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By any measure the freelance economy has quickly risen. While specific estimates vary, even the low end of growth is impressive. For example, Upwork points out that US freelancers alone contributed almost $1.3 Trillion (US) in economic value in 2023. And on a global scale, CAGR growth estimates for freelancing average around 14-15%. According to a recent article in Forbes, almost 70 million US professionals freelanced on a fulltime or part-time basis in 2023. Fiverr notes that nearly 80% of US companies used freelancers to supplement their talent base in the past year.
Despite the rapid growth in participation and economic value, reliable global and national information about the freelance economy is hard to find. Many marketplaces publish surveys of their freelancers and clients, and these are often good. Any serious student of freelancing reads the most recent Freelancing in America by Upwork or MBO Partners State of Independence report. Large marketplaces – Malt, Catalant, and Toptal – are helpful examples, offering thought-provoking blogs and useful reports on many topics of interest.
Nevertheless, there is no primary source offering objective, regular, third-party data on the forward-looking sentiment of the freelance community: what freelance leaders and ecosystem partners anticipate, worry about, invest in, or take steps to avoid. It is a regrettable miss for a global professional community that delivers trillions to global GDP and supports large numbers of generally well-educated and ambitious professionals.
This is a gap that must be filled for several reasons:
- Freelance professionals, entrepreneurs, and agencies need up-to-date information on industry sentiment, trends, priorities, and initiatives
- Enterprise HR and Procurement executives need best practice knowledge that helps them in knowing how to engage with freelance marketplaces
- Ecosystem partners must understand marketplace and freelancer needs and pain points
- Investors and journalists need information on key freelance trends for their purposes
- More generally, telling the story of this new industry and career path
A useful and well-received first step was recently created by The Human Cloud, a freelance strategy and branding boutique working primarily with early stage freelance marketplaces and ecosystem partners. Their Quarterly Freelance Trend Tracker is a brief, validated and reliable survey that can be completed in under 10 minutes and has now been successfully administered twice.
Here are findings for the most recent quarter, Q1 2024, based on more than 100 freelance leaders in the survey panel:
Optimism abounds. Despite challenges, freelance leaders remain somewhat optimistic. Overall, 48% were very or largely satisfied with their business performance to date, while 29% described themselves as somewhat or very frustrated with their business performance. When describing performance expectations for 2024, 64% believe their marketplace will perform well or very well, 29% rated themselves neutral. Only 6% expect to perform unsatisfactorily this year.
Brand and client relationships are key drivers. When asked the factors driving the greatest impact on 2024 business performance, leaders’ perspectives nicely form three tranches: crucial, important, and less important. In the crucial category, it’s all about brand and market recognition (19%) and building strong client relationships (19%). The important tranche is about speed in taking action (16%), the marketplace’s talent (14%), and the effectiveness of sales, marketing, and product working together (12%). Finally, in the less important tranche is the marketplace’s current pricing plan (6%), actively seeking funding (8%), and the quality of marketplace tech (6%).
Mixed performance in client acquisition. The data on marketplace performance in attracting new clients is a mi: some successes, some not. 44% of freelance leaders describe their marketplace as generally able to attract and win new client relationships. On the other hand, 25% were dissatisfied with their ability to attracting new clients; an additional 7% described themselves as very dissatisfied for a total of 32%. The remaining freelance leaders (24%) were neutral, neither pleased nor disappointed in their performance.
The marketplace team is strong and has what it takes to succeed. Over half (57%) of freelance leaders see their marketplace team as able to provide the competence needed for the business to compete and go, and another 31% described team competence in neutral terms. Only 11% expressed concern.
Enterprise and SMBs are still prime client targets. 38% of freelance leaders describe their marketplace as focused primarily on the needs of small and medium sized businesses (SMB). A further 29% emphasized enterprise or large corporate organizations, and 20% were primarily seeking startups. Only 5% described themselves as a specialist in governmental or not-for-profit organizations. Finally, 8% said they had no specific target clients.
Investment funding is a low priority. When asked whether attracting additional funding is a priority for 2024, 74% of freelance leaders mentioned it as a low priority. Only 20% described seeking funding as an important initiative, derivative of the drop in VC funding for startups mentioned by Crunchbase. An additional 6% described their interest as neutral. Interestingly, this item generated the lowest overall response; 25% of panel members chose not to respond to this particular item.
Marketplaces are varied in their preparedness for recession. Expectations for a global recession may have diminished overall, but freelance leaders are widely dispersed in terms of their preparedness for an economic downturn. 35% of freelance leaders describe themselves as well prepared for an economic downturn, should it manifest. 26% say they are somewhat ready. And 30% believe they would need to take additional preparedness steps to withstand a tough economic period.
Governments generally aren’t seen to be helpful. Among freelance leaders, there is broad belief that government policies are generally unhelpful to freelancing. Only 12% saw government intervention as helpful and productive. More than half (60%) described their government as unhelpful or very unhelpful. 21% rated themselves to be neutral on this topic, and 18% of leaders chose not to respond to the question.
Confidence in the growth of freelancing remains very strong. Consistent with the high enthusiasm for freelancing expressed in earlier responses, 85% of freelance leaders described themselves as very confident or confident in the future of freelancing. 9% of respondents were neutral and 5% responded negatively to this item. 7% declined to respond.
Collaboration is key. When asked about collaborating with other freelance marketplaces as a path to growth, 54% of freelance leaders recognized the power of 1+1=3 by naming collaboration as an important growth strategy. 20% disagreed, and 27% were neutral on this tactic. 13% chose not to respond to this question.
AI is a freelance Swiss Army Knife, helping in multiple ways. As a new item, the trend tracker asked freelance leaders how they were utilizing AI in their marketplace and invited them to comment on the range of ways it had benefitted their business. 33% of leaders identified AI as a tool to improve the efficiency of the marketplace. 27% focused on improving the client experience through AI. 19% found AI helpful in improving the quality of talent curation. And 21% noted the opportunity to respond to client demand by providing client organizations with technical freelance talent having strong AI expertise.
Taken together, what do these data reflect? Certainly, these data capture an enthusiastic body of marketplace leaders who believe in the future of freelancing and better days ahead. Still trying to get the business model right, with many marketplaces continuing to define their target customer, and what capabilities matter most in driving growth.
More appreciation among leaders, particularly young and first-time entrepreneurs, about the difficulty of building a significant global business and more specifically, the challenge of attracting a strong flow of new customers and serving them well. A majority are moving on from what might be called their “VC funding addiction” and focusing instead on growth and profitability through business fundamentals and grit.
There is good recognition that the infrastructure required for broad adoption of freelancing is not yet in place and needs to be. Freelancing is still viewed as somewhat risky by enterprise executives (outside of engineering and IT) and that reduces market opportunity. Positive government support for independent professionals would be a helpful step but freelancing remains a political (and taxation) hot potato and will take more time.
AI is proving helpful in many ways; as Pat Petitti, CEO of Catalant, put it, “AI offering independent consultants the tools that enable them to deliver at the level, and with the power, of a larger firm.”
Finally, collaboration among platforms was described by half the leaders as an essential part of their growth plan. That augers well for a positive response to consolidation among marketplaces, and joining with traditional staffing companies, both likely trends emerging in the space over the next couple of years.
Viva la revolution!