7 Essential Insights into the IT Freelance Economy
The 21st century has witnessed the meteoric rise of the freelance economy. With more professionals opting for flexible work schedules and businesses seeking diverse talents, the freelance world has drastically evolved. Taking a peek into this ecosystem gives a comprehensive understanding of its intricacies. Plamen Tsekov, GigsRemote's co-founder unravels the insights, originally presented in his Forbes Technology Council article, diving deep into the freelance realm.
The Freelance Landscape Today
The Rise and Rise of Freelancers
The modern age is often termed the "Gig Economy Era." The shift from traditional employment to freelancing isn’t just a fad but a reflection of a changing workforce. As per the data, 35% of the U.S. workforce now freelances—a number that’s been steadily climbing.
Expanding Freelancing into Multiple IT Roles
It isn't just designers, copywriters, or niche consultants doing freelance. We've noticed all spectrum of roles from software delivery is nowadays covered by freelancers. This expansion indicates an understanding of the value freelancers bring to the table.
Why Companies Opt for Freelancers
Faster, Quality, Budget-Friendly Solutions
With no overhead costs like insurance and office spaces, freelancers offer competitive rates that are often more budget-friendly than hiring full-time employees. One estimate calculates that the annual expenses for hiring a full-time labor-contract software engineer in the United States can be between $150,000 to $198,000, however, a freelance senior software engineer costs anywhere between $107,000 to $179,000.Often time it's considered that with half-time engagements you get half the productivity. On the contrary, usually senior freelancers, engaged in part-time work are laser-focused and are extra motivated, having a side gig. Whether they do it for money, a more interesting technology/project, or simply to apply their knowledge elsewhere, they understand that side gigs can, in the long run, turn into their next primary work and push to the max.
Access to a High-Quality Talent Pool
According to a study by Atlassian, 42% of freelancers in Central America and 41% in the Middle East navigate between a full-time job and freelance gigs. This secondary part-time market is filled with great specialists, who would rarely change their full-time job, however, they will be happy to help and apply their competencies through a gig relationship. On the other side, very senior specialists are generally hard to attract in a labor contract, so naturally they turn into freelancing.
Navigating the Freelance Economy: Tips for Businesses
Ad-hoc Increase of CapacityProjects have peaks and downs. In times of peak load often the full-time team can become stressed and overburned. Engaging with freelancers for specific tasks eases-up such periods
One of the best practices applied is to have a dual workforce strategy, with a core team of 50% to 70% fully engaged employees on a labor contract and an elastic capacity, scaling as per the project needs. Especially with seasonal projects and long-run support, this allows for focus on key activities, driving the company's competitive edge, and freelance assistance with the non-core activities, which are still needed for good results.
Clear Communication is Key
One of the top challenges faced is the potential for miscommunication. Setting clear expectations and maintaining transparency can save a lot of headaches later on. When using freelancers it is a must to have well-defined objectives and outcomes, communicate them in a timely manner, and follow up on performance.
Using Freelance Platforms
There are specialized platforms, where you can find reliable freelancers. However, it's essential to do your due diligence to find the best fit, depending on your focus - quality versus price and seniority, geographical focus, etc. There are platforms with "trial periods", where you can assess freelancers for short periods and decide how to proceed further. Generally, the freelance model is set, so you can have the ability to test before you decide on a long-term contract.
What is the freelance economy?
The freelance economy often termed the gig economy, comprises individuals who are self-employed and not necessarily committed to a long-term labor contract. They offer their services on a project-by-project basis. However, there are freelancers, who simply prefer the self-employed way of work, but not on a labor contract.
How big is the freelance market?
According to a report from Mastercard, the freelance market will increase by 17% to nearly $455 billion, and as per Statista data, about 50% of the workforce will be freelancing in the U.S. by 2027. 70.4 million people are freelancing currently, and it is estimated to reach 79.6 million by 2025 and 90.1 million by 2028.
Why are businesses moving towards hiring freelancers?
Businesses find freelancers cost-effective, flexible, and they provide access to a diverse talent pool globally. With the right processes and management in place, companies can achieve higher output and have greater team velocity and scalability with freelancers.