Future of Work– Sharp Rise of On-Demand Freelance Workers: Invisible Workers that Reshape Business, Work…

The sharp rise of the ‘on-demand freelance worker model’ is creating a massive impact on organizations; it’s a fast growing sector of the economy… but it’s invisible, hiding under the traditional staffing models… The growing trend among organizations to tap into a flexible workforce, i.e.; independent contractors, freelance workers, individual consultants… continue to make-up an increasingly, significant proportion of the overall workforce.

Current estimates put the number of freelance workers at 53 million, or about 33% of the U.S. workforce– a number that is expected to grow to 50% by 2020. According to U. S. Census Bureau’s Annual Report on Non-Employer Business; around 75% of total U.S. business (i.e., about 22.5 million businesses across the country) do not have any paid employees, which means that large number of people are working for themselves… This number is up 1.7%. These on-demand freelance businesses reported total revenues of about $990 billion, 4.1% increase. Hence, the independent freelance workers economy just keeps growing, it’s a massive movement hiding in plain sight…

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Experts predict that the growth of these workers is only going to expand… According to Richard Greenwald; these workers go by many names, e.g.; freelancers, contractors, gig-ers, consultants… but they cannot be ignored. These contingent workers have grown in size and importance in the past decade… they are not a generational anomaly or a stage for the post-collegiate generation. They’re a new economic reality and a great force…

According to Tina Brown; these are not just workers jump from project/job/gig to the next in an endless race, but rather they are reinventing a new business sensibility in the process. Freelancers are creating a new social compact. They do so, however, without the supports that traditional workers take for granted, e.g.; they are not covered by most employment laws, and for most part, they have not joined together collectively to agitate for change. They are completely on their own, flying solo, and that has huge implications for business, workplaces, workers…

In the article What Rise Of Freelance Economy Really Means For Business by Jeff Wald and Jeffrey Leventhal write: One of the most exciting discussions about the workforce today focuses on the rise of the freelance worker economy. As more workers pursue the flexibility of independent carriers and more companies pursue an on-demand workforce to scale labor efficiently, the industry is buzzing about what the freelance economy will mean for the labor force overall.

While many have focused on online staffing and its impact on the traditional staffing model, the real focus of the discussion should instead be on the shift in the human capital paradigm to include the emergence of freelancers… Moreover, the on-demand freelance workers’ work-streams that are not managed by staffing firms become a critical part of comprehensive talent management strategy, and this is where real disruption, innovation in the worker economy is happening…

Today, freelancers and temps (also known as contingent labor) make up nearly 15% of the workforce, and by 2020 it’s expected to be nearly 20%. Freelancers alone are expected to grow from about 7% to 16% of the workforce… This upward trend tells us three things: First, freelance labor is on the rise and you should expect it to continue. Second, the growth in freelance indicates that organizations are embracing work arrangements other than just staff employees. Third, business will need new tools and process in order to manage the freelancer life-cycle…

The workforce of the future must accommodate freelancers in order to compete– they will also need the technology, tools, processes to manage it. Trends for the next 2-4 years:

  • Independent contractor population continuing to grow as millennials face tough job prospects, and often choose more flexibility in their work/life balance…
  • Retirees staying engaged in the workforce as freelancers with special skills…
  • Independent contractor usage will continue to grow as companies adapt to the changing workforce, and the benefits of a variable workers, e.g., efficiency in costs…
  • Companies will view freelancers as the third prong of a workforce approach…

In the article Freelance Workers Reshape Companies and Jobs by Paul Davidson writes: Across the nation, many companies are shifting to a more flexible workforce populated by temporary workers, contractors, freelancers… loosening the bond between business and employees. Companies that are aiming to become more nimble and cut costs, want to boost or cut staffing to meet fluctuating demand or deploy workers with specialized skills for short-term projects… The trend is subtly reshaping the workforce in which business traditionally employed workers through good times and bad…

According to Daniel Pink; the basic traditional bargain at the center of work used to be, employees gave loyalty and the organization gave security, but now that bargain is kaput… The expanding use of contract workers, in fact, is partly fueled by workers, themselves, who see more flexibility and even security as an alternative work arrangements…

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In the article How An Exploding Freelance Economy Will Drive Change by mysay writes: The freelance worker economy continued to dominate the discussion about the way you work. One in three U.S. workers (roughly 42 million) are estimated as freelancers. By 2020, freelancers are expected to make up 50% of the full-time workforce. Independent work is becoming more common across all generations and the vast majority plan to remain independent in the coming year…

The freelance economy is exploding at exactly the same moment that companies are undergoing a major shift in how they hire. Talent is moving from a fixed cost to a variable cost, with companies staffing-up and down as needed. Organizations have the ability to quickly on-board hundreds or thousands of freelance workers– provided they have the tools and systems in place to manage them. The booming online staffing industry is also accelerating the growth of the freelance worker economy.

This $1 billion industry provides a valuable alternative to companies that are leveraging a contingent workforce. In fact, the ‘Staffing Industry Association’ saw the online staffing market grow 60% last year and no signs of that growth slowing down…

In the article Counting America’s Freelance, Ahem, ‘Self-Employed’ Workers by Patrick Clark writes: The rise of the freelance worker economy gets plenty of attention. Getting a handle on how many U.S. workers fit into this bucket is harder than you’d think… An old Intuit survey projected that more than 40% of U.S. workforce would be contingent workers by 2020.

More recently, a lobbying group called ‘It’s My Business’ estimated there are 10.3 million independent contractors working in U.S. ‘Freelancers Union’, meanwhile, says 42 million workers, or one-third of U.S. workforce, are already freelancers– and makes a habit of admonishing ‘Bureau of Labor Statistics’ for failing to acknowledge it…

‘MBO Partners’ publishes an annual report on independent workers in U.S., and it relies on two surveys of 2,000 people each, and the study estimated there are 17.7 million independent workers, defined as– ‘people who work at least 15 hours a week in non-traditional, non-permanent’ jobs. That was good for about 8% of workers aged 21 or older, with combined income of $1.2 trillion.

One in four independent workers hired other independents, and they spent $96 billion to pay contractors, according to the study. The report also offered interesting tidbits, e.g.: 36% of independent workers polled consider themselves ‘self-employed’, compared with 13% who said they were ‘business owners’, and 4% who were identified as ‘freelancers’.

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The on-demand freelance worker model for many workers is the ‘future of work’: These workers are available at a moment’s notice and many with special skills… it’s reshaping the nature of organizations and the structure of careers… The idea was that a good job is being an employee of a particular company; which is the legacy of the period of time that stretched from about 1880 to 1980:

During these years many companies were created from emergence of the ‘Industrial Revolution’ that brought armies of workers together, often under a single roof. In the initial stages, this was step-down for many independent artisans who could no longer compete with machine-made goods; whereas it was step-up for day-workers who survived by selling their labor to ‘job’ masters. These very early companies introduced a new stability into work, a structure which differentiated specific jobs from one another, thus providing defined roles for workers and career paths.

Many of these jobs were unionized and unions fought to improve member benefits. Governments eventually built stable employment along these lines into heart of welfare legislation. And, large class of white-collar workers enjoyed secure jobs administering this employee-based economy.

The traditional way of working still reigns, but more organizations are turning to other work arrangements, especially large enterprises that can capture significant business value from deploying a flexible, non-employee workforce… there are a greater number of enterprises that turn to independent workers more than ever before… this new way of working are providing real benefits for both employers and workers…

But, what sort of world will on-demand freelance worker model create? Pessimists worry that everyone will be reduced to status of 19th-Century workers crowded on street corners waiting to be hired by contractors.  While boosters maintain that it ushers in a world where everybody can control their own lives, doing the work they want, when they want…

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The on-demand freelance way of working is not likely to be a good experience for people who value stability more than flexibility… whereas, it’s good for outsiders, insurgents, entrepreneurs… trying to create new companies… This way of work requires workers to keep their formal skills up to date, rather than relying on the firm to train them (or push them up the corporate ladder).

This means accepting challenging assignments, or if they are locked in a more routine job, taking responsibility for educating themselves. Also, freelance workers must learn how to drum-up new business and make decisions between spending and investment… At same time, governments must rethink institutions that were designed in an era when freelance workers were rarity… also encourage schools to produce self-reliant workers rather than just loyal employees. Hence, trend of the future of work, it seems, comes with the tagline; everyone is their own business, company…