Impending Disruption In The Labor Market August 18, 2020
Freelancers are like the white walkers — they’re multiplying FAST. In the US alone, there are roughly 53 million freelancers, accounting for 34% of the country’s total workforce. It’s expected that in 5 years, this number will reach a staggering 50%. Remarkably, the same trend is also observed across Europe . Why is this shift happening? I think there are a few drivers underlying this shift: 1. Technology makes remote working much easier: ubiquitous access to fast internet, cloud/mobile softwares, live communication tools — these all have helped unchain workers from their desks. People can now work from almost anywhere. 2. The on-demand economy: Startups like Uber, Lyft, Homejoy, Postmates, etc. have created an entire new class of workers. They pick jobs they like, work when they want, and get paid by the hour. I asked my Uber driver the other day how he feels about his job. “It’s not the best,” he said, “but it’s a lot better than working at warehouses or restaurants. I drive 8 hours a day, but can go offline and take breaks whenever I want.” 3. Millennials’ mindset is evolving: Millennials are feeling increasingly dispassionate towards the 9–5 jobs that once were widely sought after. These days, young folks want work-life balance and flexibility over their work schedule & location. Freelancing gives them that option. 4. Corporations see the benefits of outsourcing: For corporations, freelancers can be a quick-fix to skills shortage. By outsourcing internal projects to freelancers, companies can find people with most suitable skill-set which can improve output and efficiency. As with anything, freelancing also has its drawbacks such as there’s little job security and less clarity in a career path for freelancers. But I’d argue that in essence, this shift is greatly meaningful and liberating. In the freelancing economy, people can choose or be matched to jobs that they enjoy and that fit their skills. They would have more freedom and ownership over their work, possibly be able to earn money from multiple revenue sources, which could actually be more secure than the regular 9–5 jobs. For corporations, freelancers allow for more flexibility to get work done. We all have seen how large corporations can become depressingly sluggish — an environment that defies innovation. Freelancers can be the cure, providing an alternative avenue to pursue new ideas and carry out pilot projects without needing to make expensive long-term commitments. Imagine a scenario where companies can build “mash-up” teams made up of in-house employees and freelancers with complimentary skills, whereby efficiency and value output are maximized. We’re not quite there yet, but technology can pave the way. Looking through the lens of venture capital, I see “the freelancer economy” usher an entirely new value chain, in which new products and services will need to be specifically built and designed. Here are some pieces of the value chain that I can think of: Professional freelancer marketplaces Freelancer management system for enterprises Segment-focused outsourcing platforms (back-office, sales, accounting, legal, etc.) Communication & collaboration tools between teams and freelancers Finance/invoice management tools for freelancers Co-working space, office sharing by the hour/day (AirBnB for office?) Education, skills training/sharing platforms Workforce/team optimization … A small number of startups are entering this space and I think the timing couldn’t be more spot-on. But we need more, because when this new wave of disruption hits, its consequences will be massive.