroll, taxes, benefits, insurance, etc.	Covered by temporary staffing agency	Flat rate paid to worker
Cost to Company	Flat rate paid to on-demand staffing agency for each hour worked	Most expensive	High hourly rates to cover staffing agency overhead	Negotiated case by case
Control over Worker	Limited, unless directed via on-demand staffing agency	Complete control over daily tasks and when and how the employee works	Complete control, as long as directed through staffing agency	Almost none since they’re an independent contractor

Click through the tabs below to learn more about your options.

On-demand and traditional staffing are related but not the same. Traditional staffing requires a thorough hiring process, usually done by a staffing agency, where you participate or conduct interviews and select the best candidate. It may be faster than hiring on your own, but not by much. The big benefit is that you don’t have to do all the recruiting or hiring work since much of it is done by the staffing agency.

Temporary employees may be filled by using a temp agency. Similar to on-demand, you would select a candidate and have them fill in during a season or while a full-time employee is out for an extended period. Temporary employees usually work longer than on-demand workers, and many companies use this relationship to test talent before offering them a full-time position.

Freelance workers, who are independent contractors and not employees, have become extremely popular in recent years. Think of Uber and Lyft using freelance drivers. While these companies are facing litigation about whether drivers are actually employees, they have helped popularize this type of workforce relationship.

Where to Find On-demand Workers

Hiring employees can be a laborious process, especially for small businesses without a dedicated HR team. On-demand staffing seeks to reduce the time and effort required to make the right hire by giving you quick access to workers who fit your needs.

Your best place to find on-demand workers and ensure compliance with employment and classification laws is to use an on-demand staffing agency. You can also look for on-demand workers yourself. Click through the tabs below to see your options.

These companies can offer you access to workers that can help you fill a gap or get necessary work done in a short time. They’ll also be the employer of record for the on-demand worker you choose, so they’ll carry the burden of overhead costs and work to ensure the worker is correctly classified. Here are some agencies you can consider:

When you partner with an on-demand staffing agency, you discuss your company details with your account manager. Together, you will determine your staffing needs and create a job post for the most urgent one. The on-demand staffing agency will provide you with a list of candidates matching your needs and ready to work, possibly as soon as the same day.

Workers also create profiles, which you may be able to search. When an on-demand worker reaches out to you, you can review their profile to see if they match your needs and instantly accept or decline. If you choose to accept them, you know exactly what you’re getting and how much it will cost, letting you budget accordingly. Because the worker is not an employee, it’s also a flat cost based on the length of time you need them to work.

Platforms like Upwork, or any of these leading websites to hire freelancers, have millions of workers available on short notice for short-term work. However, finding an on-demand worker yourself can take more time and requires you to navigate employment classification on your own. Seek guidance from an employment lawyer to make sure you are not crossing a line and potentially putting your business at risk.

If you decide to go it on your own, the great news is that there are millions of workers available, many of whom may just fit your exact needs. More than 15% of the US workforce has earned money from gig work—that’s a big pool to pull from, so you’re likely to find what you need.

Legal Considerations

Again, on-demand workers are not your direct employees—they are employees of the on-demand staffing agency, so it covers payroll and directs the worker on when and how to work. It’s very easy to cross this line, so make sure you speak with an employment attorney to help you stay compliant.

Misclassification of a worker can lead to costly fines and penalties. You could be on the hook for back pay, overtime, and payroll taxes for both the worker and your company, along with other government fines. This is why when you’re looking for an on-demand worker, it’s often best to use an on-demand staffing agency to help you fill your immediate need. It can reduce some of your risk by providing you with a worker for a limited time while maintaining compliance with employment laws.

Industries That Benefit From On-demand Staffing

On-demand staffing often works best and most effectively in industries with short-notice shifts. These often include:

Construction
Retail
Restaurant
Hospitality
Cleaning
Warehousing
Healthcare

However, any company in any industry can utilize on-demand staffing. If you run a small business and need an administrative assistant or a delivery driver for a day or week, you could use an on-demand staffing agency to quickly fill your need.

Bottom Line

Because small businesses often have difficulties hiring and retaining talent, especially for mundane work, on-demand staffing can be a great option. Having an on-demand workforce benefits your company and the workers, as you get to have quick and easy access to skilled workers who can help you fill in a gap, and they get to choose how much work they take on.

Regardless of whether a worker is one of the millions of people still unemployed because of the COVID-19 pandemic or is just looking for part-time or seasonal work to fill gaps in their working hours, you will benefit from their varying skill levels and skill sets. If your small business needs help now, an on-demand workforce may be your solution.