Four Findings on the State of Contractor Management in 2026

Contractors now do work that used to be reserved for employees, and they're doing more of it every year. But the systems most companies use to onboard, pay, and file taxes for them haven't caught up. The result: dissatisfaction on both sides — contractors frustrated by slow, opaque payments, and the operations, HR, and finance teams behind them stuck wrangling spreadsheets, vendors, and compliance work that wasn't built for this scale.

Here's what the Future of Flexible Work survey found:

Key Finding #1: Independent contractors are a fundamental part of the company’s workforce

Highly skilled workers are treating contract work as a career, not a side hustle. They’re increasingly delivering billable work that are essential to the company’s bottom line – and the workforce is growing:

The work has changed

• 84% of businesses report that contractors now do work once exclusively reserved for employees.
• 98% of companies spending $10M+ per month on contractors call them "integrated and valuable to the organization."
• 65% of companies that spend over $1M per month see contractors as mostly or fully core contributors.

Programs are bigger than most assume

• 77% of companies surveyed hire 200+ contractors per year.
• 16% hire over 1,000.
• 52% pay contractors $1M or more per month.

Growth isn't slowing

• 56% of surveyed companies plan to hire more professional contractors over the next three years.

Engagements last

• The average contractor engagement runs nearly a year.
• Contractors receive an average of 18 payments over the course of their relationship with a company

Key Finding #2: The hidden friction of contractor management creates a growing operational burden

Contractor management is a sprawling, multi-department burden that pulls in 85% of companies' accounting, HR, and operations teams simultaneously, and one that will only get harder as contractor hiring accelerates. Teams feel friction across every step of the process, from W-9 collection to background checks, payments, and annual 1099-NEC filing.

Leadership and the front line see different pictures

• 73% of CFOs report feeling very confident in contractor management.
• Only 14% of Directors share that confidence.
• That's a visibility gap between the executive suite and the people doing the day-to-day work.

Tool sprawl isn't paying off

• 95% of respondents use three or more platforms to manage the contractor lifecycle.
• 26% use seven or more.
• Only 18% say they're very satisfied with their current process. More tools aren't translating into better outcomes.

The hours add up fast

• 34+ hours per month on compliance work like TIN verification and 1099-NEC forms.
• 34+ hours per month on onboarding (W-9 collection, ID and insurance verification).
• 33+ hours per month on contractor support.

Operations teams carry the heaviest load

• Operations teams are twice as likely as any other department to exceed 81 hours per month on contractor-related work.

Key Finding #3: Contractor satisfaction hinges on payment speed and clear communication

When contractor management goes wrong, the failures show up in two places: in how contractors feel about working with the company, and in how every internal team that touches the process spends its time. Both sides surfaced the same theme — operational pain at nearly every step.

Where contractors feel the pain: payments

• 66% complain about speed and timeliness of payments.
• 53% point to payment reconciliation delays.
• 46% cite a lack of payment transparency and communication.

Where companies feel the pain: the four biggest challenges

• Integration with internal workflows (54%)
• Compliance and classification issues (52%)
• Resource and capacity planning (46%)
• Payment management (42%)

Onboarding is its own source of friction

• Background checks (54%)
• Banking and payment setup (48%)
• Contract and NDA e-signing (47%)
• 43% of companies can't give contractors clear visibility into where they stand in the onboarding process.

Key Finding #4: Purpose-built contractor management systems are now a competitive advantage

Confidence in current contractor management tools is lukewarm at best. Only 59% of respondents describe themselves as even mildly satisfied with what they have today.

Some companies have already moved

• 35% of companies have invested in a system built specifically for contractor onboarding, payments, and tax workflows.

The next wave is bigger

• 60% of respondents are either planning to invest in purpose-built options or are actively evaluating them.

What’s next

The companies winning the next three years of contractor growth are deciding now that contractor operations deserve real software — not a patchwork of spreadsheets, payroll add-ons, and email. For everyone else, the question isn't whether to make the move. It's how long the current setup can hold before something breaks publicly: a missed 1099 deadline, a payment delay that costs a key contractor, an audit that takes a week to fulfill.

Want the full picture? Download The Full Future of Flexible Work Report.