October 2, 2023 Checking in With the Freelance Economy: What Trends in the Labor Market Mean for the Future of Gig Work
We’re in a bit of a weird moment in the trajectory of the freelance economy. After almost unbridled growth spurred by COVID and remote work, 2023 has brought new challenges. Inflation, reduced budgets, layoffs, and lukewarm return-to-office policies have both workers and employers feeling wary. While there are more freelancers than ever, the freelance economy itself is in flux. This raises the question, is the freelance economy cyclical, or will companies continue turning to freelancers?
“We believe that the freelance economy is not cyclical”
The big picture
The freelance economy is only one part of the larger job market. As such, its evolution will reflect shifts in the greater employment ecosystem, as well as global changes in demographics, social forces, and technological advancements. We believe that the freelance economy is not cyclical. In fact, 33% of work is being performed by external workers. A big part of what’s going on right now has to do with the employer side of the equation—companies are recalibrating their strategy and usage of contingent workers. What kind of work are they best suited to do? How do they fit into the whole? Without systems in place, they are limited in maximally leveraging freelancers as a resource.
Recruiting and hiring are changing
According to a recent U.S. Labor Market Report, employers are increasingly favoring candidates with less experience. While that may be a function of cost cutting or tightening labor pools, it points to something else: the definition of what makes “a good candidate” is changing, too. As the freelance market has grown, companies are realizing they can tap into skills and expertise all over the world. And with circumstances and technology changing as fast as they are, companies know they must be able to move fast and continually innovate to be successful. Freelancers are uniquely poised to help companies do this—pivoting to meet the needs of individual clients and contexts is part of their work.
For this reason, the versatility and range of freelancers offer a strategic advantage to companies in uncertain times. Experience isn’t everything, and people can pick up skills quickly, especially if they’re asking the right questions.
From small tasks to fractional management
One important shift we’re seeing in the freelance market right now is from small, gig based work to more expansive roles. C-suite titles such as “Fractional CMO” and “Fractional CFO” proliferate on LinkedIn as organizations see that important strategic work does not require 80 hours per week of singular focus. Collaboration tools like Slack, Lattice, Asana, Figma, and countless others facilitate asynchronous work between blended teams of FTEs and part time workers. Increasingly, freelancers are being treated as equal and valued contributors to their fully employed counterparts, and the distinction is flattening to mean little about how work gets done.
Change is constant
Other important shifts in the freelance landscape include platforms niching down, while at the same time scaling up matches from 1:1 to 1:many. This points to a promising shift in how companies are thinking about their use of independent talent—changing from ad hoc usage to fill one-off gaps to a more strategic and far-reaching engagement. As the enterprise increases their embrace of outside experts and freelancers, we’re also witnessing platforms and services popping up that smooth the process.
Freelancing is here to stay
The most basic reason the freelance economy isn’t going anywhere? Companies are still struggling to find talent. Finding and retaining qualified candidates remains a major concern and potential threat to companies’ success. Organizations need good people. More and more good people are choosing to freelance. The structure and arrangement of that exchange of value may be changing, but the essential ingredients are the same. As long as there’s a need for talent, the freelance economy will grow to meet it.