Working for yourself seemed near impossible in the early 2000’s. Managers found it hard to work with individuals not contracted as employees. Today is a different story.
Thanks to technology and other collaboration tools, clients are happy to pay professional freelancers for the expertise they bring to the company.
With more successful freelance stories being shared, individuals see the dream of working for yourself as attainable. The freelance economy still has a way to go, but thanks to the growth of online platforms to find "gigs", individuals have been able to work for clients without being contracted as an employee. In 2017 in Europe, 30.6 million people aged 15 to 64 in the European Union (EU) were self-employed in 2016. They accounted for 14% of total employment.
Managers are opening up to the idea of working with freelancers now that professionals are making themselves available for work. In the past, individuals believed in the importance of maintaining a long career as an employee and thus, never applied for freelance jobs. Good freelance jobs that paid well were also not available for professionals looking to step out from the corporate world. But times are changing.
Collaboration with a freelancer was not always easy for an organisation. There were no processes or tools in place that helped clients and freelancers to work together efficiently. Today, technology and instant communication are closing that gap. They help both parties maintain a good working relationship that brings positive results. This, and the increase of employees from professional fields going freelancer, increases manager motivation to contract self-employed persons.
Traditional View on Freelancers
In uncertain times, hiring freelancers provided a quick solution to honing in the necessary skills for a short amount of time, but it was not a popular choice for organisations. In the past, freelancers were perceived by organizations as useful for low-skilled, temporary, non-specialized tasks; for example, performing transportation tasks (Uber, Lyft), running errands (Postmates), providing home services (Task-Rabbit, Handy), and clerical work (De Stefano, 2015; Friedman, 2014).
There are difficulties when hiring and managing freelancers including freelancers working according to their own schedule, not adapting to client needs, overcharging, and unreliability. In general, managers had very little control over the freelance workforce which makes it more difficult for them to plan for and predict the proper allocation of work. Also, freelance workers may not always integrate culturally as well as full-time employees. This can have an impact on spontaneous interaction between employees that likely drives innovation.
Even so, as reported by Von Hippel et al. (1997), organizations usually contracted temporary employees to save costs, to increase flexibility within the organization in the wake of fluctuations in demand, and to avoid restrictions, such as unions and labour protection laws.
A Change In Perspective
Today, the landscape is quite different. The freelance economy is continuously changing and with it, the manager’s perspectives. Freelancers are no longer lower-level workers, but the highly skilled talent that has left the corporate world to work for themselves, also described by Davenport (2013) as “knowledge workers”. These top freelancers earn significantly more than the average freelancer and more than the equivalent of the salary they had at work.
These top-freelancers are involved in projects that demand innovation, strategy, change management, and technological development (Burke, 2015). Having experience from the corporate world makes you a strong candidate to meet that demand. They are called to the organization for their rare knowledge and expertise, and are accordingly well rewarded.
Research on managers in Israel shows that in the business world, there are both advantages and disadvantages in hiring freelancers, but that despite this not bring a popular choice - managers recognize the value this pool of workers add to the organisation. Their view of working with freelancers is changing.
"Study 1 indicated that (a) the managers perceived freelancers’ employment as a promising avenue for bringing knowledge and expertise into the organization, (b) they inclined towards employing freelancers with superior levels of knowledge and expertise over equivalent full-time employees, and (c) they were willing to pay the talented freelancers more than the regular compensation for their services. Managers were significantly less willing to employ a freelancer at lower pay when the freelancer’s perceived expertise levels were below that of an equivalent full-time employee."
One of the biggest game-changers in freelance working is the development of online platforms and real-time collaboration tools. In 2017, the online gig economy and use of platforms grew by 26%. These include platforms for finding, hiring and paying freelancers emerged such as Upwork, Fiverr and Freelancer; Freelance Management Systems (FMS) help corporations manage freelancer paperwork; communication tools like Whatsapp, Skype, Email and Slack; and project management tools like Notion that helps increase efficiency with setting tasks, deadlines and payments between remote teams.
The Online Labour Index (OLI) is the first economic indicator that provides an online gig economy equivalent of conventional labour market statistics. Dating back to 2016, it measures the supply and demand of online freelance labour across countries and occupations by tracking the number of projects and tasks across platforms in real time. This monitoring tells us that the growth has been consistent and will continue.
Corporations Welcome Freelancers
Morgan Stanley reports that for corporates, the rise of freelance work brings both opportunities and challenges. A growing number of Fortune 500 companies are now using freelancers because it enables them to be more agile and utilize those with specific and specialized skill sets while controlling labor costs.
Using freelancers helps corporates expand their workforce in periods of peak demand as well as use a leaner, core teams for when the workload returns to normal. It can also help companies access talent that may not be available to work on a permanent basis.
For corporates, the challenge for moving forward is an all too familiar one. As the gig economy grows, clients will need to know how to keep freelancers engaged and, internally, preserve their culture as on-staff employees take note of the flexibility freelancers enjoy.