The world of work is changing - to really understand what is going on in the global jobs market you need to watch TV. Not what’s on the screen, but how it’s being delivered to the viewer. Not so many years ago, the only way to watch Top Gear was live on BBC2 every Sunday night. It’s now available on demand across multiple satellite and cable channels, can be downloaded from the internet, recorded on your set top box and next up streamed by Amazon.
The fact is that on demand video services have blasted the door off conventional TV with more than 200m expected to be subscribing to services like Netflix and Amazon Prime by 2020, leaving traditional broadcasters with a multi-billion dollar hole in their finances.
The freelance talent pool is growing exponentially
The parallel with how business is consuming talent is palpable. Employees are leaving their jobs in their swarms to go freelance and harvest the riches of the plug and play economy. Just like TV viewers, we are enjoying being in control of our consumption of work, creating bespoke work schedules with multiple employers.
The statistics behind this revolution are pretty convincing. Around a third of all working Americans are now freelance - that’s around 53 million people working off the payroll. In the UK, the figures are lower but nevertheless an irrefutable sign that patterns of work are changing. There are around 1.8 million freelancers in the UK, but the numbers are growing at a rate of 14% per annum. Our own research into growth at the top end of the freelance market is even more bullish. We have estimated that the number of senior consultants in the UK will hit the one million mark by 2020 - up 25 % on current figures.
Why employees are giving up the 9 - 5
The reasons for the exponential growth in this sector of the workforce revolves around three economic and social drivers.
- Firstly, a change of attitude towards work and its relationship with life. More workers, particularly millennials, are turning their backs on rigid structures of corporate life where their personal lives play second fiddle to their careers. A Mental Health Foundation survey recently found that as many as a third of us feel unhappy or very unhappy about the time we devote to work. Compare this to happiness levels amongst freelancers which, according to our research, is a remarkably high 91 per cent.
- The economy has played its part in driving the freelance economy. Many of today’s independents lost their jobs in the recession and have been forced out on to the open market. The Telegraph puts the number of UK redundancies since the recession as high as one in seven of the workforce. With the Brexit decision taken in June 2016 economic uncertainties became a concern for employers again and potentially exacerbating the trend to employ independent rather than permanent talent.
- Technology, as always, is the real rebel rouser. The growth of online talent marketplaces is making it much easier to find project work. According to Staffing Industry Analysts, companies processed between $8.9 and $11.1 billion in spend associated with the so called Human Cloud last year alone.
If the world of work is then tipping towards a freelance culture and what is often called the “gig economy” what does this mean for business? Can the corporation survive mass defection on such as scale?
Your staff are leaving: more talent is incoming
For those companies who have seen the writing on the wall, there is a general acceptance that human capital is moving away from a fixed cost to a variable one. Those already running sizeable freelance workforces are realising that, properly organised, a large freelance workforce can bring huge cost savings and expertise to an organisation.
The black cloud of losing staff to self-employment does have a silver lining which gets brighter the deeper you go. With no national insurance and pension contributions to pay, no holiday and sickness entitlement and no permanent desk space to provide, companies can enjoy savings of around 30% over conventional employment costs. It’s the same economic principle shared with the on demand TV market. Why fork out an annual cable TV subscription for a smorgasbord of entertainment when you only want to watch Breaking Bad and The Blacklist?
The other big upside of the on demand labour market is that it forces business to look outside its own walls for inspiration - and that is normally where great ideas come from. Research has shown that people who work full time for a particular company find it harder to come up with innovative ideas than those from outside who are not mentally constrained by existing, “known” solutions to the problems. Accenture recently researched this area and discovered the majority of innovation is created by service providers or a joint effort between the client and the supplier. Only 17 % of innovation came from within.
Take advantage of the trend
Both JP Morgan and Deloitte have dedicated programmes to tap into the on demand workforce which they now consider to be as much a part of the company as full time employees, JP Morgan’s Chauncy Lennon put it well when he said: “ The workforce of the past was organized around the company. The workforce of the future is organized around the worker. If we can’t find the right people, it’s going to hurt our bottom line.”
Deloitte estimates that by 2020, as much as 40 percent of the workforce will be part time or freelance according to Mike Preston, Deloitte’s chief talent officer. The company has created what it calls Deloitte Open Talent to network with and identify workers who are opting to forgo full-time work for some other arrangement. Last year about 8,000 of the almost 70,000 workers at Deloitte were part-time. Companies focused solely on traditional full-time hires are missing out, Preston says.
The truth is that the global workforce is increasingly directing its own labour channel, deciding when they are going to work and for whom. The sooner business tunes in, the better. The skills shortage which haunts many sectors is only going to get scarier as the number of talented employees jump ship to the world of independence.