Companies need to be more flexible in the search for talent, as well as broaden the way they look for and engage people.

This observation comes the way of Matthew Franceschini, chief executive officer of contractor management specialist, Entity Solutions.

Franceschini spoke about the growing role of contractors at a human resources industry briefing in Sydney run by Smartsalary, a salary packaging organisation.

"Even now, a large proportion of Australian organisations are locked into an old workforce model of permanent employment, and this has led to companies often finding themselves hampered by a lack of available skills," he said.

Franceschini adds that it is the "innovative" organisations that are seeing the traditional engagement model, such as full time employment, being "largely irrelevant."

"Contractors are often the best way to quickly get hold of scarce and specialised skills," he said.

"In addition, they help to reduce fixed staffing costs for the business."

Caution required

While this flexible approach to talent engagement has demonstrated an increase in the number of companies offering contractor management organisation (CMO) services, Franceschini said there are pitfalls to this staffing approach. "The CMO industry is being transactionalised by companies that are jumping into the industry without the necessary financial backing, the systems or an understanding of the complexity of the compliance task," he said.

Franceschini points out that Australian courts have already dealt with a couple of examples of these kinds of problems during 2013, such as a CMO failing to meet its financial obligations, with more instances expected in the year ahead. "Businesses are going to have to develop a greater appreciation for the risks and obligations that come with outsourcing their contractor management requirements to CMOs, and recognise the need for due diligence before entering into any partnership with a CMO provider," he said. The road ahead

As for what the forecast is for 2014, Franceschini said it will likely be a year of "fluctuating business confidence."

"How we engage and manage people is transforming, and being an 'employer of choice' is now defined in completely new ways that go well beyond the traditional permanent employment model," he said.

Franceschini recommends businesses remain agile, flexible and progressive in their mindset about workforce options in the coming year to create a sustainable and growing business.

"That way they can ensure that they have the best people to deliver the best outcomes for their business," he said.

Patrick Budmar covers consumer and enterprise technology breaking news for IDG Communications. Follow Patrick on Twitter at @patrick_budmar.