Freelancers, contractors, 1099s—you can pick your favorite buzzword, but they’re all part of the new way work gets done, and businesses are seeing massive savings as a result. It’s part of why more than 80% of large corporations plan to increase their use of flexible workers. And so should you.
Between the access to technology, cost savings, and the desire of 80 to 90% of U.S. employees to telework, employers are rapidly embracing remote options. Research from Global Workplace Analytics suggests that regular “work-at-home” or from a coworking space is growing nearly 10x faster than the rest of the workforce.
But it’s not just the number of remote employees that have skyrocketed; it’s the number of freelancers. According to a study commissioned by the Freelancers Union & Elance-oDesk, there are a staggering 53 million Americans—34% of the U.S. workforce—working as freelancers. Furthermore, this workforce is adding $715 billion annually to the economy through their work.
This trend is showing no signs of stopping. A report by Intuit suggests that by 2020, 40% of the population will be joining the gig economy. While this growth may come as a surprise, it looks like both businesses and freelancers are reaping the benefits.
Adapting to The Market
Because of the interconnectedness of the market, small and large businesses both need to continually set themselves apart with specialized products, niche services, and outstanding branding to satisfy the highly-individualized wants and needs of the modern customer. However, in order to offer a personalized solution, organizations require a customized workforce.
This workforce will include freelancers, remote workers, and according to Intuit, a significant rise in collaborative partnerships between big and small firms—some of which are freelance business owners. The best part is, both parties share some significant benefits.
What the Contingent Workforce offers Big Business
What Business Benefits offers the Contingent Workforce
- Add customer insights
- Contribute innovative practices
- Increase global competitiveness
- Increase marketing agility
- Minimize fixed labor costs
- Distribution power
- Marketing assistance
- Work flexibility
- Rapid growth
- Semi-permanent work
Considering the Benefits
It’s no secret that hiring freelancers can save businesses a healthy amount of money on labor costs. According to the book, Business Law Today, the cost savings from using freelancers rather than employees can be as much as 30% because the business removes the cost of payroll and unemployment taxes, worker’s compensation, or providing health-care benefits.
30% savings should make anyone see dollar signs, but management should beware of hiring “permalancers”—freelancers who stay on a business’s project for years. Since 2010, the IRS has been cracking down on companies that misclassify permanent workers as independent contractors. In the case of 1099 work, you can—and should—build a long-term relationship with great freelancers, but be transparent. If they’ve been working forty hours every week, you’re probably risking an expensive penalty from the IRS.
The real benefits of these savings are compounded by the versatility and specialization that contingent workers offer. Without having to hire full-time employees, you can complete projects that demand niche talent (i.e., logo design, websites, video, etc.). Think of it this way: does it make sense to hire a full-time graphic designer to create a logo or a full-time videographer to make a few commercials? In most cases, probably not.
Moreover, freelancers stay competitive with other businesses—and even other freelancers—by staying ahead of the latest trends in the market as well as offering incredibly high-quality services. By hiring a freelancer, you have access to top-tier talent without long term expense and can quickly switch to a different contractor if a drought occurs in their current talent pool.
Freelancers often add efficiency to your organization by being specialized in a given service. All too often, businesses try to make their employees wear too many hats until there is a major loss in productivity. For example, social media management often gets pawned off on a secretary or “IT guy.”
Here’s another aspect to consider. Technology provides access to streamlined remote working, which means companies can fish outside their geographical talent pools to find freelancers who are better fits for the project than the talent they can find locally.
A More Effective Workforce
For business owners, the math is simple: If an employee is ineffective then money is being wasted. A study by Work Front suggests that only 45% of an employee’s workday was actually spent on primary job duties. Consider the incentive structure, when completed projects equate to earned dollars, it’s in a freelancer’s best interests to work as hard as possible. Salaried staff don’t have that same incentive.
But it’s not just about savings; it’s about profitability. To fully understand the potential of a high-quality freelancer, let’s dive into two Gallup studies. In the first study, researchers found that the employees who spent 60-80% of their time working remotely were the most engaged workers; meaning they were more productive, fostered better work relationships, and they developed more skills related to their job.
In the second study, Gallup found a strong correlation between engagement and profitability. Researchers found that “highly-engaged” employees created 21% greater profitability for the company!
Ok but, ‘these examples talk about employees, not freelancers.’ But remember, freelancers don’t get paid for downtime, and they won’t get hired if their quality is mediocre. It’s in their best interest to work as quickly and effectively as possible.
Looking to Hire Freelancers?
When deciding whether or not to hire a freelancer, consider the task that needs to be completed. For instance, contingent workers often represent the best talent in the industry when it comes to brand design, copywriting, event planning, photography and videography, social media management, and software and web development.
In addition to the type of task, consider the kind of availability each potential freelancer offers. While it’s not necessarily indicative of talent—some freelancers are moonlighting for some extra cash whereas others have made this their full-time gig. If you want someone who is available to meet/communicate during the day, find a full-timer. The Freelancers Union breaks Freelancers into five groups:
- Independent Contractors (“traditional freelancers, project-by-project)
- Moonlighters (professionals w/ jobs who also freelance)
- Diversified workers (multiple sources of income)
- Temporary Workers (their employment is temporary with a single employer/client)
- Freelance Business Owners (business owners with one to five employees)
Your Local Talent Pool
If you’re trying to get great talent for an affordable price, Radius CoWork is packed with members who are highly-qualified independent contractors and remote workers.
Want us to make a connection? Contact us or visit the member’s page to scope out our community. Not from the area? Cool, we’ll still work with you, or you can find a coworking space near you by visiting Cowork.com or simply Googling, “Coworking spaces in my area.”