Whether it’s the Great Resignation driving workers out of the office or a general awakening amongst employees to follow their bliss, the contingent workforce is growing as freelancing becomes an increasingly attractive option for many. According to recent data by Upwork, 20% of the US population — 10 million people are considering a professional move to freelancing work, and 2 million of those individuals have begun freelancing during the last year.
This shift toward the gig economy (which includes Uber drivers and Etsy sellers but also professional freelancers and fractional executives) was already in play before the global pandemic. However, it has accelerated over the past two years. In the pre-pandemic booming job market, individuals were traditionally attracted to freelancing because of its flexibility and variety. However, over the last year, two million more Americans have entered the contingent workforce out of necessity, as employers shed full-time jobs in response to the COVID-19 crisis. In addition, professionals who are initially forced into remote work have come to appreciate the work-from-home lifestyle. In fact, according to the Upwork survey, 34% of remote workers are not excited about returning to the office. And of the two million who began freelancing this year, 73% cited a reluctance to return to the office as the primary driver.
So what does this mean for businesses who rely on a contingent workforce to get the job done?
On one hand, one would assume more freelancers entering the market would mean supply exceeds demand. But demand is very (VERY) high. Over 90% of companies depend on freelancers and plan to increase their use. According to research conducted by Robert Half and Associates, 38% of surveyed companies said they’re hiring more independent contractors, and 45% said freelancers already make up more than half their workforce. And while the US is still in the lead when it comes to freelancer dependency, other parts of the globe such as India, Latin America and China now have a widening talent gap. Tech talent, such as front-end developers, user-experience and digital marketing experts, and system security managers are in the highest demand, with finance and administrative experts also experiencing strong demand. It is also true that not everyone who decides to freelance is cut out to be successful as a freelancer. The A-players are still the A-players and they are in heavy demand. A survey of more than 1900 freelancers across 30 countries conducted by the Agile Talent Collaborative in partnership with the University of Toronto found that 60% or more of freelancers have enough or too much work, report satisfying relationships with clients, say they’ll meet their financial goals, and remain committed to freelancing. So it’s not just a matter of employers choosing freelancers and contingent workers. Freelancers — especially those with successful track records, years of experience and unique talent — are choosing YOU. So how does the employer/contingent worker dynamic have to change to adapt to an economic shift where businesses are more dependent than ever on high-value contractors? It boils down to a few things. First, the employer mindset needs to change from a transactional form of engagement toward a relationship built on mutual value and respect. Second, employers need to adopt a longer-term view and build a contingent workforce talent bench. And finally, in lockstep, the systems and processes for managing non-full-time talent need to evolve to align with this new way of work.
It’s about talent, not transactions
While the contingent worker marketplace has undergone swift and dramatic change in the last year or so, the way employers engage and manage freelancers is still built on an old-school, archaic full-time job business model. Freelancers and their services are either regarded as a transactional commodity by their employers (I need something from you, I get it and you leave), or, freelancers are basically owned body and soul. They are incorporated so completely into the company that they are as close to a full-time employee as it gets. Right now, it seems to be one or the other. But just as the nature of work has evolved quickly into a hybrid model, the employer/contingent worker relationship also needs to evolve in a more hybrid way. First and foremost, employers need to recognize, value and manage external contingent workforce talent in the same way they recognize, value and manage internal talent. In short, if you want high-quality external expertise, you’ve got to pay their rates. Now, the prices freelancers demand for their services sometimes give employers sticker shock. However, what people need to understand is that professional freelancers bring knowledge and speed and industry insights to your team that you just don’t have in your full-times. According to a report by Talent Alpha, more than 67% of enterprises believe they are challenged with an acute shortage of qualified applicants with requisite skills. And close to 60% of enterprises state that the existing workforce lacks technical skills, given the pace of technology change. Contributing factors include rising attrition rates, lack of internal project readiness and a fast-changing skills landscape..
So what does this mean for businesses who rely on a contingent workforce to get the job done?
On one hand, one would assume more freelancers entering the market would mean supply exceeds demand. But demand is very (VERY) high. Over 90% of companies depend on freelancers and plan to increase their use. According to research conducted by Robert Half and Associates, 38% of surveyed companies said they’re hiring more independent contractors, and 45% said freelancers already make up more than half their workforce. And while the US is still in the lead when it comes to freelancer dependency, other parts of the globe such as India, Latin America and China now have a widening talent gap. Tech talent, such as front-end developers, user-experience and digital marketing experts, and system security managers are in the highest demand, with finance and administrative experts also experiencing strong demand. It is also true that not everyone who decides to freelance is cut out to be successful as a freelancer. The A-players are still the A-players and they are in heavy demand. A survey of more than 1900 freelancers across 30 countries conducted by the Agile Talent Collaborative in partnership with the University of Toronto found that 60% or more of freelancers have enough or too much work, report satisfying relationships with clients, say they’ll meet their financial goals, and remain committed to freelancing. So it’s not just a matter of employers choosing freelancers and contingent workers. Freelancers — especially those with successful track records, years of experience and unique talent — are choosing YOU. So how does the employer/contingent worker dynamic have to change to adapt to an economic shift where businesses are more dependent than ever on high-value contractors? It boils down to a few things. First, the employer mindset needs to change from a transactional form of engagement toward a relationship built on mutual value and respect. Second, employers need to adopt a longer-term view and build a contingent workforce talent bench. And finally, in lockstep, the systems and processes for managing non-full-time talent need to evolve to align with this new way of work.
It’s about talent, not transactions
While the contingent worker marketplace has undergone swift and dramatic change in the last year or so, the way employers engage and manage freelancers is still built on an old-school, archaic full-time job business model. Freelancers and their services are either regarded as a transactional commodity by their employers (I need something from you, I get it and you leave), or, freelancers are basically owned body and soul. They are incorporated so completely into the company that they are as close to a full-time employee as it gets. Right now, it seems to be one or the other. But just as the nature of work has evolved quickly into a hybrid model, the employer/contingent worker relationship also needs to evolve in a more hybrid way. First and foremost, employers need to recognize, value and manage external contingent workforce talent in the same way they recognize, value and manage internal talent. In short, if you want high-quality external expertise, you’ve got to pay their rates. Now, the prices freelancers demand for their services sometimes give employers sticker shock. However, what people need to understand is that professional freelancers bring knowledge and speed and industry insights to your team that you just don’t have in your full-times. According to a report by Talent Alpha, more than 67% of enterprises believe they are challenged with an acute shortage of qualified applicants with requisite skills. And close to 60% of enterprises state that the existing workforce lacks technical skills, given the pace of technology change. Contributing factors include rising attrition rates, lack of internal project readiness and a fast-changing skills landscape..
