Freelancers are likely to find themselves in more demand in the future, with 47% of hiring managers more likely to hire independent professionals since the COVID-19 crisis than the were in the future, according to new research by the giant freelance platform Upwork.
“Businesses really find a lot of value in flexible talent in a variety of situations,” said Upwork’s Chief Economist Adam Ozimek. “This is one of those situations. Companies are having to pivot very quickly and to quickly adapt to remote work and having to change their businesses in a variety of ways. Some of them are trying more flexible talent and finding it works, especially in circumstances where you need to move quickly and grow and scale dynamically.”
The data is part of Upwork’s just released Future Workforce Report, which looks at the hiring habits of 1,500 U.S. hiring managers. The survey this year looked at two rounds of data, one from before the COVID-19 crisis—conducted from October to November 2019—and the other after that, in April 2020. The online survey was conducted by independent research firm ClearlyRated.
The two-part survey reflects the stark changes in the employment market since the pandemic. Back in November 2019, the scarcity of talent and access to in-demand skills were the top challenges for hiring managers surveyed by Upwork.
By the time the second round of data was gathered in 2020, 45% of organizations had frozen hiring, and another 39% laid off employees or expected to do so in the future. By that point, on average, employers expected only 53% of laid off employees to be hired back. And only 10% said they increased hiring in response to the pandemic.
It remains to be seen how labor trends will play out, with all 50 states now in various stages of opening back up for business. This recession has been different from the Great Recession in that the global economy has never been restricted in the way it has been during the pandemic, and the changes to the U.S. economy in 2020 were extremely sudden.
The Coronavirus Aid, Relief and Economic Security (CARES) Act has also cushioned the blow of the sudden slowdown for traditional workers, businesses and freelancers, by providing financial aid—though that has been hard for many to access as government agencies have struggled to keep up with demand and the tech infrastructure of some unemployment departments has all but buckled under the strain.
However, past downturns may be a guide. In the last recession, many employers who laid off traditional workers shifted to relying more on temps and freelancers to avoid adding fixed costs to their balance sheets. For people who are freelancing voluntarily, this can be an ideal situation to grow a business, because such workers are in more demand.
Not everyone welcomes this trend, though. In recessions, there is often growth in “involuntary” freelancers—people who would prefer to have a W-2 job with a steady paycheck but have been laid off and have to turn to freelancing for lack of other options.
It’s still unclear if we will see that trend in this recession. The CARES Act has bolstered unemployment to the point that some lower-wage workers who got laid off are actually bringing in more than they earned in their jobs. Also unknown is how quickly employers will call back laid-off workers, if they do so at all.
What we do know is with more than half of the hiring managers saying at least half of their workforce was currently working from home, many are more are inclined to use remote and independent workers in the future.
“There are people turning to freelancers now, especially, to grow quickly and scale quickly,” said Ozimek. “They need to figure out how to turn their company remote overnight. It’s hard to find a full-time employee to do that.”
As the research showed:
- 73% of hiring managers are continuing or increasing their use of independent professionals.
- 56% of hiring managers said working remotely has exceeded their expectations, and 62% said their workforce will be more remote than before COVID-19.
- 32% of hiring managers say remote work has increased productivity
- 59% of hiring managers agree that organizations that aren’t adopting a flexible workforce are falling behind.
For many hiring managers, the business case for using flexible talent seemed clear.
- The top three benefits the managers cited for remote work are no commute, reduction of non-essential meetings, and less distractions in the office.
- 49% of hiring managers pointed to access to highly-skilled talent as the reason to use independent workers in 2020
- 57% of hiring managers engaged independent professionals for ongoing strategic partnerships across multiple channels
- Three quarters of hiring managers are not fully convinced that retraining existing employees is more efficient than engaging independent professionals to gain critical business skills
- 61% of hiring managers agree that bringing in outside skills from independent professionals helps keep current, full-time employees up to date with their skills.
Many employers seem to be developing ongoing relationships with their extended team. The average length of an independent talent engagement is 4.1 months, the survey found.
Most commonly, independent professionals are being hired for roles in writing, creative, web development and software development, with popular projects at the moment taking place in the areas of motion graphics design, front end development and conversion rate optimization.
For freelancers looking for work, marketing themselves independently may be a better route than going through staffing firms, based on the survey’s results.
Among hiring managers, 61% were not fully satisfied with their staffing firms, and 62% said they prefer to engage with independent professionals to get jobs done more quickly. Hiring managers also found that working directly with independent professionals reduced costs (53%), provided greater transparency in the hiring process (49%) and gave access to skills not available locally (49%).
Some employers are turning to online “talent clouds” and marketplaces, such as Upwork, to find freelancers, so it’s likely they will see growth in the future. According to Upwork, more than 30% of the Fortune 500 now source talent on its platform, with clients including Airbnb, Automattic, GE, and Microsoft—and business is on the upswing.
“We’ve see in a big increase in client signups and freelancer signups,” said Ozimek.
The work-from-home trend could also be a boon to smaller cities with lower cost of living and to people who want to live in them, given that companies such as Facebook have said they will now be sourcing remote talent from all over, according to Ozimek.
“The impacts are going to be very big and broad,” he says. “What’s really happening is that more people will have more choice overall. That will be good for everyone.”
Source: Forbes
