You monitor employees. You trust contractors. That’s the problem. Contractors have full system access, months to plan their exit, and minimal safeguards in place to stop them.
They have the same access to your customer databases, pricing models, and intellectual property as your permanent staff. But unlike employees, they know exactly when they’re leaving—with months in advance to prepare. And when that contract ends, they’re walking out with something far more valuable than their laptop: intimate knowledge of your business and the data that could make or break your company.
There’s a growing blind spot in your security strategy, and it’s about to get bigger. The contingent workforce now makes up 30-40% of the U.S. labor market and is projected to reach 50% by 2050. Freelancers represent 46.6% of the global workforce—approximately 1.57 billion individuals worldwide.
It’s a transformation in how we work. And it’s creating the perfect storm for data exfiltration.
Why Contractors Are Your Biggest Security Risk
1. Same Access, Zero Loyalty
Here’s the uncomfortable truth: Privileged users who have access to sensitive information are the biggest threats to organizations. It isn’t surprising that consultants and contractors were listed as higher threats among privileged users. Contractors often have the same level of system access as full-time employees, sometimes even more when they’re brought in for specialized projects.
But unlike your permanent staff, they have:
- No performance reviews to incentivize good behavior
- No career progression within your organization to protect
- No exit interviews where red flags might emerge
With an average tenure of just 13 months, the flexibility that contractors and consultants provide also create a constant rotation of risk. With Teramind you can deploy our lightweight endpoint agent to Windows and Mac devices and maintain visibility however your contractors work.
Try Teramind’s Live Demo.
2. The Exit Window of Risk
The most at risk period isn’t at the beginning of a contractor’s tenure, it’s at the end of it. 70% of intellectual property theft occurs within 90 days of an employee’s resignation announcement. Now, imagine a contractor who knows their end date 3-6 months in advance and wants to add to their portfolio.
Traditional Data Loss Prevention (DLP) systems are designed to catch bulk downloads and obvious theft. They miss the gradual, “normal-looking” data collection that happens over weeks:
- Copying customer lists one at a time
- Downloading pricing spreadsheets “for the current project”
- Conveniently taking screenshots of proprietary systems
- Forwarding emails to external accounts
By the time you notice something’s wrong, they’re gone and so is your competitive advantage. Teramind uses behavioral context and a visual timeline providing a next-gen DLP solution, today.
3. Remote Work Amplifies the Risk
Over 70% of contingent workers prefer remote opportunities, and most organizations accommodated this shift post-pandemic. Remote contractors operate with even less oversight than their on-site counterparts, making suspicious behavior harder to detect until it’s too late.
They’re accessing your systems from personal devices, home networks, and sometimes multiple time zones away from your security team. When that contractor in Manila accesses your customer database at 2 AM, Teramind flags the anomaly in real-time – unusual geography, off-hours access, data outside their project scope. Your security team gets an alert before the download completes, not three months later during a compliance audit.
5 Red Flags to Watch When Working with Contractors
Based on behavioral analysis and forensic investigations of actual data theft cases, here are the warning signs every HR and Security leader should monitor:
Red Flag #1: Unusual Access Patterns Near Contract End
What to Watch: Contractors accessing systems or data outside their normal scope, especially in the final 60-90 days of their engagement.
Real-World Example: In the Arrivia case study, an employee was discovered accessing numerous customer accounts during night shifts when they should have been off duty, building secret databases of customer information to sell to third parties.
The Data: Common indicators include unusual work hours, such as frequent late-night logins. Reports indicate that 70% of IP theft occurs within 90 days of an employee’s resignation announcement.
Red Flag #2: Sudden Interest in “Documentation”
What to Watch: Contractors who suddenly need to “document processes,” request access to systems they haven’t used before, or want to “create knowledge transfer materials” without being asked.
Why It Matters: This is often a cover for systematic data collection. They’re not documenting, they’re copying.
Action Item: Implement behavioral analytics that flag when users access data repositories outside their established patterns, especially sensitive customer lists, pricing models, or intellectual property.
Red Flag #3: External Device Usage and Cloud Storage Activity
What to Watch: USB drive connections, large file uploads to personal cloud storage (Dropbox, Google Drive, personal OneDrive), or frequent use of personal email for “work purposes.”
Why It Matters: Contractors working across multiple clients often justify personal device usage and cloud storage as “necessary for their workflow.” This creates the perfect cover for data exfiltration—what looks like normal contractor behavior could be systematic IP theft.
The Risk: Remote contractors operate from personal networks and devices with minimal oversight. When your data leaves corporate infrastructure for a contractor’s personal Dropbox at 11 PM, is that legitimate work or preparation for their next gig?
Best Practice: Teramind’s monitoring caught Arrivia employees storing credit card information in unauthorized locations, triggering instant alerts before compliance violations occurred. The same behavioral analytics work for contractors accessing data outside approved channels.
Red Flag #4: Job Hunting or Competitor Contact
What to Watch: Website and LinkedIn profile updates, resume uploads, engagement with competitors, or suspicious meeting activity or movement of scheduled meetings.
The Risk: Contractors moving to competitors or starting their own competing businesses are exponentially more likely to steal client lists, pricing information, or proprietary methodologies.
The Data: Fraud (55%), monetary gain (49%), and IP theft (44%) are the top motivations for insider attacks. 89% of all privilege misuse cases are financially motivated.
Red Flag #5: Avoiding Oversight and Collaboration
What to Watch: Contractors who resist standard check-ins, work unusual hours by choice, avoid screen sharing in meetings, or become defensive about their activities.
Why It’s Dangerous: 48% of organizations reported that insider attacks have become more frequent over the past 12 months, with 51% experiencing six or more attacks in the past year.
Behavioral Pattern: The Arrivia case revealed employees placing phones on spacebars to keep computers awake and appear active while avoiding actual work, or worse, using that “active” time to steal data undetected.
The Cost of Doing Nothing
Let’s be clear about what’s at stake:
- Detection Time: It takes an average of 86 days to detect and contain an insider threat incident, with only 13% of insider-related incidents contained in less than 31 days.
- Financial Impact: The average yearly cost of insider threat incidents taking over 91 days to detect is $18.33 million.
- Volume of Threats: Between 2023 and 2024, there was a 28% increase in insider-driven data exposure, loss, leak, and theft events. On average, a single organization experienced 13.5 negligent insider incidents alone in 2024.
- The Acceleration: In 2024, only 17% of organizations reported no insider attacks, a significant decrease from 40% in 2023. The number of organizations experiencing 6-10 attacks nearly doubled to 25% from 13%.
How Organizations Are Fighting Back
The Arrivia Success Story
When Justin Skagen, VP of Revenue Integrity at Arrivia, discovered an employee building secret databases of customer information in the middle of the night, traditional security measures had completely missed it. The employee had developed a sophisticated operation:
- The Method: Copy customer data and paste into Excel files
- The Cover-Up: White out the text so files appeared blank if checked
- The Distraction: Play Disney movies while “working”
Here’s what caught them: Teramind’s behavioral monitoring noticed the pattern. An employee accessing hundreds of customer accounts during night shifts when they should have been off duty. Copying data at volumes that didn’t match their job function. The system flagged it, provided screen recordings of the Excel manipulation, and gave Skagen irrefutable evidence—not just of what was stolen, but how it was being hidden.
Without that visibility, Arrivia might have terminated the employee and never known about the database ready to be sold to competitors.
The Result: Arrivia now catches 10-15 insider threats annually before they escalate—including threats from contractors who assume remote work means invisible work.
What Effective Monitoring Looks Like
The solution isn’t treating contractors like criminals—it’s giving you the same visibility into their behavior that you have with full-time employees.
Unified Monitoring Across Your Entire Workforce
A contractor downloading customer lists at 11 PM triggers the same alerts as an employee doing it. No separate policies. No blind spots. When someone with system access starts behaving suspiciously, you know—regardless of whether they’re on your permanent payroll or a six-month contract.
Predictive Edge Catches Pre-Departure Data Hoarding
Here’s what actually happens: A contractor with 45 days left on their engagement suddenly starts accessing pricing models they haven’t touched in months. They’re downloading files at 3x their normal volume. They’ve connected a USB drive four times this week when they haven’t used one in six months.
Your traditional DLP sees individual actions that look normal. Teramind’s AI sees the pattern: access frequency spike + unusual timing + external device usage + approaching end date = contractor preparing to take your data to their next client. You get the alert while they’re still employed, not after they’ve ghosted your exit interview.
Forensic Evidence That Holds Up in Court
When you do catch a contractor stealing data, “we think they took something” doesn’t cut it legally. You need proof.
Teramind captures the whole story: screen recordings showing exactly which files were accessed, keystroke logs revealing what was copied, application tracking proving data was moved to personal cloud storage, and behavioral timelines that demonstrate this wasn’t accidental—it was systematic theft over weeks.
That’s the evidence that stops stolen IP from launching a competitor’s business. That’s what gets your legal team the leverage they need.
Protecting Against Contractor Data Theft
Immediate Steps (This Week)
- Audit Your Contingent Workforce: Pull the list of every contractor, consultant, or supplier with access to customer data, IP, or financial systems. You might be surprised how many there are—and how much access they have.
- Identify High-Risk Contracts Ending Soon: Filter for contractors with less than 90 days remaining. Those are your highest-risk individuals. 70% of IP theft happens in that window. If you’re not watching them now, you’re waiting for the theft to happen.
- Review Current Monitoring Capabilities: Here’s the hard question: If a contractor started systematically copying customer lists tonight, would you know by tomorrow morning? Or would you find out three months from now when a competitor starts calling your clients? 76% of organizations have detected increased insider threat activity, but less than 30% have the tools to actually catch it. Which group are you in?
Medium-Term Implementation (This Month)
- Deploy Behavioral Analytics: Your current DLP catches the contractor who downloads your entire customer database in one bulk export. Teramind catches the contractor who copies 20 customer records per night for six weeks—the theft that looks like normal work until you see the pattern.
- Establish Baseline Behaviors: Let the system learn what normal looks like for each contractor. How much data do they typically access? When do they usually work? What applications do they need? Once the baseline exists, deviations become obvious—and automatic alerts put them on your radar immediately.
- Create Clear Policies: Tell contractors upfront that behavioral monitoring is in place. Not to invade privacy, but because everyone with system access—permanent staff and contractors alike—operates under the same security standards. Transparency protects legitimate workers and deters bad actors.
Long-Term Strategy (This Quarter)
- Integrate with HR Systems: When a contractor’s end date is 60 days out, monitoring intensity automatically increases. When they’re renewed for another term, the system adjusts. Your security posture should respond dynamically to your workforce reality—not require manual updates every time a contract changes.
- Build Response Protocols: It takes an average of 86 days to detect and contain an insider incident. That’s unacceptable when contractors know their end date months in advance. Map out exactly what happens when an alert fires: Who investigates? What access gets restricted? When does legal get involved? Have the playbook ready before you need it.
- Regular Training and Awareness: Your hiring managers and project leads are the ones granting contractor access. They need to understand the five red flags, know how to spot concerning behavior, and have a clear escalation path when something feels wrong. Security isn’t just the IT team’s job anymore.
The Bottom Line
Nearly 35% of the global workforce is made up of gig workers, and 65% of companies plan to increase their use of contingent workers within the next two years. By 2050, half of all workers will be contractors, consultants, or freelancers.
This isn’t a temporary shift. This is the future of work.
Your biggest vulnerability isn’t the employees you’ve hired, trained, and invested in for the long term. It’s the contractors who know they’re leaving, have the same access as your permanent staff, and operate in a blind spot that traditional security measures were never designed to see.
The question isn’t whether contingent workers will become the majority of your workforce. The question is whether your security strategy will evolve as fast as your hiring practices.
Right now, most organizations are securing yesterday’s workforce while tomorrow’s workforce walks out the door with their data. The gap between how we work and how we protect that work is widening every quarter. Every new contractor onboarded without behavioral monitoring. Every project handoff that happens without visibility into what data moved where.
You can close that gap now, or you can explain to your board later why your most sensitive IP is now powering a competitor’s product launch.
The companies that will win aren’t the ones avoiding contingent workers—they’re the ones who figured out how to work with them safely. They’ve extended their security perimeter to match their actual workforce. They’re catching data theft during the contract, not discovering it six months after someone’s gone.
Teramind gives you visibility across your entire workforce—permanent and contingent—with behavioral AI that identifies threats before data leaves your building. Because in a world where half your workforce knows exactly when they’re leaving, you can’t afford to wait until they’re gone to discover what they took with them.
