The rise of e-lancing in the workplace

Keith Holdt, investment director at private equity firm LDC\s Value Enhancement Group explains why freelancing, in particular e-lancing, is having an impact and is set to transform the modern workplace.

Freelancing is sweeping business globally and the trend is as strong in the UK as anywhere. Aided by rapid advances in technology and increases in web and mobile access, people are now able to work from home or other remote locations with the same functionality as if they were in the office.

A report by the Professional Contractors Group (PCG) shows that 1.56 million people work freelance in the UK, a rise of 11.9 per cent since 2008, which accounts for over 80 per cent of the increase since 1998. This illustrates the extent to which freelance work has grown more rapidly in recent years as companies have come under huge economic pressure to cut costs and increase efficiency. Deployed effectively, freelancing is a means of achieving both.

The rise of e-lancing, as it’s called, which is largely centred on online work, is driving more creativity, flexibility and productivity whilst cutting costs and creating a niche for tailored and less benefit-heavy contracts. It is becoming increasingly common amongst smaller businesses in particular as they look to continue to adapt to this tough business climate.

The extent of this global shift in working patterns and the way businesses employ is perhaps best illustrated by the online US freelance employment platform Elance, which values the earnings of its 1,854,466 registered contractors at $627,967,137 to date, based on work done by freelancers connected via their site.

On average, 75,814 jobs are posted on the Elance website per month, with the total earnings of its contractors in 2011 reaching $140 million, up from $20 million in 2006. Freelancer, the UK equivalent, boasts 4,412,420 professionals with a total of £412,304,025 made by contractors from 2,647,209 projects, illustrating how much value there is in successful freelance work as well as the continued growth in outsourcing online projects.

The number of sectors involved and the variety of skills required are constantly increasing and the development of ‘super-intelligent’ technology has led to predictions that computers will obtain the same capacity as the human brain by 2020 giving easy access to large quantities of data and connections between colleagues thousands of miles apart, which will only intensify the e-lance trend.

The rise of the e-lance workforce has led many to speculate (e.g Thomas W. Malone and Robert J. Laubaucher in The Dawn of the Elance Economy) that we could see an end to the rule of large multinational corporations in a fate similar to that suffered by the great film studios of the 1930s and ‘40s. The huge shift in control saw actors, directors and screenwriters become freelance, wrestling the power away from the industrial organizations and returning it to the individual. Such a change in global business could transform the UK economy and the industrial model on which it is based.

How can SMEs manage this change?

  • Appoint Specialist HR managers to take charge of the freelance employees. These managers may need specific training to ensure that they can adapt to the new challenges that they will face without face-to-face interaction.
  • Aim for lean staff structure with reduced number of central, HR, type roles, as some of the former functions of managers will be heavily reduced in the new workplace.
  • Lease more flexible office space. This takes planning but drives down overall costs by replacing larger, more expensive office space.
  • Introduce more adjustable and flexible contracts, ensure e-lancers, who typically don’t have the same promotion and career prospects as full-time staff are compensated through either monetary rewards, such as bonuses, or other tailored services, so they don’t feel disadvantaged.
  • Include core e-lancers on team-building exercises and away days to continue to build loyalty to the firm and retain some degree of identity with the company’s values and culture.
  • Ensure the retention of a strong core team as having a significant number of freelance staff, or having key roles staffed by elancers, may count against a business during its valuation, driving down the potential sale price.

The term ‘freelancing’ was coined by Sir Walter Scott in Ivanhoe (1820), to describe a medieval mercenary whose lance was not sworn to any particular lord’s services. Today’s mercenaries are armed with laptops not lances but are able to provide an ever-increasing range of services to a portfolio of employers, making it easier for small businesses to take advantage of the specialist skills available and helping to enhance growth in what is likely to remain a turbulent economy for some time to come.

See also: Businesses must evolve to capitalise on the freelance economy

Hunter Ruthven

Bernard Williamson

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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