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The Cost of Streamlining Through Contract Work

By the end of 2019, the US workforce will have 160 million people, according to figures released by online statistics portal Statista, despite the fact that companies are shifting towards automation. Indeed, along with upgrading their current IT and tech infrastructures, businesses are also looking to invest in acquiring the right talent and expertise in a bid to impact the bottom line.

And yet, despite the increasing importance of human capital, there has also been a recent trend in cases of workplace rights violations across the world. Sure enough, the world’s largest corporations and conglomerates have been accused of violating employee rights at some point or another. The reasons for these violations often always deal with the need for companies to streamline their operations and secure better revenue projections. We can look no further than the practice of outsourcing key activities to offshore service providers or getting terminal, project-based workers for a short-term contract that does not guarantee the same benefits and protections granted to full-time employees.

Contract work has certainly nurtured a negative reputation over the years, owing to the fact that it does not guarantee ample compensation for productive work done by employees working such an arrangement. But that’s not all. Contract work can also have negative effects on an organization despite the tangible benefits it provides to the bottom line.


According to this article published on the University of Pennsylvania Wharton School, contract work doesn’t do much in terms of providing value. Since a company hires employees for an interim period, there is less investment in terms of nurturing talent that generates long-term value. In terms of saving resources, companies would actually train entire teams if they choose to contract out their activities to outsourcers. This may benefit the bottom line, but Wharton professor Claudine D. Gartenberg notes that the practice of contracting out may entail serious “social consequences”.

The real toll is on the workers who are forced to contract out their services. Students from the Wharton School have conducted a study on contract work and its effects on career advancement and sure enough, they have found the results to be quite dismal. Employers, for one, are unwilling to employ contract workers but are unwilling to spend resources on training people who already demonstrated their proficiency in their previous experiences.

Exploitation can take many different forms, but contracting out productive work may very well be the subtlest. Numerous laws have been passed in the last decades to counter such attempts and aimed at protecting the rights of contract workers, but there have been numerous cases of labor malpractice that still happen owing to loopholes in current labor laws.
Nevertheless, contract workers will still have to fight for their rights regardless of the arrangements they enter into with an employer. Sure enough, in cases such as employees’ compensation and personal injury in the workplace, contract workers should review their contracts and make sure they get the right legal services for their needs. Each state has its own laws that deal with contract work, so it’s best to find a local law firm such as a Chicago personal injury lawyer if you happen to figure in an accident while on duty.

At any rate, while it’s still impossible to stymie the appeal of contract work, it’s only fair to pass legislation that will hopefully change how companies view the need to streamline their operations. People, not just wealth, have the potential to grow.


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