1099s Driving Payroll Platform Retention
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Anthony Mironov, CEO of Wingspan, on why 1099s are eating payroll
Every contractor paid outside their platform represented lost revenue and more friction
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This reveals that contractor support had become a control point for the whole payroll relationship, not a side feature. Once a customer had to jump from a PEO into Bill.com, QuickBooks, or a bank to onboard and pay 1099 workers, Insperity lost payment volume, lost product surface, and made its own all in one promise weaker. That is why contractor management changed from nice to have into retention infrastructure.
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The pain is not just cutting a payment. Contractor workflows require W-9 or W-8 collection, TIN checks, insurance verification, classification controls, and 1099 filing. That is a different system from employee payroll, because contractors behave more like many small businesses than a company's internal staff.
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At small scale, companies can patch this together with bank bill pay or basic payroll tools. At 50 to 100 contractors, reconciliation and compliance start breaking, which is why leakage matters before a customer fully churns. The platform with the cleanest mixed workforce workflow gets the higher win rate and keeps more share of wallet.
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The competitive split is now clear. Rippling is building contractor rails inside a broader workforce suite, while platforms like Insperity can partner with Wingspan to add white label contractor infrastructure faster. Both paths are aiming at the same prize, becoming the single system where a business manages every kind of worker.
Going forward, payroll platforms will be judged less by how well they run W-2 payroll alone, and more by whether a business can add any worker, employee or contractor, in one flow. As blended workforces keep growing, contractor volume will keep pulling HR, payroll, AP, and fintech products into the same stack.