Gig Economy

Enterprise Use of Freelancers: Data & Future Trends

by

Gary McCauley

|

December 11, 2018

Freelancers have become a crucial part of business models around the world and are now a main source within establishing a workforce. Contingent workforce solutions have become increasingly popular as business owners have sought to find ways to reduce costs, while continuing to grow and establish their brand. A contingent workforce is the ultimate possibility, providing business owners a way to open new avenues for a company while keeping spending in check.

In 2017, 55 million people, roughly 35% of the US workforce were completing some form of freelance work in 2016. Experts were right when they suggested this number would continue to climb. The Intuit 2020 report suggests that within a few years, freelance work will become the new status quo, with traditional employment being the minority. Intuit also reported that 80% of large companies claimed they would be increasing their numbers of flexible workers and by 40% freelancers were expected to make up more than 40% of the US workforce. This is not a localized trend either, this type of change within the workforce is being seen globally.

Research is being conducted to continue investigating this new development and how it will impact businesses and employees in the future.

Freelancers Are Being Used More in All Enterprises

It was once believed that medium and large sized enterprises were not as likely to rely on contingent workforce management compared to small companies. This might be because small companies typically have a larger need to expand their resources. However, a recent 2017 study revealed that the reality is quite different. This study suggested that larger companies are likely to rely on freelancers, more than 50% of the managers surveyed believed that agile and dynamic team structures would become the new norm in the future. These managers reported that nearly 60% of departments in their companies were using a contingent workforce solution.

The report also highlighted the similarity between the popularity levels for freelancers at large and small enterprises. Over the next ten years, 46% of managers at large businesses stated that they would be increasing their use of freelancers compared with 56% of managers at smaller companies.

Reasons for This Growth

Many analysts have their own ideas about why this change is occurring. When surveyed, managers provided the main reason as a shortage of talent. This perhaps fits into the idea that to survive on the market, enterprises do not need a team with a massive variety of different skills. This is harder to achieve with a permanent or fixed workforce. Managers provided various reasons for their own reliance on freelancers including a higher level of cost efficiency and an easier option to find the talent that they wanted. They also suggested that they were drawn to an increased level of flexibility that this setup provided them with, when hiring new workers for their company.

Managers further reported that there was a greater demand for freelancers and the majority also provided evidence that the perception of freelancers is becoming positive.

Increased Reliance on Freelancers

As well as an increased level of demand for contingent workforce solutions in the future, the study also suggested that companies are already relying on freelancers in their business model. Of those interviewed, 47% of managers suggested that they were currently using freelancers while 39% stated they would be using more through the next year. Interestingly, very few - just 16% - suggested that they would be reducing their numbers. This suggests that these managers are pleased with the benefits freelancers are bringing to their business.

Long Term Relationships

You might think that businesses are only using freelancers as a quick one-time solution. According to reports however, this is no longer the case. While freelancers were once seen as a temporary option, 40% of managers suggested that they were forming ongoing relationships with freelancers across multiple projects, compared to 18% who were using a one-time, project-based solution. This provides further evidence that business managers are utilizing freelancers as a major part of their workforce rather than a stop-gap solution.

Additionally, 84% of managers also suggested that they would consider using freelancers for a temp position, rather than a replacement from a work agency. This does suggest that the perception of freelancers are changing as in earlier years, managers would have been dependent on temp workers. The main reason for this shift to a freelancer economy versus temp workers, was the access to specialized skills that were not available on the market locally. 29 % of other managers reported that reduced costs was a strong factor here and another 20% were eager to gain more control over the vetting process.

Growth in Digital Platforms

This new level of demand from medium and large business enterprises will lead to a further need and reliance on digital platforms. These digital platforms provide managers and easy way to access and hire workers across a variety of different industries. There are now platforms for specialist sectors where companies can hire trained and qualified workers. That is crucial, because one of the main reasons for managers hiring freelancers was the ability to access individuals with advanced degrees and unique skills sets. With digital platforms, firms can do this in minutes, so this is certainly going to be a large part of the business model in the future.

Using these on-demand freelancer platforms, managers will be able to provide better results and rapid responses that clients demand from companies.

Ultimately, it seems that freelancing and contingent workforce management systems are becoming a main part of the company model for medium and large business enterprises. In the referenced study, more than half of the managers suggested freelance use has been growing for a variety of reasons and that it has even replaced other worker resources. It is no surprise then, that experts expect the levels of freelancers to increase over the next few years, eventually outnumbering the level of permanent employees.

Are you interested in gaining the benefits of contingent workforce solutions in your enterprise? Join the majority of enterprise managers and tap into the future by hiring freelance engineers today!

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