The Shift to Freelancing – How the Gig Economy is Taking Over
The COVID-19 Pandemic has completely changed the world we live in. From restaurants and stores closing to many workers transitioning to working from home, this has been a disruptive time.
Though unusual, the pandemic has made remote and freelance work impossible to ignore and it needs to be looked at. Just how big is the gig economy and is there a permanent shift to freelance work?
The gig economy is a market of the economy that consists of short-term contracts rather than permanent, full time employment. Gig work consists of freelance writing, digital design, photography, film, data entry and even more work.
Companies often seek out freelance workers when they need certain projects rather than employing an employee to do so.
Now with most of the working world taking place virtually (some data in our past article), is freelance work becoming more appealing to individuals?
Despite the efforts of the employers, transitioning to freelance work means remaining remote permanently with the freedom to create your own schedule.
Just How Big is the Gig Economy?
The gig economy is a semi-new industry. With the availability of work online, more and more workers are finding themselves able to work outside of having a traditional employment with a company. Gig workers make up 36% of the total workforce.
There are an estimated 59 million gig workers that earn over $1.2 trillion of annual earnings in the United States alone. Freelancers making up 22% of the total annual earnings are a huge part of our economy. With more companies shifting to remote work, is this shift here to stay?
One of the largest freelancing sites in the world called Upwork recently conducted a survey involving 6,000 freelancers signed up on their site. The report shows that 24% more people decided to join the gig economy this summer than in normal years.
This report includes people looking for additional income as their jobs have shifted from in office to remote as well as involuntary freelancers, those who lost their jobs due to the pandemic. This trend is consistent between other platforms similar to Upwork.
So, is this trend long-lasting, or simply a sign of the times? As studies show the percentage of freelancers continues to grow, it may be a change that is here to stay.
Many businesses and workers are finding that these changes may be longer lasting that originally thought:
- 24% more people decided to enter the gig economy this summer
- 38% of traditional workers who began working remotely due to COVID-19 are now considering freelancing
- 49% of hiring managers said they now look to independent workers to access highly-skilled talent, rather than employed individuals.
Why are individuals shifting to freelance work?
From 2014 to 2019, the number of full-time freelancers grew from 17% to 28%. For many, freelancing feels like a temporary gig. Some may do it while in between jobs or on the side for some extra money.
Though this is true, the number of those taking up freelancing long term grew from 18.5 million to 28.5 million in the past 5 years.
Gig work has progressed with its growth over the past few years so it should come as no surprise that almost 33% of Fortune 500 companies turn to freelancing sites to outsource some of their work.
Working with freelancers gives large businesses a chance to broaden their net of talent while also giving the freelancer valuable experience and a highly regarded reference.
Is this shift going to continue to grow? Only time will tell. Our current business model in the United States is highly vulnerable to road blocks such as the COVID-19 pandemic. Adopting a hybrid business model that incorporates freelance workers with full time employees is a great way to stay flexible in an unpredictable world.
35% of the global workforce are freelancers.
Global workforce ~ 3.5 billion, Freelancers: 1.1 billion.
59 million freelancers working from home in 2019.
75% of freelancers wouldn’t trade their job for other types of work.
68% of freelancers declare to be much happier since they have started freelancing.
From 17% to 28% is how much the full-time freelancers grew from 2014 to 2019 (compared to all the freelancers).
52% of the U.S. adult workforce is expected to work in the gig economy.
64% of freelancers found their respective jobs online.
Almost 33% of Fortune 500 companies outsource their work on freelance websites.
92% of freelancers believe that soft skills will help them be more successful in the future.
65% of skilled freelancers are taking business-related training to enhance their soft skills.
Are companies going to have a mix of full-time employees and freelance workers?
Though the gig economy is growing and there is an increasing number of freelance workers, there will likely not be a complete shift from any company from full time employees to freelance, gig workers.
Willie Greer, founder of The Product Analyst, has found his company hiring an increasing number of freelance workers, especially this year amidst the pandemic.
He responded to our inquiries about the gig economy with a few statements including this one:
The hybrid talent model does not only give opportunity for the company to acquire manpower with new skill sets, but also introduce businesses to the idea of conceptualizing a freelance talent pool where they can pick skills just when they need it and not invest largely for a manpower that’s only seasonal or periodically needed.
The hybrid talent model acquires skills and talent from not just full time employees of the company, but also freelance talent for differing projects. Greer notes that this shift is not only beneficial to the company and gig workers, but also to existing full-time employees.
According to Greer, the hybrid talent model “gives full time workers a favorable chance to maximize their working potential, knowing they will not be assigned tasks outside their skillset.”
Allowing your employees to focus on projects within their skill set rather than require them to work on outside projects may increase productivity and create better content all in all.
The Value Freelancers Bring to a Business
When a company or business has different needs and projects throughout time, it may require a different talent to address each project.
Rather than employ an individual who has broad knowledge of all the needs of the company, some choose to hire freelancers that are highly talented or experts in one area to complete one specific project.
A “flash team” is a new idea. Flash teams consist of freelance, short-term contracted workers rather than a team of permanent employees.
Flash teams offer a unique opportunity to reach out to individuals with more niche talents and experience, allowing you to build a stronger and more in depth team than you would be able to if you used your existing employees or hired one person for the job.
In our ultra-connected world, it is getting more and more common for businesses to reach out to a rapidly growing freelancing community to tackle projects.
Patrick Hardy is founder and CEO of Hytropy.com, a private disaster management company. When we reached out to Hardy and asked him if he ever uses flash teams, he was happy to tell us that he does, all the time.
We form and then dissolve freelancer flash teams constantly. We like to think of it as a Strike Team that focuses on a particular problem. And on Upwork, we maintain a pool of reliable talent we can pull from to pull the team together and get the task completed quickly.
For example, we will have a marketing campaign that needs a fresh ad look for a particular industry vertical. So we’ll go to Upwork and rehire a graphic designer we’ve used before, a copywriter for the ad prose, and then a marketing consultant to make sure all the pieces are put together for that particular medium and type.
In an industry as unpredictable as disaster management, it makes sense that Hardy would often reach out for a new team to address a new campaign or design a new look. Hardy even told us that last year he hired an independent contractor instead of adding a new employee.
Last year we finalized a major partnership with an insurance company and one thing we needed as a series of 20 videos over the next year, targeted at different verticals. We had a freelancer do the voice over, the graphics, the animation, and the original script.
Instead of hiring a videographer full-time, we hired a freelancer who we could call upon throughout the year when the elements had to be put together into a single video package. The person we hired did such a good job that they work for us full time now.
As the percent of freelancers grows and the gig economy continues to grow and talent continues to improve, it is going to be much easier for businesses to find contingent work depending on the project and tasks at hand.
Why is there a shift from freelancing to contract or self employment?
Unfortunately, COVID-19 has completely changed the work environment that we are used to. Many businesses were hit hard at the beginning of the pandemic and had to lay off and let go some employees.
Though the economy is picking up and most companies are in a better place now than they were 9 months ago, businesses and hiring directors may be hesitant to bring on new full time hires.
Milosz Krasinski is the Managing Director of Chilli Fruit Web Consulting and has found this to be true with their company. He relates to the above sentiment of reluctance to bring on new full time hires and additionally stated:
In a recent survey, one in four people who have shifted to remote working during the crisis said that they would happily accept a 10% pay cut in order to be allowed to continue working from home.
For many businesses, a 10% pay cut to their employees is extremely tempting, especially in such uncertain times.
Freelancing can look very different depending on the industry it practices in. In many businesses gig workers work on projects such as video, photography, writing or design but it can look very different depending on the market the job is in.
Stewart Webb, lead developer of a Prime Carers says they use freelance workers in the home care industry by finding clients and carers on a need by need basis. He wrote:
Freelancing provides a number of benefits in the care industry. Without the bureaucracy of a larger organization, carers can choose who they want to work with and their clients get to build a relationship with a single carer instead of them being swapped out constantly due to scheduling reasons.
For Webb, he sees that freelancing actually brings a more dependable worker than traditional employment, leaving the gig worker and the patient much happier.
Aside from offering more niche knowledge and talent, the freelancing gig economy can bring a balance and equilibrium to a business. John Howard founder and CEO at Coupon Lawn wrote to us saying this is exactly why he chooses to use freelance talent.
Running the company is essentially balancing its mechanisms for supply and demand. As CEO of my coupon company, I make sure to preserve that equilibrium to the best that I can. One of the best means of preserving is by hiring freelancers.
Creating a balance in your business is much easier when you can easily hire an outside contractor to complete a specific project or task. Creating a well rounded team with alternative work and talent has never been as easy as it is now in the days of the gig economy.
Are there problems with the gig economy?
As this shift from traditional, full-time work to short contracts takes place, it is to be expected that there are going to be some bumps in the road.
Unlike business’s full time employees, freelance workers may have a lot more on their plate for many different clients. Because of this, gig work may not be as efficient as having a permanent employee. Willie Greer spoke to us on this issue:
The best way to utilize this model is to divide work properly and assign it ahead of time, or in a manner which is favorable for both parties. While it is true that the company deserves the right to demand efficient work, it’s also a must for businesses and companies to consider that they are working with a human force and not a robot model. You can only maximize this hybrid model if tasks are properly fractioned, based on their abilities and job descriptions.
In order to properly make use of the freelancing job market, you have to be sure that it is beneficial for both the client, the freelancer, and the company.
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