The 57 million-member freelance workforce in the U.S. could soon get even larger. A new survey by freelance platform Upwork found that 20% of current employees—10 million people—are considering doing freelance work.
The 17% increase in the number of those who prefer being independent contractors would have important implications for business leaders.
Bad And Good News
A larger freelance workforce would mean an increased risk for business leaders of losing talented full-time workers. The good news: corporate executives could have access to an expanded and deeper pool of skilled, talented and highly motivated independent workers, with none of the overhead associated with full-time employees.
“Freelancers are an important talent source for businesses and a growing part of the labor force, according to Adam Ozimek, Upwork’s chief economist. “As more people look for greater flexibility and remote work opportunities, businesses that don’t utilize freelancer talent will miss out on a share of professionals.”
Lessons From Covid Pandemic
Robert Nickell, founder and president of Rocket Station, said, “The pandemic taught the business world two lessons. The first…is that a remote workforce is not only viable but often preferable. The second… is that the average person wants flexibility and freedom in their life.
“As a result, a lot of people have started working in a freelance capacity, either on the side or to replace their traditional job. The genie is out of the bottle and there is no going back at this point, so employers need to be prepared,” he said.
Less Reliance On Overtime
“This means employers may not be able to rely on employees for overtime because of other commitments. It also means they need to develop a pool of freelance contractors to handle overflow work or replace employees who have chosen to go out on their own. Ideally, this should be done ahead of your needs so you can avoid interruptions to your business. Employers who are proactive will thrive as this issue grows, while those who are reactive will struggle,” Nickell said.
Greater Integration With Employees
According to Nickell, “The key is to have a clearly documented workflow process that enables outside freelancers to integrate smoothly. You have to remember that they aren’t familiar with how you do things, and they don’t have someone they can turn to and ask. Putting a process in place helps them execute tasks exactly the way you want them done within your timelines.”
The Coming Brain Drain
Jacob Villa, co-founder and marketing director of School Authority, said “Many of the employees who will turn to freelancing would naturally be the more skilled and experienced ones because they would have more to sell. As a result, companies will experience a brain drain on their top talent. They would then have to choose between internally growing new talent from scratch or finding a way to leverage the growing gig economy. They would also have to pay their full-time employees more in order to stay competitive.”
He said that, “As a business owner, I find embracing the gig economy more appealing. You can grow newbies to become experts after some time but there is no way you can prevent them from shifting into freelance work once they have accumulated enough skills to have an edge in the market. Embracing the gig economy means farming out some of your workload to freelancers while keeping a small core of full-time employees for essential positions.”
Competing For Talent
George Santos is the director of talent delivery and head of marketing at 180 Engineering. He observed that, “The growing trend of employees making it on their own as freelancers rather than salaried workers will undoubtedly have consequences for businesses across a variety of industries. For instance, it may mean competing with other businesses for someone’s time, facing uncertainty when it comes to the manpower at your disposal, and not being able to tackle tasks on short notice.
“However, this dynamic does also introduce numerous benefits for businesses. These include only paying people for the work you actually need them to do, having flexibility when it comes to who you’re working with, and being able to benefit from temporarily seeking the talents of freelancers with a niche skillset,” he noted.
More Benefits And Flexibility
Alison Pearson, the head of HR at the law firm Hal Waldman and Associates, noted that, “… as employee retention reaches an alarming low, companies are losing some of their best talent to the gig economy.
“To compete with the freedoms offered by freelance platforms, companies are going to have to up their benefits and flexibility. Before the pandemic, my company outsourced some work, but very little— most of it was to media marketing companies, which largely managed the minute work like a draft deadline,” she said.
“Now with the surge [in freelancing] my department spends more time than I’d like to admit hiring freelancers, following up, and essentially seeing the job to the end. We’re learning to be flexible, but I’m already thinking we need a new position just for that. We may need to start seeing freelancers as a wholly separate department with its own management, for the most efficient experience,” Pearson observed.
Advice For Business Leaders
“To prepare for the consequences of a more freelancer-dominated workforce, companies should either make [plans] to ensure they maintain their position as the top priority of their most important workers or be prepared to pivot their business strategy,” Santos of 180 Engineering advised.
Build Freelancer Network
“In the former category, offering competitive pay and steady work to an employee who has recently become a freelancer will allow you to stay as their main client. When it comes to pivoting around these changes, companies need to build a network of trusted freelancers who they are comfortable working with,” he advised.
“They also need to prepare for the fact that working against strict deadlines may require more preparation time without as many full-time employees at their disposal, which means business planning needs to be an increased priority,” Santos concluded.
About The Survey
Upwork surveyed 4,000 adults over the age of 18 online between June 14, 2021 and July 16, 2021 and conducted a follow-up survey of an additional 1,000 people.