Businesses aren’t adapting quickly enough to the rapidly shifting nature of the workforce and are sitting on a “ticking time bomb” that could cost the economy billions, according to a global expert in workforce trends.
As millennials increasingly seek the flexibility of self-employment, the freelance economy is booming and there are now an estimated 4.78 million freelancers in the UK, up 43% from 2008. According to a McKinsey study, as much as 30% of the working population could already be self-employed.
The thriving freelance economy offers big opportunities to businesses which adapt quickly to this shift. This is because the flexibility provided by freelancers adds around £30bn value to the UK economy. According to forecasts from PeoplePerHour, the UK’s leading digital marketplace for freelancers, half the UK’s workforce will be self-employed by 2020, and at this point, freelancers would likely offer added value of as much as £51bn a year to the economy as a whole. It is thought that as many as 80% of UK workers could be freelance by 2050.
Business Leader Magazine recently sat down with PeoplePerHour founder and CEO, Xenios Thrasyvoulou to discuss the role of freelancers in the business world.
Why technology is important in managing freelancers? What are the types of technologies that businesses can utilise?
“The way many businesses are managing their freelancers is inefficient and disorganised. There are many companies using freelancers, however these individuals usually work remotely and on their own projects, while the rest of the company is usually unaware of this talent pool and their capabilities.
“Technology plays a crucial role in structuring and nurturing relationships between a business and a freelancer. Freelance management software enables businesses to collectively organise the talent pool and use their skills across the whole company. This means that each employee can browse the freelance talent pool to match tasks with the right skills. Such technology provides planning and timesheet management, budget and payment control that ensures freelancers are embedded in the usual company structures. At PeoplePerHour, it is our responsibility to support businesses to adapt their processes to the evolving workforce – we already have the technology and expertise in place allowing us to provide customised solutions to small and medium sized enterprises (SMEs).’’
What are the challenges inherent within the shift towards freelance workforces?
“In the next three years, we predict more than 50% of the workforce will be self-employed rising to 80% by 2050. As the freelance economy booms, this poses new challenges for businesses – as their workforce becomes increasingly fragmented, making it harder to source, retain and manage talent. This trend is set to continue when Generation Z, those born between 1995 and 2012, make waves across the sector. Businesses that aren’t set up to effectively and flexibly manage flexible talent will, to be frank, struggle to adapt to a new reality and risk losing their competitive edge.
“Tools are already in place to cope with this evolving workforce, and businesses should be investing in this infrastructure to efficiently manage a blended workforce, while putting them in a better position to leverage the global pool of flexible talent that is now available.
“We’ve created Flexible Talent Management which aims to improve the use of on-demand workforce by establishing a unified process. In practice, this will be achieved through a powerful, elegant, end-to-end solution for managing all individuals, driving efficiency, and optimising resources. Such solutions are in development and will become available in the very near future.’’
What are the opportunities inherent within the shift towards freelance workforces?
“The thriving freelance economy offers big opportunities for businesses which adapt quickly to this shift. This is because the flexibility provided by freelancers adds around £30 billion value to the UK economy. On an individual level, our research has shown that the average waste or spare capacity per day for small to medium sized enterprises (SMEs) was 1.9 hours per person. By hiring freelance professionals as required, this wasted time has an earnings/savings potential of £6,297.17 per annum.
“Working with freelancers offers a whole host of benefits, and not just from a cost-saving and flexibility point of view. A freelancer’s expertise and breadth of knowledge is always expanding, owing to working with multiple and varied clients. Secondly, freelancers can be chosen based on their hyper-specialised expertise meaning you can hire the perfect person for the job or project, every time. Freelancing also offers the opportunity for individuals to earn higher earnings. In fact, freelancers who use PeoplePerHour.com earn a mean of £20.73 per hour.’’
Can you tell me about the future trends and patterns in UK and global workforces?
“As millennials increasingly seek the flexibility of self-employment, the freelance economy will boom. There’s an estimated 4.78 million freelancers in the UK, up 43% from 2008 and we predict by 2020, 50% of the UK workforce will be self-employed and contributing over £51 billion to the UK economy in terms of value – which could fund the NHS for five months. Whilst millennials are driving growth at the moment, Generation Z is about to enter the workforce.
“This population is tech savvy, having never experienced life without digital devices and social media. While the digital revolution has provided new opportunities for this generation, it also poses new challenges in nurturing and retaining this talent. As a result, they will disrupt the full-time employment model structure as we know it. Our role now is to ensure businesses are best prepared for such disruption. The workforce is shifting and the model of full-time employment is becoming obsolete. It’s becoming impossible for businesses, regardless of their size, to ignore this evolution.’’
Why businesses mustn’t wait to adapt to this change – why do they need to act now?
“Evolution is happening across the workforce – email is inefficient and is becoming replaced with messaging software such as WhatsApp, the same is happening with the workforce. Full-time employment is obsolete, in three to five years’ time, businesses that solely depend on permanent employees will be struggling to keep up and remain competitive – ignoring this evolution is unwise. Only 5% of SMEs and even fewer corporations have adapted to this evolution, if the remaining 95% leave it too late, they won’t be able to capitalise on the value provided by freelancers and could find themselves on the losing side in an increasingly brutal war for talent.”