A quote about why freelancing can help us become more productive

Why Is Freelancing Becoming More Popular? Analysing The Shift

Rosie Allabarton

By 2020 freelancers are expected to make up 50% of the full time work force. Why are more us choosing to break away from the nine-to-five?

Opportunities for freelancers are increasing thick and fast. If you were thinking about making that break for freedom, signs from economic experts say now is the time to do it. By the end of 2014 more than 930 million dollars could be earned by freelancers worldwide, with businesses looking more than ever to outsource work to remote independent workers rather than hiring in-house staff. But what has brought about this shift? Is change being directed by the workers themselves, demanding a working life that fits around them? Or from employers who no longer want to take risks on permanent members of staff?

In the last five years alone, the average earnings for freelancers have increased by 50%. Not only are more people willing to hire freelancers, they are willing to pay them the right price for their work as well. As Sara Horowitz of the Freelancer’s Union recently said in an interview with Fortune magazine in April:

People who employ freelancers are starting to realize cheaper’s not always better. I’m hearing that a ton lately. You could do it cheap or you could do it well.

What are the benefits to employers, as well as freelancers that has made this option so much more attractive?

The answer it seems is here: Recent reports show that increasingly employers are looking

1. to cut the cost of expensive employee overheads 2. for flexibility in how long they hire someone for 3. to speed up the time it takes to find the right person and hire them

Employers are turning to freelancers to make savings that are unavoidable with in-house staff. Freelancers can provide niche skills, at a low risk and low cost. Freelancers benefit too: they have the freedom to work flexibly and have a work/life balance that fits around them. They are also able to decide their own hourly rate and focus on work that really interests them, without being snowed under by the drudgery of office life. When a change is being pushed from both sides it’s inevitable that freelancing will only increase in popularity.

Drake Baer from Business Insider said:

Just like Amazon Prime delivers you an inflatable mattress the day before your friends arrive at your house, these online work platforms let businesses — especially small businesses — get the skills they need when they need them, without having to bring someone on full-time.

Who’s leading the way in the freelancing onslaught?

Despite having a reputation for sitting around in their pyjamas all day, freelancers are set to rake it in this year - and that’s after what they’ve spent on coffee. Freelance marketplaces Elance and oDesk have released data that suggests that of those freelancers earning $930 million this year, over half will be based in the US. Currently it is estimated that one in every three Americans work freelance, but by 2020 freelancers are expected to make up 50% of the full time work force.

But it’s not just the American market who are embracing the new wave of freelancers. It seems Europeans have a strong penchant for this flexible lifestyle too as more people give up the 9-5 and work for themselves. A 2012 study by the European Forum of Independent Professionals (EFIP) showed that, between 2000 and 2011, the number of freelancers rose by 82% to 8,569,200, a phenomenal increase in just over a decade. According to the same 2012 study, Italy, Germany and the UK have the largest number of freelancers in Europe.

Australia too has seen huge changes in the freelance market. Why? It could be the appeal of working from the beach, but the acute shortage of skills in the country also plays a part, and has led many businesses to seek workers online. Australian website zdnet.com recently reported on the growing number of Australian businesses who are looking abroad for men and women with IT and programming skills, in particular those with CSS, PHP and HTML. The report, conducted by Elance and oDesk, foresaw even more growth in the Australian freelance market over the next three years, as more companies confirmed in the survey that they already planned to hire more freelancers in the future.

Reasons behind the increasing popularity of hiring freelancers in Australia came down to three things: speed of hiring, flexibility and cost. A clear skills gap in the IT industry - the report showed that over 40% of jobs advertised online by Australian businesses were in tech - is also changing how employers approach the problem, looking beyond their immediate circle to the internet, where they can acquire skilled individuals who might not necessarily live within a stone’s throw of the office car park.

Demanding the moon on a stick - the influence of Gen Y

The change in the market is also believed to be driven by graduates coming out of university and demanding something different from what their parents had, and not just the latest iPhone. Generation Y want flexibility and freedom in their working lives, rather than a linear career in the same industry working 9-5 until they die. It is also a generation that has been brought up online; they shop online, study online, date online, organise and publicize their social lives online, so finding work online, using the internet as a connecting point to employers and working online is the natural next step for graduates after university. And they are in a great position to demand this ideal of flexibility, creativity and variety in their working lives: they are the next generation of talent which employers are desperate to entice. It may sound like today’s graduates want the moon on a stick, but with those in-demand skills under their belts it looks like they’re going to get it.

Is work being taken away from from in-house staff?

The fear that freelancers are taking work away from in-house staff appears to be largely unfounded. Further research from Elance and oDesk shows that more businesses are taking on a ‘hybrid’ model. This approach combines in-house staff who manage the everyday running of the office, with freelancers who are brought in for specific projects. Elance and oDesk’s Australia country manager Kyri Theos said:

Businesses are finding they can use.. freelancers remotely and can be a lot more productive than they would be if they had only onsite staff. So what we’re seeing is a move towards a hybrid model within organisations.

Employers are moving towards hiring ‘generalists’ as in-house workers: people who can adapt to a variety of different tasks or requirements. Freelancers can be brought in to do niche work that isn’t needed all the time, but requires specialist skills when it is. Theos continued:

You can have a group of dedicated onsite staff and you could bring in offsite staff when you need to get specific projects done. What that means for a business is the flexibility to respond to changes in e-market demands and customer preferences so you can be more competitive.

Why is there a sudden shift towards freelancing?

1. To Generation Y the term ‘work’ is not a place, it’s what you do

For Gen Y, work is no longer a place, the office is obsolete and the concept of a traditional “job” feels increasingly anachronistic.

When everything you need is inside your computer, your place of work becomes fluid: it becomes wherever you want it to be. This is a concept Generation Y truly embrace. You could be in a cafe in Paris, in a co-working space with other freelancers, or on a train through snow-topped mountains (internet connection-dependent) and still be able to chat to your client and carry out projects. With direct communication via Skype, Google Hangouts or instant messaging, face-time is becoming a thing of the past and with tools like Google Docs or InvisionApp you can even discuss your work with the client or other freelancers directly on the work itself making each project a truly collaborative one.

Now, the Internet can bring the work to the worker, rather than the worker to work.

Said oDesk CEO Gary Swart.

2. For startups, the rise of the freelancer has been an unexpected blessing

The length of time it takes to find, vet and hire workers can be halved with freelancers. They are also a much smaller financial risk. For startups these savings can be the difference between success and failure.Employers are steadily realizing the savings they can make, both financially and in terms of their time, by hiring people online for specific periods, rather than taking someone on full-time in-house. For startups the benefits of using freelancers cannot be overstated. They can help in the early stages of a company to speed up progress and growth at a rate that would not otherwise be possible. And by hiring freelancers instead of in-house staff, startups can save a lot of money on tax and insurance that would otherwise add a huge burden to a small company.

Within the startup culture, freelancers are an integral component for companies to achieve goals quickly and efficiently while saving money and maintaining equity.

Troy Osinoff, Founder and Executive Director of PD/M.

3.) The internet has made it possible to find exactly who you’re looking for

Companies no longer have to limit themselves to who lives in their town or city. With hiring online firms can find people with the exact skills they’re looking for, and the best at what they do, to complete niche projects from anywhere in the world.

4.) In just under 12 years, Millennials will make up 75% of the work force.

A report by Millenial Branding found that 45% of Millennials will choose workplace flexibility over pay. “A generational change is occurring,” said Dori Albert, crowdsourcing practice manager at Lionbridge Technologies Inc. She believes crowdsourcing to be a key factor for Millennials seeking employment on their own terms. Millenials, defined as those who reached young adulthood in the year 2000, are - in general - more than comfortable working online. This has brought about a shift in the availability of freelancers in every field. It has also changed the expectations of younger employees, who see working freelance not just as a lifestyle option, but as a basic human right.

5.) Specialists over generalists

Firms no longer have to make do with a generalist to do a specific job because of limitations of time or location. Specialists can be available via the internet to work on projects on the other side of the world, meaning employers don’t have to settle for second best anymore.

With so much good news for freelancers, employers need to think long and hard about what they’re offering their employees. Graduates coming out of university now are no longer going to be satisfied with mediocre starting salaries and a retirement package to look forward to in forty years. Students and career changers are looking for a flexible work/life balance and jobs where they can make an impact now. They want to be the best at what they do and they want it on their own terms. The freelance lifestyle can give them the creativity, variety and freedom that traditional employment contracts simply can’t compete with. Employers who have embraced the freelance movement are realising that freelancers are beneficial to business, particularly startups, where high overheads associated with permanent staff can be financially crippling. Freelancers can provide niche skills for specific projects without draining resources or wasting time. We’ll leave the final word with Elance’s Country Manager, DACH, Nicolas Dittberner, who said:

_ “The changing economy, or the freelance economy as it’s been named, is enabling professionals to share their talent, their expertise, and their skills with businesses from around the world. Through online workplaces like Elance.com and oDesk.com, professionals are able to work when and from where they choose and on projects that interest them. Not to mention, working online enables professionals to grow their careers and ultimately their wages by helping them develop and expand their skill sets and online reputations, without the limitations of commuting.” _

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Rosie Allabarton

Rosie Allabarton

Contributer to the CareerFoundry Blog