The times when people were tied to a single, 9-5 job their entire career doesn’t seem that far away. The traditional workplace has many disadvantages that are causing serious dysfunctions in labor markets around the world. Issues like high unemployment rate and unhappy workers are still very present in today’s economies. But the workforce has significantly changed – especially over the last decade.
The number of freelancers, contractors and part-time workers is constantly increasing, and it is not uncommon for people to change jobs or work with more than one client at the same time. This increased flexibility allows people to manage their own working time, find jobs more quickly and apply for positions that better fit their skills and goals.
By 2020, 60 million Americans – or more than 40% of the total US workforce will be freelancers. But how will this affect companies? Some say that freelancing will bring revolutionary changes in the way companies hire people and do business. And here’s how.
Businesses have expenses beyond their employee’s salary such as insurance, bonuses, training and retirement savings plans. This means although one full time worker gets $50,000 salary per year, the company actually needs to spend maybe $65,000 for his service. This isn’t the most accurate approximation you’ve seen, but it clearly illustrates company’s additional expenses for having full time workers. Freelancers on the other hand, are short-term contractors that companies can hire for a given task, and keep them around until there is work that needs to be done. This releases companies from having to pay the extra costs related to full time hires – which results in long-term savings (assuming the employee is going to work for a long time).
Other than long-term benefits, freelancers can help scalable businesses to be more adjustable on work demand. This means that companies can hire people on large projects when more personnel is needed, but also cut back if there isn’t much work. This isn’t the case with full time workers – as their costs are fixed on your expense tab. You can use their full potential every single day of the week or not, but you will have to stick to the original contract.
Normally, big companies are well aware of how much business comes in and how much workforce is needed. Even if work slows down at some point, they have measures to cut back on expenses. But guess who will benefit the most from hiring freelancers? Startups of course! As these companies mostly work on limited budget, they can’t allow to hire too much full time employees, and hope to constantly get clients. There is too much risk involved. That’s why freelancers are the perfect choice for startups to become more competitive on the market and provide additional services.
The gig economy is constantly growing as new platforms are trying to provide the ultimate client-freelancer experience. Although still on the rise, millions of people are already using the services of online talent marketplaces. This is an amazing opportunity for companies to outsource work and get qualified people for much cheaper rates in low-cost markets. Expanding company’s activities oversees was once considered as a large investment and lot of work – but then freelance showed up. From platforms that host all types of freelance services like Fiverr, to specialized ones like Valoso (a video editing platform), it is now easier than ever to connect and cooperate with people all around the world.
Once you hire someone, you pretty much owe him a monthly paycheck for as long as he’s under the contract. The interview process is the only place where companies can see how qualified the person is, and whether he’ll fit into the company. But sometimes, people make the wrong hiring decisions. If the worker isn’t performing as expected, they still need to pay him the agreed salary. You see where this is going, and how limiting the traditional workspace can be. The only way to end the working relationship with the under-performing employee is to pay him a severance package – which is a costly solution.
By hiring freelancers, companies can easily overcome this issue and form stronger, more transparent relationships. Clients can set targets, project goals and other factors on which they can measure worker’s performance and send payouts.
Freelance platforms embrace transparency as much as possible by providing accurate and detailed information about their users. This is always a great, honest way of doing business that lacks in the traditional workplace. Companies can hire people that fit their cultures, goals and requirements while freelancers can openly choose who to work with. The end result is more productive and effective business relationship.
The Freelance Revolution
As you can see, freelance introduces some practices that simply cannot be implemented in a traditional working environment. Companies can be more flexible and cut down on their expenses while at the same time, be able to fully satisfy the needs of their customers. Although freelancing faces some issues like stability, it can most certainly become a viable career path for many professionals who want to be independent and work by their own rules.
Stefan is a technology writer and WordPress developer. He is a graduate, with degree in Business Informatics (BI). Stefan enjoys writing about technology, online marketing and SEO. Big supporter of open-source, and GNU Linux enthusiast. You can find him at Valoso, a freelance video service.