Out Source Or Hire

Up Early Designs

With a growing number of freelancers on the market, is the traditional employee employer relationship changing? Is there a move away from hiring employees and towards hiring for services?

On both ends of the spectrum, there is likely no shift. For very large companies it makes sense to employee attorneys, accountants, etc. Such companies likely have more work than even this in-house team can handle. But on the other end of the spectrum, the opposite is true. A one person shop, has neither the resources, nor workload needed to employ such.  For them, outsourcing is the only strategy.

But in between, the waters are murkier. The decision to hire employees or freelancers is less clear. And those waters will become more clouded as more and more freelancers come on line. As more and more people work from home, an employer’s options to outsource for services versus hire direct will increase.

A report from CIO.com (full article found here) indicates such a shift is well underway.  The average business workforce of full-time employees will shrink from 54% in 2015 to 41% in 2017, a 24% reduction. While contract work will rise from 20% to 25% over the same period.

“A common term for this new workforce is the “flex economy,” or the “gig economy,” but whatever you call it, it’s certainly non-traditional. As of 2015, the average business’ workforce consisted of 20 percent contingent workforce and 54 percent traditional full-time employees. The other 26 percent are a grey area of people who fit into both categories; perhaps remote workers or part-time employees. Fieldglass predicts that by 2017 that will change to 25 percent contingent and 41 percent traditional workers, while the remaining 34 percent will exist in that grey area.”

Intuitively this makes sense. And until some state of equilibrium is achieved, this trend is likely to continue for the foreseeable future. And it’s a win win for all.

On the employer side, there are plenty of cost savings. From FICA to benefits to vacation time and more. Make a bad hire? Rather than manage the waters of termination, just wait out the contract. Or exercise a built in clause. There are many savings both financial and non-financial.

For employees there is improved quality of life. Less time commuting. For many families, no need for two cars as one will suffice. And the ability to have a direct input on how much they earn. Want to earn more money? No longer do you need to wait for your annual review. Rather, expand your knowledge base today and earn more tomorrow.

Nothing in life stays static. At least almost nothing. Change, though difficult to understand and accept initially, often is a welcome sight when viewed with hindsight.  Through the lens of history, this shift in employment demographics will be no different.