In recent times, we are witnessing a permanent and profound shift in the way we work—Creating an urgency among companies to gain a competitive edge over each other for years to come.
There was already a buzz around various knowledge-work corporations and organizations, even before 2020. However, with the rapid development and constant progress in digital and technological sectors, people have begun to wonder, “Is it necessary in this modern age to come to a conventional workspace to get the job done?”
The pandemic lockdowns answered that question. We found out that most of us do not require to sit with our colleagues in an onsite environment. From an individual to an entire workforce, distributed work has proven efficient and productive. However, this abrupt situation begs some serious questions:
Are majority-remote or all-remote organizations the inevitable future of knowledge workers? Is it safe to say that work from anywhere in the future of the working environment?
Due to the global pandemic, the labor market is at its lowest point, and the economy is compromised. In addition, people leave their traditional workspace jobs for several reasons, like health issues and family concerns. And since the second wave has hit us, the excellent resignation movement is making matters worse, as millions of working Americans are quitting their jobs, consequently leading to a record-breaking labor shortage in domains like software engineering, IT, and healthcare.
Leading economists have been trying to comprehend for months now what lengths we will face the impact of the ongoing pandemic. But, one thing getting overlooked for quite some time now is this:
The remote working opportunity and freelance revolution are at our face and screaming for a change.
The change has already begun.
Initially, companies allowed employees to work from home because of the global crisis, but now it is becoming a norm for many businesses. According to one article, by 2025, it is estimated that about 70% of the personnel will remotely work for a minimum of five days per month. 2020 was the year of remote working from home, but this trend has taken 2021 under its umbrella, and apparently, it will continue to do so for the following years to come.
Let's take a closer look into how both the employees and the employers are making the most of the accidental situation created in challenging times:
Usage of Contingent Labor is Becoming a Norm
The demand for skilled contingent labor is increasing. According to a 2019 survey of executives conducted by SAP Fieldglass and Oxford Economics, 48 percent of respondents said their companies would be unable to fulfill their current business without contingent workers, and non-payroll workers accounted for nearly a quarter of their total human resource spending. “I can see a world where the external workforce makes up an even greater proportion of the workforce. That’s a future we anticipate for Philips,” Martin Thomas, Head of Total Workforce Management at Philips, told SAP Fieldglass.
Contingent sourcing requests increased by more than 70% between September 2019 and September 2021, according to internal data from Toptal. According to data scientist Erik Stettler, a shift toward totally remote work has fueled this rise, while demand for on-site or hybrid engagements has decreased.
Based on past performance, SAP Fieldglass projects that non-payroll hiring would climb 7% by mid-2022, potentially creating chances for tens of thousands more freelance workers. In addition, according to a 2021 Poll by Randstad Sourceright, a global talent acquisition firm located in Amsterdam, 56 percent of human resources and C-suite executives plan to transfer more roles to freelancing, project, or contract employment.
BMO Financial Group is the holding company for Bank of Montreal, North America's eighth-biggest bank and number 107 on Forbes' Global 2000 list of the world's largest public firms. According to Richard Wiskin, BMO's Contingent Workforce North America Lead, External Talent Solutions, "we noticed a big spike in the utilization of contingent labor in 2019—about a 50% increase compared to five to ten years before." During the peak of the pandemic, non-payroll recruiting slowed a little, but "we are seeing signs of the growth in using contingent workers coming back for 2022," Wiskin adds. In addition, the banking behemoth is hiring hundreds of freelancers as it grows its digital channels program, one of three divisions at the corporation that primarily rely on contingent labor. BMO presently spends around 5% of its revenue on foreign labor, according to Wiskin.
Why Is This Happening Right Now?
According to a report released in 2021 by the International Labour Organization, a UN institution that sets labor standards for member nations, the pandemic will increase demand for contingent work, with COVID-19 hastening changes already underway. Businesses are increasingly turning to cloud computing, virtual collaboration platforms, and contingent employment agencies for sourcing personnel.
Contingent employees in the software development, IT, and project management industries helped firms grow the technology solutions required to keep operating during the epidemic's early stages. In addition, employees who were forced to leave due to illness or childcare duties were also filled by freelancers.
Cost savings against employing, training, and providing benefits for full-time employees is one of the most advertised benefits of contingent labor. However, today's firms need the agility and flexibility of contingent workers to survive in an increasingly uncertain market. "For us, the value of the external workforce has never cost. It’s flexibility." JP Stadelmann, Head of Purchasing for the External Workforce at Swisscom, told SAP Fieldglass.
A Growing Number of Skilled Workers Are Going Freelance
According to a 2019 study by the Freelancers Union, around 35 percent of the workforce was contingent at the time, and freelancers will make up about half of the US labor force by 2027. However, according to Peter Miscovich, Managing Director of Strategy and Innovation at JLL, a Fortune 500 professional services organization, that number will be substantially higher. Given present trends, he believes that contingent employees could make up as much as 80% of the labor force by 2030.
The number of candidates seeking to join freelancing networks climbed by 55 percentin the first nine months of 2020 compared to the same period of the previous year. After months of abrupt remote working owing to COVID-19, these business, design, and technology experts were "deciding to take ownership of their career paths and value in the labor market" —Taso Du Val.
Why Is This Happening Right Now?
Knowledge workers have seen the advantages of working from anywhere and don't want to give it up. "People see freelancing as an opportunity to restructure their lives into ones with more financial freedom and personal fulfillment," says Stettler. "Flexibility and constant learning—that’s what COVID showed us are essential ingredients for job satisfaction and security."
The current Great Resignation is expected to boost the number of competent individuals who prefer to work for themselves. According to a recent study performed by Qualtrics, about one-third of workers are considering leaving their employment, and nearly 60% say the pandemic has made them entirely reassess their careers.
Contingent employment allows workers to adjust their workload to fit their schedules; it gives them more choice over their work hours, pays, and career trajectories; and it will enable them to develop strong client networks across industries and continents. In addition, according to Stettler, freelancing can help people diversify their income by providing cash flow as they pursue risky endeavors like starting a business or writing a book. Another major draw is the ability to relocate to more livable and cheap regions, a phenomenon that has enticed US talent away from costly metropolises like San Francisco and toward secondary cities, small villages, and even abroad.
Jennifer Kahnweiler, the author of The Introverted Leader and a career development consultant for companies like Amazon and Merck, says that talent is now time to embrace the freelance transformation. The career ladder has been replaced with a lattice in which networking and a broad range of experiences are essential: “You become more employable the more experiences you have,” she says. “It’s a seller’s market. You build more strategic partnerships and relationships when you step out. There are so many wins to doing it.”
Where We Headed?
As the global economy and talent market recover from the events of 2020, disruption and change will continue. One of the most effective ways for businesses to protect themselves and plan for future growth is to invest in a more flexible workforce. One that is brought in on-demand to fill unanticipated skill gaps and assist enterprises in pivoting and thriving.