The new freelance economy and what it means for your business

Reading Time: 8 minutes

The rise of the freelance economy has been a topic of discussion for some time now. The cocktail of improved technology, shifts in pervasive attitudes, and the increasing acceptance of remote work have contributed to making freelancers central to today’s business conversations. Now, every organisation in every industry needs a strategy for the rising gig economy. Not having one could spell disaster: arguably, it’s comparable to ignoring the dawn of the Internet in the 1990s or the mobile revolution in the 2010s.

This new era of work comes with benefits as well as challenges, and it’s important to know what these conditions mean for your business, what changes you should expect and how to engage with employees and freelancers in the future. On the Outvise Insights podcast, freelance advocate and author of the book ‘Gig Mindset’ Paul Estes shared his insights on the freelance economy. 

Estes has over 20 years of experience in big tech and was inspired to advocate for freelancers after hiring one himself. While at Microsoft, he signed the company’s first freelance platform agreement before going on to roll out a programme to facilitate engagement with freelancers across the company. He now provides insights to over 100,000 readers in his newsletter, Gig Economy with Paul Estes, and has articles published in Fast Company, TechCrunch, and Forbes.

In this episode, Estes points out that businesses are increasingly turning to freelancers due to the flexibility and cost savings they offer. He highlights that, with the rise of remote work, location is no longer a barrier for businesses to hire the best talent available. This article will provide an outline of the essential points. For a more detailed look, check out the podcast.

Freelancers in today’s economy

The freelance economy – sometimes referred to as the gig economy – is a growing trend that is changing the way we work. In the past, freelancers were only commonplace in specific industries such as creative arts and writing. However, today’s freelance economy includes a broad range of professionals, from designers and programmers to consultants and managers.

The gig economy is not limited to Uber and Lyft drivers; in fact, it has expanded to include doctors, lawyers, CPAs, and other high-skilled professionals. For instance, the market for telemedicine experienced explosive growth during the COVID-19 pandemic, but even as the world returns to a new normal, it shows no signs of letting up. Now, even doctors are providing services on an ad-hoc, remote basis. There are even platforms popping up for hiring lawyers on-demand, at the touch of a button. This is growing at a stratospheric pace; according to SIA, $34 billion dollars of revenue is being reported by talent platforms every year.

What is the difference between the gig economy and freelancers?

Despite the often interchanged use of the terms, as the freelance economy gains importance, it seems pertinent to make a distinction between the gig and freelance economy before continuing the discussion. These distinctions have always existed, but for our discussion here, let’s nail it down – particularly in light of the highly skilled freelance workforce we just spoke about. 

The gig economy refers to a labour market where temporary or flexible jobs are prevalent. The gig economy can include freelancers, but it also includes workers in traditional employment arrangements, such as part-time workers or those on zero-hours contracts. Platforms like Uber, Lyft, and Airbnb are well-known examples of the gig economy, but there are many other platforms catering to a wide range of industries and professions. 

Freelancers, on the other hand, are self-employed professionals who offer their services to clients on a project-by-project basis. They are not tied to a single employer and have the freedom to choose the projects they work on, the clients they work with, and their own schedule. Freelancers are often highly skilled and experienced in their fields, and they offer their services to businesses of all sizes, from startups to large corporations. 

This confluence of skills and diversity of experience makes freelancers invaluable in the modern economy, offering businesses the flexibility and cost savings they need to compete in today’s fast-paced marketplace.

The benefits of the freelance economy

In light of this distinction, let’s discuss how the freelance economy is changing the game. First up, one of the key benefits: flexibility. Freelancers can work from anywhere in the world and at any time they choose. They can also choose the projects they want to work on and the clients they want to work with. This flexibility is particularly attractive to younger workers who value positive work-life balance and the ability to work remotely.

This, in turn, attracts some of the most promising profiles to the freelance pool. The pandemic has only accelerated the growth of the freelance economy, normalising remote work. As talent are increasingly calling the shots on when, where, and how they work, it’ll be the businesses that adapt to their demands that gain access to the most promising talent. This isn’t only the case for younger professionals; post-pandemic, many tech and telecom industry ‘old guard’ are switching on to the benefits. 

But it’s not all bending to the will of the worker. Businesses are embracing the flexibility and savings that come with hiring freelancers, as it allows them to scale up or down quickly based on their needs. By engaging talent on a freelance basis, they can save them money in the long run. Freelancers do not require benefits or other perks that come with traditional employment arrangements, freeing up budgets to focus on growth.

Certainly, it’s true that businesses often turn to freelancers when facing budget cuts or requests for leaner project management. But as touched on, this isn’t to say quality suffers; in fact, it’s quite the contrary. A properly vetted freelancer can come in with a highly specific skill set tailored for a short-term project and use their knowledge to do more with less.

Subsequently, the traditional mindset of hiring a full-time employee to solve every problem is changing. Companies are realising that freelancers can provide high-quality work at a lower cost. This is particularly useful for project-based initiatives, where businesses can access the most relevant possible experience as and when they need it.

The enablers of the freelance economy

If the freelance economy is opening so many doors, then what are the keys to turn the locks? The primary enabler is undoubtedly technology. With the advent of freelancing marketplaces, video calling, and online project management, it has become easier for freelancers to connect with clients from all over the world.  This rise of remote work has had a significant impact on the growth of the freelance economy. 

Video conferencing tools like Zoom, Slack, and Microsoft Teams have made it possible for freelancers to communicate and collaborate with clients and team members from different parts of the world in real-time. Cloud-based project management tools like Asana, Trello, and Monday.com have made it easier for freelancers to manage projects and stay on top of deadlines.

With the acceptance of remote work following the pandemic, location is no longer a barrier for businesses to hire the best talent available. This has opened up a vast pool of potential clients and projects. These arrangements are particularly attractive to young people, which introduces the second key enabler: generational shifts in work culture.

Younger generations, such as millennials and Generation Z, have grown up in a world where technology is ubiquitous. They are digital natives, comfortable with remote work and online collaboration tools. They understand how to work within the constraints of asynchronous communication and collaboration. These generations value work-life balance and flexibility, and they are not interested in the traditional 9-to-5. As a result, they are more likely to seek out freelance opportunities that allow them to work on their own terms.

In addition, younger generations have witnessed the instability and layoffs that occurred during the 2008 financial crisis and the pandemic. This has led to a desire for greater control over their work and income streams. Freelancing offers the opportunity to diversify income streams and work with multiple clients, reducing the risk of relying on one employer. As younger generations continue to enter the workforce, it is likely that the trend towards freelancing will only continue to grow.

The numbers reflect this: 63% of full-time freelancers said they are happier freelancing than they were in a traditional job, and 79% said they wouldn’t give up freelancing to take a traditional job. These statistics highlight the growing trend of freelancers viewing their work as a long-term career choice rather than a temporary solution and their preference for the flexibility and autonomy that freelancing offers. 

Challenges of the freelance economy

However, this isn’t to say that the outlook is entirely rosy. While the freelance economy offers many benefits, boosted by these particular enablers, it also comes with its own set of challenges. These challenges affect workers and employers alike.

For freelancers themselves, one of the biggest challenges is the lack of job security. Freelancers must constantly look for new projects and clients to stay afloat. This uncertainty can be stressful, which is why client trust and sustained relationships are key. Another challenge is the lack of benefits. Freelancers do not get health insurance, paid time off, or retirement savings plans in their contracts. Freelancers must pay for these benefits out of their own pockets, which can be expensive. 

Coupled with these pressures, the rise in remote work and freelancing has introduced a new boogieman for employers: Quiet quitting. The “quiet quitting” trend refers to a growing phenomenon where employees who are dissatisfied with their jobs or work environments choose to leave their jobs without informing their employers. Instead of giving a traditional two weeks’ notice or openly expressing their dissatisfaction, these employees gradually decrease their work output or simply stop showing up to work altogether.

There are a variety of theories about the root causes of this trend – the fact that it is particularly common in the gig economy can really add fuel to the proverbial “death of office culture” fire. While it’s true that many young people and gig workers don’t expect to stick with a single company for decades (an expectation that is likely to hold true), it’s not necessarily due to a disdain for work in itself. 

So what is the quiet quitting trend in 2023? Workers have spent decades going “above and beyond” their job descriptions, only to discover that they have sacrificed important details like their family, their mental and physical health, and sometimes the entire concept of having personal time and hobbies off-the-clock. That’s why there’s an argument to be made that workers aren’t so much “quiet quitting” in droves as they are simply setting up boundaries. They are putting forward a perfectly reasonable proposition of just doing the work that is described in their job description: the work that their employers have budgeted for them.

Despite these challenges, the freelance economy shows no signs of slowing down. In fact, the freelance economy is projected to continue growing in the coming years. According to a study by Upwork, the freelance workforce is expected to reach 86.5 million by 2027, up from 60 million in 2022.

Crafting a freelancer strategy

Organisations that think they can continue to function in today’s market without leveraging freelance talent are committing errors tantamount to ignoring the existence of the Internet in the 1990s or closing their ears to advice about shifts to mobile in the 2010s. The freelance economy is a game-changing framework for how the world does business. 

More and more knowledgeable professionals are choosing to be freelancers for the dynamism and flexibility the career path brings. In a business environment where talent is the new differentiator, meeting skilled professionals on their terms is key. Businesses that really maximise value from freelance labour are those that are no less dedicated to fostering a positive long-term relationships and work culture. 

Managers and C-suite executives alike need to understand that because they are not tied to any specific employer or location, freelancers may not share the company values or cultural context of the organisation. This is why collaboration and open communication is the cornerstone of any good freelancer strategy. Developing one should be the first item on any forward-thinking HR department’s to-do list.

An integral part of this strategy should be how you source freelancers in the first place. This is where Outvise can help. Our platform of thousands of highly skilled, pre-vetted professionals based all over the world helps you connect with the best of the best in as little as 48 hours. From there, products like the Freelance Management System help you nurture these relationships long-term. 
Take a look at what we can offer. Or, to learn more about how your business can plug into the new freelance economy, listen to the Outvise podcast on Spotify, Google,Apple, and iheartradio.