by Dr Jon Younger
Putting together a current and global picture of the freelance revolution isn’t easy. It needs to be assembled. So, when a copy of a recent Harvard study on the future of work landed in my in box from Dorel Iosif, a fellow activist of the freelance revolution, and CEO of Lavaux Global, an Australian consultancy, it seemed prudent to combine several recent reports and studies in a single piece that my readers could find helpful.
So, with thanks to Dorel for the inspiration, I will in future pull together some of the interesting data streams I receive from colleagues and share them as a freelance research cornucopia.
Here’s the first:
Funding is a rising tide that lifts more boats.
Crunchbase recently reported that startups and Unicorns closed out 2020 in a stronger position than the year started with global venture funding up 4% year over year to around $300 billion. While investors backed fewer companies, average deal size rose significantly, lifting the totals.
Freelancers will play a key role in solving the global tech talent gap. Talent Alpha, a Poland based freelance platform, recently completed a freelance study and op-ed focused on global tech talent supply and demand.
According to this analysis, by 2030, major economies will need very sizable additions in technical expertise, a problem that can be filled by redefining the challenge. Why are we limited by geographic boundaries? Think collaboratively and creatively by imagining a flexible, blended, digital talent solution – a freelance enabled talent cloud that operates globally and provides the talent needed remotely:
Canada will need an additional 200,000 tech professionals,
The US shortage will be approximately one million tech professionals,
The Latin America shortage is also one million tech professionals,
Europe will need to close a gap of 700,000,
China will require almost 3 million,
Australia will have to find 200,000 tech experts.
And, India will have a surplus of 1.3 million technical expert, giving it a unique opportunity through tech and remote work to expand its economy and influence, providing a global resource.
The pandemic has accelerated the need for tech freelance expertise. 85% of the companies surveyed in recent McKinsey study have accelerated digitization of key channels – supply chain, customer, employee – and 67% have accelerated automation and AI. In other words, the tech talent gaps forecasted above are likely to be experienced far sooner and more sharply without material acceleration of tech expertise and greater global access to global tech talent. 20% say they will increase their dependence on freelancers overall, and an additional 60% say their dependence is consistent with last year. Interestingly, 70% say they are more interested in on-site than remote freelancers.
The state of freelancing in the EU; Spain is lagging. Malt, a European freelance platform focused on tech, consultancy and creative work, teamed up with BCG to describe the state of freelancing in Europe, particularly Germany, France and Spain. Several of their findings were interesting:
The European Forum of Independent Professionals (EFIP) estimates three million full-time freelancers. Almost two thirds of European freelancers in tech, consulting and creative are male and 40+ in age. And, they are determined. 80% of freelancers are committed to full-time freelancing. Three factors dominate this career choice: autonomy (81%), freedom of choice (76%), and choice of workplace/employer (73%).
Tech and creative/marketing work are the largest categories across the EU, with independent management consulting a lagging third. Consulting among French freelancers (20%), far outweighed Germany (5%) or Spain (6%).
Despite growing acceptance of remote work in Western Europe, freelancers are still primarily urban (and many companies still require freelancers to work on-site).
Daily rates are highest in Germany, lowest in Spain across categories
Professional networks are the most common focus of marketing, with more than two thirds of freelancers depending principally on client and colleague recommendations.
The toughest challenge reported by freelancers was negotiating with clients. Negotiation was a larger challenge for Spanish freelancers (68%) than for French (57%) or German (37%) colleagues
Freelance income is growing for committed, experienced, and client-satisfying freelancers. Payoneer completes an annual survey on freelance income. If you missed this excellent study, here are a few of the key findings from the 2020 study. As you review, keep the Payoneer context in mind: Close to 70% of freelancers were under 35 and 21% were below 25.
The worldwide average hourly rate charged by freelancers has increased by 10% over the past two years to $21 versus $19 and is well above the average hourly salary in most of the countries where the survey respondents are based.
Experience is a major factor in hourly rates. More experienced freelancers earn more than twice as much as the youngest cohort.
Commitment pays off. Full-time freelancers earn a higher hourly rate and are more satisfied with their lifestyle compared to side-giggers.
Freelancers in higher paying fields aren’t always happiest. Administrative freelancers have higher levels of satisfaction while earning a lower average hourly rate while freelancers in multimedia production have low levels of satisfaction, despite being a higher earning field.
Advanced degrees don’t automatically translate into a higher hourly rates. In hiring freelancers, clients pay closer attention to experience, portfolio and the ratings from other clients.
Women’s participation in freelancing continues to gain momentum, but inequality remains a concern. Female freelancers average 84% of men’s earnings across all fields.
Confidence in freelancers has been aided by the global remote work experiment. Upwork recently published a pulse study focused on remote work; one data point was particularly interesting: “There has been a significant increase in the demand for hiring remote freelancers. As businesses become comfortable working remotely, they are also overcoming one of the potential concerns of working with remote freelancer platforms.” Upwork reports that businesses utilizing freelancers pre-pandemic were more likely to have experience with remote work arrangements. This gap is even wider today.
Independent management consulting matures and grows.
Two reports – one from Catalant in the US, and the other from Expertpowerhouse in Germany, point out the growth of the independent management consulting space in 2020. Catalant notes that their top project categories by average project size (USD) were:
Supply chain ($91K)
Project and program management ($77k)
Corporate strategy ($61K)
Operations and process improvement ($60K)
Technology and digital ($60K)
The Expertpowerhouse study provided a perspective on the geographic breadth of support for independent consultants. Like Catalant, Expertpowerhouse offers independent consultants from top firms and an expert network for short consultations. Their data suggests that, on a geographic basis, penetration of independent consultants is as follows:
North America (88%)
Mideast (80%) – this was a surprise until the study offered this quote from a Saudi business leader: “We actively seek to incorporate external expertise to ensure our reforms and economic initiatives are state of the art and incorporate the latest thinking on labor market reforms, tax reforms, smart city developments and private sector growth initiatives.”
Latin America (59%)
Rest of world (81%)
Expertpowerhouse also points out industries where executives expect significant utilization of independent management consulting. The top 5 are:
IT and Telco (73%)
Public Sector (65%)
Trust is a freelance killer.
The growth and durability of the freelance revolution depends on clients’ trust that freelancers are as talented, productive and engaged as full-time employees and, therefore, represent an attractive supplement or alternative. But we live in an increasingly distrusting world, and a report by Gallup points out the important role of trust on both sides of freelancing: confidence in the freelancers and platform expressed as respect and fair treatment, and the confidence of the freelancer in the client and project, which is so important to commitment and high performance. As trust in our institutions, in business, and in our leaders continues to ebb, building a trusting relationship between freelancer, platform and client is critical to success all around.
Finally, about that Harvard Business School report.
As Gopal kindly shared, HBS and BCG teamed up on a report surveying 700 business leaders on the future of work. Anything these excellent organizations do is worth a look, but I was surprised to see some of their numbers. Where appropriate, my differing data or experience is offered in italics:
Since 2009, the number of digital talent platforms has grown from 80 to more than 330 (This number seems very low. Colleagues in the field and my extensive network suggests more like 800-1000 platforms are either operating or in active beta).
More than 30% of business leaders reported using new talent platforms extensively, while another 30% reported medium usage.
Nearly 50% of respondents expect their use of new digital platforms to increase significantly in the future (In multiple studies, 90+ percent of executives expected to significantly increase their use of freelancers and freelance platforms, including partnering on so-called bespoke or “white label” platforms).
Almost 90% of business leaders reported talent platforms would be somewhat or very important to their organization’s future competitive advantage
A full 40% of users reported that accessing highly skilled workers through new digital talent platforms helped improve speed to market, boost productivity, and increase innovation.
Only a handful of companies used new digital talent platforms to improve the performance of current business models and to innovate and create entirely new nimble, talent-light business models of the future (According to platform leaders, this is quickly evolving and freelancers are broadly engaged in both disruptive transformation efforts and improving current operations and product/service performance.)
Many leaders (60%) reported it was “highly” or “somewhat” possible that their core workforce in the future would be much smaller (For example, one large global consulting leader anticipated as much as a reduction of 30% in entry level consultants over time, with young generalists replaced by freelancers offering project specific experience and expertise demanded by client projects.)
Similarly, 60% expected they would increasingly prefer to “rent,” “borrow,” or “share” talent with other companies. (The concept of talent sharing is increasingly of interest. We are also seeing a large number of freelance platforms offering interim management or technical expert roles in addition to more conventional freelancing, and more incidents where companies delegate the development of a prototype product or transformative process to a fully freelance team.)
If your platform has recently completed a survey of freelance clients or independent professionals, or you have found another survey source of interest, send it to my Linkedin. Who knows, it might be part of the next research cornucopia!
Viva la revolution!
This article was originally published in Forbes.
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