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An External Workforce is the Future
Flextribe has identified some of the labour trends growing post-pandemic and in this report, we give you the insights.
Flextribe has identified some of the labour trends growing post-pandemic and in this report, we give you the insights. The freelance economy is growing and by 2027, the majority of US workers will be freelancing, and be on contracts. At the current rate, 36% of the entire US workforce are freelancers and as more businesses adopt a remote or external workforce, the challenges of managing remotely become larger.
What is an External Workforce?
An "external workforce" can be defined as a workforce that is not permanent or directly tied to the company. These types of workers have many names, such as contingent workers, freelancers, consultants and contractors, and all of them have one thing in common. They are typically hired for project work and often procured through third-party vendors or databases.
The future workforce
In June 2020, mid-pandemic, McKinsey conducted a worldwide survey and gathered valuable insights from 800 executives on workforce trends. The pandemic created a need for remote work and digitized processes and one of the insights found was that in Europe, 20% of the German and British executives said that at least one-tenth of their employees could work remotely two or more days a week going forward. Another indicator of the future was that digitization of supply chains, customer channels and employee interaction had significantly accelerated during the early days of the pandemic – and most businesses benefited from these changes. Centralizing and digitalizing workflows has come to stay and as the need for remote workers grows, there is one segment that is already ready to embrace this need – freelancers and external consultants.
By 2025, 41,89% of all businesses expect to expand their use of an external workforce to do task-specialized work.
Working remotely is the new normal
It can be similar to taking a leap of faith when first hiring a consultant. Someone, who works remotely and has no pre-existing knowledge of the company and its processes, values and ethics – can seem a bit untrustworthy and like it’s difficult to manage. With freelancer management systems (FMS) all these worries are tackled. With a streamlined and custom onboarding process, a freelancer can come to understand a business and seamlessly integrate with methods, processes and know-how.
For the working remotely part, an FMS ensures exceptional management and tracking properties – all the way down to hourly tracking and detailed work descriptions. This way, a business can ensure that they are able to keep up with the progress and if they wish to check in, and FMS allows for group chats, video calls etc. so there are no worries when it comes to continuous check-ins. Traditionally, before these software existed, all these management processes would be handled by phone calls and emails which was a rather hectic task to keep track of. Though as we move towards a post-pandemic society, remote work has impacted all businesses for the better. PwC surveyed 133 executives and 1200 office workers and the results were astonishing: 83% of employers said that the shift to remote work was successful, indicating that perhaps it is not only freelancers, but permanent employees as well, that can work remotely.
Ensuring continuous collaboration
A study conducted by Robert Half shows that 4 out of 10 executives say that freelance creative talent has grown significantly. As the increasing demand for specialized consultants and talent occurs, many businesses now invest in training resources. Building skills among freelancers is not only a benefit for the freelancer, but also for the company! Spending resources on training freelancers ensures higher quality results and if a freelancer has client contact, it can also improve your client relationships and establish a continuous collaboration which is highly important in such a competitive market.
Another interesting study also shows that workers, particularly younger ones such as Millennials and Gen Zs, are willing to receive less pay in exchange for ‘non-monetary perks’ such as skill-building courses, flexible work hours and remote working hours. In fact, freelancers on average spend about 5 hours weekly on self-training and building skills. 64% even stated that “learning a new skill” is an important factor when choosing a new project. 
Automation, digitalization and specialization
In “The Future of Jobs Report 2020” by the World Economic Forum, automation is a double-edged sword as it can eliminate and hire workers. Automation is essentially automating processes that are traditionally done by a person manually, and one of the fields where automation has nearly eradicated workers is administrative processes. In addition to that, 84% of businesses plan to accelerate the digitalization of work processes. This proves that there is a need for smart solutions to embrace these developments, such as cloud services like databases, and analytical and communication tools. It is no wonder that the demand for specialized workers is rising, particularly data specialists and analysts – mostly within the field of IT and marketing.
Another observation shows that companies struggle to attract specialized talent. In fact, 46,7% of companies agree that finding specialized talent is difficult and similarly, the need for reskilling or upskilling workers is larger than ever. This all points towards finding non-traditional labour - highly specialized, able to work remotely and with flexible hours, and who does that better than freelancers?
As freelancers keep appearing and businesses keep hiring them, several problem areas occur. These hindrances include a lack of streamlining in the procurement process, not being able to manage or track an external worker or something as simple as maintaining good communication. In the following paragraphs, we break down these problem areas and how they can be tackled by using a freelancer management system.
Lack of centralized processes
There was a time when LinkedIn didn’t exist and businesses sent out a call and waited for someone to answer – someone who had just the right resumé and skillset. Those days are long gone. Today, most companies use different agencies to meet the needs of their hiring processes. This creates a problem. What is the benefit of having to use several agencies and systems if they aren’t compatible? How do businesses ensure that they can have everything in one place, visible for all and effortless to use?
With one single cloud-based solution, all the internal bureaucracy is no longer needed. New digital solutions like FMS make it easy for companies to source talent, onboard them and brief them on tasks and projects. In the more advanced systems, like Flextribe.io, the software is not only a database but also a system that allows having everything in one place - hiring, management, time tracking and so on. In fact, Flextribe is actually the first platform where everything related to 3rd party staffing can be handled in one place! By using this type of software, businesses can centralize their processes and save time and resources.
Hiring the perfect external consultant
There is a common misconception that freelancers or contingent workers are unskilled, but studies show that 38,9% of independent contractors have a Bachelor’s degree or higher in the US, and in Europe, 54% of consultants have a Master’s degree. [6,10] With software tools like online CV banks, it is now possible for businesses to search through a database of consultants and specialists with the ability to pick and choose based on a freelancer’s resumé, portfolio or skillset. A comparison of wages even showed that in regards to hiring software developers, freelance developers are actually cheaper than full-time employees as freelancers often have their own tools and materials, and are required to be covered by company benefits such as health care, and retirement funds and paid leave.
But finding the right, qualified people is no walk in the park. It’s not unlikely that a company hires talent that doesn’t deliver or doesn’t meet the needs of the job. In these types of situations, it is vital that a digital CV bank or database allows for precise communication and transparency around a freelancer’s previous work and clients. With an FMS, a business can ensure everything is saved in a database. Nothing is lost through several links of bureaucracy or accidentally thrown out. This also ensures safety for both the company and the freelancer, as both parties have a fully transparent view of documents.
Engage, validate and recognize
What happens when the talent has been procured? Managing a flexible workforce is not too different from managing a permanent workforce. Whether the number is three or three hundred flexible workers, the requirements are the same. Communication is key and it must be reliable and honest, especially if a business wishes to attract more freelancers or just permanent employees. This means that it is not good practice to just send out a task without carefully communicating the needs and expectations for the final result.
The wonderful property of an FMS is that it also allows for continuous support and engagement. This means re-use of consultants and referrals are made much easier, as everyone within the company can have access to a project and can provide helpful feedback along the way. In the same way, one can keep freelancers on file and hire them for other projects in other departments or areas if the freelancer is interested in further work. The transparency involved in these processes creates significant value for your company – with full data transparency, your company can not only manage freelancers but manage costs and budgeting too. Who knows? Perhaps a skilled freelancer might end up becoming a permanent employee or maybe, your shift towards a transparent, centralized process will let you ease a heavy workload and increase ROI.
If you want to be part of this growing economy and start investing in an external workforce, here are our suggestions for accessing and working with freelancers.
Accessing and working with consultants
How do you find the right freelancer? How do you ensure that there is a perfect fit between freelancer and company? Here are 5 tips for choosing a freelancer through a freelancer management system.
- Analyze your options for budgeting and planning
It is of the utmost importance that you are aware of your business’ budget and limitations. Do you need something done fast? It will probably be pricey. Do you need someone with 10+ years of experience or will 3+ years do? Access your needs and look for consultants in a freelancer database to get a better understanding of pricing and preferred work methods.
- Consider creating an auction for your task
This way, freelancers will come to you and ‘bid’ on the project by essentially creating a sales pitch about themselves. This is also a way for you to see the demand for tasks - perhaps you’ll even find that there are freelancers for other projects and needs!
- Access the skillset and portfolio of the freelancers
Whether you do an auction or not, a freelancer database often has hundreds or even thousands of consultants and specialists available. Luckily, filters are in place to make your search easier. Use filters to figure out what requirements you have for your future freelancer.
- Communicate expectations clearly
Make sure to give a precise brief. What are your expectations? How often do you want updates and check-ins? Much like delegating tasks to permanent employees, you need to be clear about subtasks and deadlines.
- Validate and refer your freelancer
It’s good practice to leave a positive review or give constructive feedback. If you are satisfied with your collaboration, remember to validate freelancers by referring them or writing a recommendation. They’d do the same for you.
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