Upwork and the Use of Independent Freelance Workers by Enterprise Businesses in the U.S.

belinda stronach

Freelancing by independent “knowledge workers” is growing more popular in the United States.  American graphic designers, data scientists, copywriters, editors, accountants, translators and Instagram marketing experts are all finding jobs online. Some of them are actually making six figures annually using the Upwork platform. And the so-called “contingent workforce” is growing faster than the overall American workforce.

Even mid- to large–sized business enterprises with over 1,000 employees are using outside temps, consultants and freelancers more often. Managers use freelancers to close talent gaps both for one-time projects and for ongoing workflows across multiple projects. They pay either fixed rate fees or an hourly rate. Often the work is very specialized and requires specific training, a certification or an advance degree. However, this flurry of activity typically is not yet being tracked and documented by corporate HR or procurement departments, so it tends to stay beneath the radar in news reports and industry surveys and studies.

Nevertheless, Upwork commissioned a 2017 study, “Future Workforce Report: Hiring Manager Insights on Flexible and Remote work Trends.” The research firm Inavero interviewed over a thousand hiring managers at a broad range of companies across diverse industry sectors. To the researchers’ surprise, they found very little difference between the responses from big company managers to questions about their use of freelancers and responses from small business managers who were asked the same questions. This suggests that use of freelancers by larger companies may be more extensive than previously known.

Managers across more departments within companies are now using freelancers and reporting more flexible and creative team building. They have reported several common primary reasons for hiring freelancers. These include cost-efficiency and the ease with which they can find just the right the talent they need when they need it, even on the spur of the moment to start right away.

Key workforce innovation drivers for many respondents were a shortage of talent available via traditional channels, greater demand among prospective workers for more flexible arrangements, and emerging technologies like AI, robotics and blockchain that are changing the nature of work performed by humans.

Most surveyed managers project that over the next ten years, the workforce landscape will be changing in the following three ways: 1) greater global competition, 2) need for more specialized workers and skills and 3) agile and more dynamic team structures becoming the norm.  As managers embrace freelancers, they report more positive perceptions of freelancing overall, including the vital roles independent knowledge workers fill in their company’s talent acquisition strategy.

According to the Upwork study, 47% of managers at enterprise organizations say they are currently using freelancers, and 39% say they will be using more freelancers in the coming year.  An average of 46% of all managers report plans to use more freelancers in the next ten years, while that figure jumps to 56% for smaller businesses. 84% reported they would consider hiring a freelancer instead of a temporary worker supplied by a staffing agency, often citing access to a broader, global pool of high-quality talent, and direct control of the applicant vetting process.

Indeed, since some of the most qualified workers are also traveling the world as digital nomads, online platforms are the only way to find, interview and hire them.

From a freelancer’s point of view, the Enterprise Client label on an Upwork job post is a comforting indication of stability and professionalism.  It may take a bit more time to establish the reputation of individual or small business clients by checking LinkedIn, the Better Business Bureau or Glassdoor for example.  However ratings for all clients from other freelancers they’ve hired are fully visible with job postings.

Despite the undeniable trends toward hiring independent workers in the knowledge economy, some mid-sized to large enterprises may be slow to facilitate or even approve the sourcing and managing of freelance help. Much of corporate America simply lacks the administrative infrastructure of protocols and procedures for tapping into the online market of skilled knowledge workers.

Those enterprises that have established policies for using freelancers likely have discovered that adequate oversight and process innovations allow them to optimize the value gained from hiring independent contractors. Replacing taxi and hotel receipts on expense account reports with ride hailing and Airbnb charges is one thing.  Adjusting for freelancers working with internal corporate teams on core mission projects takes a bit more doing, but as the study showed, many enterprises find the benefits outweigh the administrative changes required.

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