Is the “Great Resignation” we’re reading so much about the start of the next seismic shift in the future of work as we see the increase and mainstreaming of professional freelancer and contractor employees determined to have the flexibility and work/life balance they want, after furlough, redundancies, overwork and burnout struck during COVID-19 lockdowns?
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If so, it looks like tech startups and their venture capital supporters are ready to make it a reality. Although freelancing is globally a $4.5 trillion economy, it’s incredible how little technology has impacted its inner workings, until now.
A massive talent and economic opportunity
When we think about freelance work, often we conjure up images of laptops in coffee shops, paper diaries and pens, and stumbling through complicated and time-consuming self-assessment tax filing. The news has also been dominated by what’s known as the “gig economy” with generally lower-paid and more manual roles done on a flexible basis, enabled by apps like Uber and Deliveroo.
Yet few realize that the solopreneur industry is not much smaller than the enterprise sector–and twice the size of India’s GDP—but it has yet to see its own SAPs or Oracles.
This is rapidly changing with the emergence of a dynamic freelance-tech industry attracting strong interest from venture capital, who are pouring their cash into what looks like the next future work trend: freelancing and contracting as the next “new normal.”
According to a recent survey of 800 business executives globally by McKinsey, a full 70 percent plan to increase their dependence on on-site freelancers, and 22 percent plan greater hiring of remote freelancers.
Europe alone has 60 million solopreneurs: either single-person companies or sole proprietors. About 25 percent to 30 percent of them are knowledge-based professionals. Unsurprisingly, those sorts of roles were remarkably little affected by the COVID-19 pandemic, as businesses pivoted to new ways of working, with demand for skilled talent in IT, marketing, administration, finance, design and communication remaining high as securing customers and revenue became a life-or-death situation.
In fact, our company, one of the largest freelancer platforms in Europe, saw a 28 percent year-on-year increase in income from its active members in 2021, from 9,200 euros to 11,800 euros a month; i.e. freelancers using the Xolo platform saw their monthly income increase during the global pandemic.
How will tech unleash the next generation of freelance entrepreneurs?
A typical solopreneur is concerned about two main issues: finding customers and running the business. If the former is largely solved by a reasonably advanced network of freelance marketplaces and word of mouth, the latter has been barely touched by technological innovation, until now.
Xolo estimates that only 3 percent to 4 percent of European freelancers use online tools specifically tailored for their needs. Business administration done the old way is time-consuming, with an average freelancer spending about 15 hours per month on it. A lot of time is spent chasing clients for payment, for example, which eats into one’s personal life and time that could be used doing billable work or business development.
In the last five or six years, a new freelance-tech industry has emerged. Its ambitious goal is to fix the problems faced by freelancers running their one-person businesses by creating a technological infrastructure that releases the creative power of hundreds of millions of solo entrepreneurs. SaaS platforms, automation, better communication and collaboration tools help with invoicing, and marketplaces to look for work are now flourishing.
Freelancers and contractors are the future of work
If we’re going to see an increase and mainstreaming of freelancer and contractor employees in the future, the other side of the fence—the businesses doing the hiring—needs their own set of tools to manage the more rapid and flexible hiring and onboarding of more freelancers than they’ve ever had before.
This isn’t a new trend, but one that has been given a new lease on life and added appeal following the past 18 months of disruption to our ways of working. For example, Fortune and Bloomberg reported that in 2018, contractors outnumbered employees at Google for the first time in the company’s history.
Businesses will need the tools to manage and support a much more dynamic workforce. Traditional platforms and processes used by HR, payroll and accounts payable will need to adapt and new platforms found to manage a larger freelance workforce at scale. Ideally, a platform focused on one area of the business-freelancer relationship will provide a portal for both sides, making the whole process a lot easier and quicker, without the need for SaaS sprawl.
A greater use of freelancers and contractors means businesses can tap into needed skills and experience, keeping overall staff headcount lean, and with it, reduced employee costs around pensions, insurance, taxes and different types of paid leave. That approach to a leaner, dynamic workforce frees up cash to invest elsewhere in a business, and will be seen favorably by current and potential investors.
Allan Martinson is the CEO of Xolo, Europe’s leading platform for solopreneurs. He is a tech executive, entrepreneur and investor with a career spanning over 30 years and many successful tech and media companies. Prior to joining Xolo, Martinson was COO of Starship Technologies, the self-driving delivery robots business. He has lived and built businesses in Estonia, across the Baltic states, U.S., U.K., Germany, Ukraine and Russia.
Illustration: Dom Guzman
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