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August 10th, 2013 at 9:00 am

6 reasons why half of us may soon be freelancers

Shane Snow and his cofounders started Contently in 2010 because they saw the world of journalism shifting. Where newspapers and magazines once provided stable, salaried jobs for reporters, writers and editors, they now largely shun fixed costs for an employment model that relies on an increasing percentage of freelancers.

 

 

Shane Snow: I and many of my fellow graduate students from Columbia J-School had entered the job market as freelancers, and I witnessed dozens of friends lose jobs at newspapers and magazines, only to become freelancers to the same newspapers and magazines. Indeed, statistics now show that about a third of journalists and creative workers are already independent, and that number is only going to increase.

The cost savings and flexibility of a non-salaried workforce often make business sense, but the model requires the workers to suddenly become businesspeople. We wanted to help our writer and editor friends continue doing what they were good at, without having to deal with the stress of finding work, getting paid on time, and marketing themselves on their own. And we were not the only ones who saw the wave coming. Communities for designers and other creative talent have helped these freelancers make it on their own for several years now.

And where it’s clear that the majority of creative people will be freelance before long, all signs point to other jobs one day following suit. This will mean huge things for the domestic and global economy, and it will give an enormous number of people increased flexibility, responsibility, and stress.

You might soon be one of them, a hired gun.

This week, online work marketplace oDesk, whose CEO Gary Swart I quoted in a recent post, announced that it just hit $1 billion in work brokered between businesses—many of them small—and solopreneurs, freelancers who moonlight, and in many cases earn their entire livings, online. (“We think we’re at the tip of the iceberg,” Swart says. “We anticipate 5x growth in five years.”) And in a month, 37 Signals founders David Hansson and Jason Fried will release an anticipated book, Remote, which argues the merits of working via the Internet—something of which their massively successful business has been an early adopter. Clearly, the freelance wave is only growing.

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Whereas I don’t believe the majority of businesses will ever become completely freelance or remote (core staff need to be in-house and work in proximity at any company of a certain size; local service-based businesses need people on site, though those can be freelancers), it’s entirely plausible that more than half of the American workforce will one day log in or show up every day as independent contractors.

Here’s why:

1. Work is no longer a place.

Especially in knowledge work, our office is our computer. Our work is the craft we do, not the place we do it at. “Now, the Internet can bring the work to the worker, rather than the worker to work,” Swart says.

2. The biggest friction point for businesses is finding, vetting, and hiring workers, and online talent exchanges remove that friction.

3. The web lets you find the best person to do anything anywhere.

Would you rather work with someone awesome or someone mediocre? Companies used to not have a choice, if the awesome person lived 3,000 miles away. Now they do.

(One of the use cases we originally started Contently for was to allow The New York Times—or whoever—to not have to fly a reporter to Alaska for a story, but instead find a qualified freelancer who already lived there. Saves money, plus a little carbon!)

4. Millennials will be 75% of the workforce in 11.5 years.

And though we ought not to overgeneralize about them, the Facebook generation are quite comfortable with working via the Internet.

5. The internet opens up long tail specialization.

With access to the wide world of talent, not just the limited pool in a given location, businesses now can get specialists where they once got generalists. (And talent can now specialize and charge more of a premium.) Instead of just a writer, you can get a genomics writer in Quebec or a cloud computing blogger in Kansas.

This chart from oDesk, showing jobs employers are requesting (and specialists are offering) freelancers to perform says it all:

I’d wager that most Robotframe specialists like being freelancers. And they often need to be, due to the volume of work any one employer can give them.

6. The economics can work for both sides.

A freelance model means lower fixed costs for businesses, but those costs are often offset to some degree by higher rates freelancers can charge—especially the good ones. Even if you stay local. A full-time publicist in New York might make $50 an hour as a salaried employee, but a company may only need her services part time. A freelance publicist can charge $100 an hour to come in (or work remotely) for 40 hours a month, and end up making more money herself while saving the company money in absolute terms.

In other words, a freelance model means we don’t need to waste money on extra capacity, and even if we pay more per unit, everyone can win.

I’m, of course, painting a rosier picture than the reality often presents. Much of freelancing and remote work in the past has amounted to outsourcing of cheap overseas labor, and downward price pressure on the workers. Sure, that will make sense for some businesses. But not as many as one might think. What I’m predicting is that for highly skilled jobs where things like domestic labor and face time and communications skills are important to the employer, a freelance model has advantages that will continue to push the market toward independent workers.

And that brings challenges, of course. Freelancers are de-facto entrepreneurs, which means all of us need to learn to think and act like startups.

Surprisingly, a large percentage of the working freelancers on our platform at Contently have day jobs. They supplement their incomes (and in squeezed industries like journalism, that’s increasingly necessary) and either maintain a balance of full-time and freelance work, or eventually ween themselves away from their desk jobs and become fully independent.

It’s an exhilarating feeling, taking your work in your own hands. But freelancing requires an additional skill set they didn’t teach a lot of us in school.

And for many, it’s soon going to be the only option.

Photo credit: SEO Web Content

Via Shane Snow/Linkedin

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