The Pros and Cons of the Freelance Economy
With Platforms Acting as HR Managers, There’s a Certain Uncertainty With Hires.
The freelance economy has seen a whole host of changes in the past few years and is now becoming mainstream.
India is one of the largest markets for the gig economy. A study conducted by payment platform Paypal found that a fourth of the global freelancers are in India. The freelance economy is estimated to generate at least $10 billion (₹697 billion) annually.
But not every business is taking the plunge. A survey conducted by consulting company BCG on 6,500 executives revealed that only 40% of respondents see an increase in the use of freelancers in the next 5 years.
Here are the pros and cons of why you should or shouldn’t hire a freelancer:
Hiring a freelancer means you can save on overhead expenses like office equipment and supplies. It also increases your cost-to-work ratio as freelancers are typically paid hourly. This means you don’t have to pay for downtime. There’s also no need to cover benefits like health insurance and mandated bonuses.
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The flexibility it affords
Freelancing is great for short-term projects. Project-based work that requires experts are the bread and butter of gig workers. With a wide array of platforms nowadays, you have unprecedented access to talented individuals across a wide spectrum of disciplines.
They’re highly specialized
Fast Company observes that platforms like Working Not Working, which handpick freelancers, are not only getting bigger but also becoming more elite. As the industry matures, more and more platforms that offer pre-screened freelancing niche professionals are becoming more available – giving companies access to the world’s best talent.
It’s Risky for Both Ends
Deccan Chronicle notes that the trust-deficit between employer and freelancer is one of the factors that hinder companies from outsourcing. The Paypal study mentioned above also found out that all freelancers in the survey had not been paid for their work at least once. Yoss suggests that companies should have a streamlined process for hiring freelancers that includes contracts, invoices, and project briefs. This way, collaboration is easier on both sides. Greater trust is also likely to lead to more work in the future.
With platforms acting as HR managers, there’s a certain uncertainty with hires. Since most freelancers work remotely, there are risks in the speed and quality of service. Since fly-in professionals mostly do other jobs – at least 2 to 3 according to the Paypal survey – they aren’t loyal to one employer and therefore are a risk to project continuity.
While it’s impossible to train freelancers as we hire them on the spot, we should take time to develop good communication and understand the contract. Setting it clear and agreeing upon objectives can ensure both speed and quality of service.
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As the gig economy makes improvements, the risks of hiring freelancers will slowly be mitigated. Niche platforms pose a great leap in doing this. By improving the hiring capabilities of platforms, it becomes more convenient for companies to outsource a portion of their workforce – reaping the benefits of the freelance economy.
Another factor is scale. Freelancers give small and medium businesses space to grow as they provide less costly but more specialized labor. The flexibility affords also permits startups to pivot from business models without restructuring their workforce.