Empowering the Freelance Economy

Competition heats up amongst freelancers

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With almost 35% of the global workforce self-identifying as freelance talent, the freelance economy is bound to expand greatly in the coming years. This is good news for freelance talent and for companies who require their services. It also means competition is heating up amongst freelancers.

Skilled professionals are seeking out freelance work for a number of reasons: improved work-life balance, increased control over their schedules, and reliability and stability in the face of uncertainty. Some 75% of freelancers stated in a recent survey that their wages remained stable at a time when traditional jobs were suffering from redundancies, permanent closures, and loss of employment.

In 2020, the United States saw 59 million people freelancing—just over one third, or 36%, of the entire US population, according to an annual trends report by Voices, an online audio services marketplace hosting 2 million freelancers.

In India, there was a 46% increase in new freelancers between Q1 and Q2 of 2020 and a wave of new freelancers in Pakistan contributing to a 47% increase in monthly freelance revenue in the month of June 2020 alone.

The 2021 figures could see global freelancer numbers rise further as many professionals joined the Great Resignation or “The Big Quit”.

How often do companies rely on freelancers?

According to Voices’ research, 31% of companies surveyed said that they are hiring freelance talent once per week, 29% hire once per quarter, and 26% hire once per month.

End-hirers including CEOs, Founders, Vice Presidents, Directors, Managers, and Editors that participated in the survey agreed that remote and freelance working is the way of the future.

Mike Funkhouser, CEO Small Business Mentor

“Freelancers have made remote work infinitely easier for many companies,” says Mike Funkhouser, CEO, Small Business Mentor.

“We’ve worked with a few clients on video projects that used voice-over talent. With everyone working remotely, it’s easier to outsource the creative work and hire voice actors than to get everyone in a central location to do a shoot,” said Funkhouser. 

Freelance work will help relieve employee burnout in the new year, according to Chelsea Cohen, Co-Founder, SoStocked:

The transition to digital workplaces created new burdens for companies. Many teams struggled to manage their workload while coping with communication hiccups and physical isolation. Freelancers are assets for those looking to share their responsibilities and avoid sacrificing work quality.

Chelsea Cohen, SoStocked

IR35: Can UK freelancers compete on the global stage?

As previously reported by The Freelance Informer, the number of self-employed people in the UK reached a high of 4.95 million people in July to September 2019, falling to 4.27 million in July to September 2021 – a drop of 682,000 or 14%. But many that did enter self-employment were nearing or at retirement age. That marked a significant shift in professionals with decades of experience entering the freelancer economy. It also begs the question people are working in their golden years out of love or survival.

According to research carried out by Rest Less, an online community and advocate for people aged 50-plus, the number of self-employed workers in the UK fell across all age categories in the past two years apart from those in their 70s and 80s, which increased by 7% and 88% respectively. These finds smash preconceptions that 20 and 30-somethings represent the bulk of freelancers and self-starters in the UK.

The drop in the number of self-employed people in the UK was a side-effect of the pandemic and the simultaneously sweeping and confusing changes to legislation regarding off-payroll working rules (IR35) which came into force in April 2021.

These factors resulted in many contractors who previously classed themselves as self-employed moving onto company payrolls, which has contributed to the fall in self-employed numbers and boosted the numbers on payroll.

Brain drain

While the UK Treasury may see this as a short-term gain when it comes to tax revenues, stifling the UK’s skilled freelancer economy will equally stifle or cap earning capabilities, which in the end is not advantageous for the Treasury’s coffers. It is also going to pivot UK talent to foreign companies, away from the needs of the UK economy.

Outside of training and using niche consultancies to bridge the tech gap, more than a third of digital leaders have widened their geographical net to source new talent, as hybrid working becomes more commonplace, according to Harvey Nash Group.

Not surprising that companies are having to hire non-UK workers to fill the digital skills gap with the onset of new hiring challenges due to IR35 and Off-Payroll legislation. These new rules are already very damaging to the UK’s ability to remain competitive, according to a host of contractor specialists, such as Dave Chaplin of IR35 Shield, and representative bodies, such as IPSE and the CBI.

Chaplin, who has been watching the developments unfold in recent HMRC and House of Lord committees, told The Freelance Informer that IR35 could be “very damaging” for the UK’s ability to address the digital skills gap in a variety of sectors from finance to construction.

“We are already seeing many in-demand contractors turn their backs on medium or large UK firms and simply offer their services, remotely, for overseas clients. We have a major brain drain on our hands. The reforms are a terrible act of self-harm,” said Chaplin.

More freelancers. More competition.

With the onset of new taxes to be imposed in 2022, UK-based freelancers and contractors could be financially worse off than at the onset of the pandemic. That means they might have to take on more projects, clients and charge higher rates in line with rising inflation. That is if they have the flexibility to do so. If they were blanket banned as a freelancer running their own company, they may have lost out on viable projects or been pushed into employment via an umbrella company.

To stand out from the competition, freelancers and fixed contract workers may be wise to search new networks, expand their skills on and off the job and even join forces with fellow freelancers to pitch for larger and multi-skilled contracts.

Below is a list of articles that may inspire you to start or grow your freelance business:

How to take on more clients as a freelancer

Take a cue from Nextdoor: build a hyperlocal freelance business to revolutionise your revenues

What is open innovation and how can freelancers use it to build their business?

Set up a second-hand business

Freelancers should build Next-Gen gaming studios

Love pets? Love tech? Join a pet startup community

Solopreneur millionaires on the rise

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