In recent years, there has been a proliferation of new forms of work. Many businesses have been regularly turning to these alternative arrangements, particularly freelancing. It’s estimated that 40% of the American labor market has already switched over to this form of work, which is more flexible in terms of contracts and is better adapted to the speed of technological changes. That percentage is even believed to reach 45% in high-tech professions and over 50% for the design of new technology applications.
THE CONSULTING WORLD IS NOT KEEPING UP WITH THE INTERNET WORLD
Ten years ago, I set out to prove the feasibility of a global revolution in how consulting and intellectual services operate.
Today, consulting is provided in a way that is totally different compared to before the Internet.Offshoring and nearshoring have revolutionized mass delivery by putting production where it makes the most financial sense. At the same time, freelancing facilitates access to precise, on-demand expertise. In this case again, globalization of sourcing is possible.
If I were a company, I wouldn’t want a French agency developing my U.S. communications strategy. Instead, I can work remotely every day with an agency in the United States, without any slowdown. Even agile production methods are accessible with offshoring. Businesses have already understood this and are taking advantage.
However, when it comes to sales, established players in the consulting industry haven’t gotten the message. They haven’t yet understood that if you can provide consulting remotely, you should probably be able to do the same with your sales. Apparently, they haven’t learned from the many offshore outsourcing providers who have been doing just that, producing billions of dollars’ worth of services provided from emerging markets. Naturally, before providing those services, they had to be sold. This was done with small, relatively inexperienced sales forces.
It’s still not a very sophisticated operation, but it’s coming along. We have made this into a winning strategy for ourselves with our consulting and outsourcing services. Each of our salespeople brings in three times more revenue than the average for the sector, covering a worldwide geographic scope while barely moving from Orléans, Frankfurt, and New York.
The consulting establishment also does not seem to want to recognize the stunning success of freelance marketplaces, which provide a sales experience that is attracting hordes of customers. Upwork long ago reached the milestone of $1 billion in sales of services on its platform. This is another case of sales of intellectual services significantly disrupting the business model of companies like Publicis and Accenture!
With a few hundred thousand digital professionals in their databases, serious capacity to create content, and four or five strategically located salespeople, these freelance marketplaces are able to generate constant revenue streams from consulting, worth tens of millions of dollars.
The final key for us is being able to rapidly satisfy market demand by identifying skill levels rather than just profiles in professional networks. To do so, within our company, we have created a testing engine for digital skills (marketing and programming) that has already registered 300,000 people to whom you can offer jobs or freelance assignments. Thanks to this system, recruiters end up being three times more effective because people who do not pass the hard skills test are not invited to interview.
This experiment that we have undertaken in recent years has taught us a lot about the evolution of the technical skills market. Most clients who have been won over by our approach tend to be innovators focused on strategy. As they see it, the company that can offer technical skills possesses the capacity for growth and adaptation that they need to carry out their plans. Our clients represent a new form of demand coming from the extraordinary wave of start-ups around the world, as well as new leaders and innovation departments, who are not at all comfortable with the old way of doing business where preferred supplier lists are created, price is prioritized over needs, and efficiency is not constantly tracked (the exact opposite of a lean approach). The days of selling consulting by the pound should be long gone, and yet, this characterization still rings true because consultancies are clinging to the old ways.
FREELANCING = THE FUTURE OF WORK?
Those who analyze changes in the labor market are also changing how they think. They have discovered completely opposite situations for freelancers depending on whether they are white-collar or blue-collar.
While blue-collar workers have found a significant and varied source of income in freelance work, they are also subject to the power of the dominant platforms, Uber being the most familiar. The freelancing-marketplace combination doesn’t really offer them a choice.
The situation is very different for white-collar workers. Companies often maintain their desire to keep key skills in-house, perpetuating an old myth found in both Europe and the United States that employees are like intellectual property and are part of a company’s intangible assets. Nonsense! An employee never belongs to you and, given the power dynamic in certain countries, it’s sometimes the worker who has the company on the hook. The only way to really build employee loyalty is through financial incentives: a salary that is truly above the market average and/or offering a stake in a company with a bold strategy. Otherwise, you often get IT employee turnover over 20%. It’s the elephant in the room.
In the world of intellectual services—including things like programming, server management, organizational consulting, product and service design, marketing, and more—increasing numbers of workers are being attracted by freelance work. The calculation is simple: if you have sought-after skills, it’s in your best interest to look for the projects that are best fit to your skill set, projects that most value those skills, both literally and figuratively. In this context, a permanent work contract is not seen as a way to mitigate risk, but rather as an unnecessary insurance policy in a flourishing environment. The outlook for pay and scheduling freedom is much more advantageous with freelancing, leading to a rapid increase in the percentage of people choosing this work arrangement.
CONVERGENCE BETWEEN EVOLVING BUSINESS NEEDS AND WORKER NEEDS
This preference for freelancing among workers shouldn’t scare companies; they should embrace it. Freelancers provide companies with relative flexibility in a complex, rapidly changing market. Finding a freelancer is no more complicated than finding a new employee (it’s also no easier though). There are two forms of remuneration for skills, whether a worker is salaried or freelancing: with money and with the satisfaction of accomplishing a project, if that project is meaningful.
I was thinking about how I have personally invested so much time in lean innovation for the consulting and outsourcing industries, increasing sales effectiveness, multi-modality and interoperability between services, contracts, measuring skills and registering them, measuring the effectiveness of processes, and more. As I thought about all of this, I kept on coming across the theme of the evolution of work toward freelancing. Specifically, I realized that we were better positioned than anyone else to offer individuals and companies what they need.
For a thousand and one reasons, work is not going to go 100% freelance, even in the world of Web development! If you look at the motivations and preferences of companies in the United States, you’ll see a very significant inclination toward hiring and outsourcing. In 2017, among U.S. CIOs, 50% said that they wanted to increase their use of outsourcing and 40% wanted to increase offshoring. Even while these numbers have gone down slightly, they remain quite high. The top reasons that they gave to explain their intentions were access to new resources and flexibility in an uncertain environment. In this context, demand for freelancing only comes in third place, very often considered a last resort.
To try and simplify things, I sorted the reasons for outsourcing, hiring, and using freelancers into two groups.
There are, for example, cases where freelancers are not an option:
- Need for a structured contract measured in KPIs (outsourcing)
- Need for legal security and a liability insurance policy (outsourcing)
- Need for coordinating many individuals (in spite of progress in collaborative environments, there’s still a long way to go). For people to effectively carry out a project together, they have to know each other (especially if they’re young). (outsourcing)
- Outsourcing of complex process chains (outsourcing)
- Product management (hiring)
- Key management position (hiring)
Then, there are other cases where hiring freelancers is extremely useful, often when it comes to creativity or technological expertise:
- Graphic design
- Product design
- Short-term IT development requiring significant expertise
There remains a small segment of demand for freelancing as a substitute for hiring and outsourcing. This demand comes from companies that are not yet strong and financially solid enough to afford a structured service contract or companies that are not attractive enough to recruit talent. These companies often have no other choice than to go with freelancers for hire, with all of the accompanying difficulties of selecting skilled people.
Here at Pentalog, all of this analysis led us to a strategic convergence. If we wanted the Pentalog platform to attain the desired level of comprehensiveness and interoperability of services (for tech, marketing and HR), as well as a significant volume of commitments from the market, we would have to combine our strategic objectives with this analysis of the evolving labor market. As such, with modest resources, we started an experiment with freelancing in the digital sector, believing that many digital start-ups seek out developers and marketers with verified levels of technical skills, like the developers and marketers that make up the SkillValue community. Nobody wants to buy or sell a load of nonsense. We decided that companies would be attracted if we started with a technical evaluation, consistent with our lean values, and then complemented that with selection services driven by robust technical profiles, CTOs actually, having carried out dozens of recruitments within Pentalog Group and elsewhere, coordinated by the former head of development for a large French software company.
This desire to take on the freelance market with a high level of service to fill in the market’s shortcomings led us to a cautious start. We had to perform tests, find the exact level of support that clients need, and deliver the right user experience. The value of the three offerings (hiring, freelancing, outsourcing) is still to be determined. We believe that what counts, the smallest common denominator, is technical qualifications and skills, not the form of work contract. Essentially, there shouldn’t be separate offerings for selling services to freelancers, for outsourcing, and for hiring new employees. Instead, a modern platform should offer all of these, the important thing being for the platform to identify the right skills.
Learn more about SkillValue Freelancing