The Gig Economy Isn’t Just For Startups Anymore

August 29, 2017, 1:00 PM UTC
U.S. Unemployment Rate Drops To 5.1 Percent, Lowest Level Since 2008
Big companies are hiring, but not for full-time employees.
Photograph by Joe Raedle — Getty Images

The rise of the TaskRabbit, the Lyft driver, the Postmates delivery man are well-known and much discussed, but guess what? Gig workers are coming to some of the world’s largest corporations too. Increasingly Fortune 500 companies and global giants like Samsung are turning to online freelancing platforms like Upwork and PeoplePerHour to find designers, marketing staff, IT specialists and other knowledge workers.

“It’s surprising how far some of these very large enterprises are in adopting these platforms,” says Vili Lehdonvirta, an economic sociologist and associate professor at the University of Oxford, who is studying online freelancing platforms and their effects on the way workforces are organized. In the past 12 months, the total number of projects sourced using such platforms increased 26%. He says that while we typically think of start-ups and small businesses using such platforms, increasingly large firms are turning to them too. “That is something that could have real impact,” he says. Lehdonvirta and his colleague Gretta Corporaal on Tuesday published research on the subject—they looked closely at 9 large companies—in a report by the Oxford Internet Institute, “Platform Sourcing: How Fortune 500 Firms Are Adopting Online Freelancing Platforms.”

Upwork, the online freelancing platform that launched (under a different name) more than a decade ago, has noticed this trend as well. “Until a couple years ago, we mostly saw very small companies, with maybe as few as 100 employees ” says CEO Stephane Kasriel. Now, there’s so much demand from large firms for freelancers on its platform that Upwork is planning to double the size of the “enterprise team” that caters to them. (Upwork currently works with 20% of Fortune 500 companies.)

Leaning on a crew of outside freelancers may seem antithetical to the needs and values of the modern corporation, for which talent—and retaining it—is often said to be everything. There’s also intellectual property to protect and culture (which is supposed to be eating strategy for breakfast) to maintain.

Lehdonvirta says these values are shifting; large firms have begun to appreciate more “permeable borders” and to see freelance workers as a source of fresh ideas and “knowledge transfer” from the wider world (better yet, their broader industry). “Enterprises have become more open to facilitate knowledge creation,” he says, adding that the savviest of platform-using firms build a bench of these highly valued experts that they can call upon as needed.

Corporations are also looking for more flexible and low-cost ways to hire, which freelancing platforms make possible. This is what led Cathleen Nilson, head of On Demand Talent at Samsung to turn to Upwork early last year. The company’s master service provider had capability gaps—particularly when it came to staffing quick-turnaround projects—and a lengthy engagement process in general, says Nilson. Though the Upwork experiment was initially met with internal skepticism, the business teams involved in the piloting of the platform at Samsung were pleased with the results. The electronics giant also saved money—using the platform achieved 60% cost savings and reduced administrative time by 64%, says Nilson. The onboarding process was also seven times faster than with traditional models, she adds. (Upwork handles much of the administrative burden for its enterprise customers, from payrolling to handling non-disclosure agreements.) Samsung is now expanding its use of freelancing platforms. “I really believe this is the future,” says Nilson, who notes the online talent model fits the tastes and expectations of younger workers. Few companies are as open about embracing online talent as Samsung; it was the only large corporation involved in the Oxford study to reveal itself.

The rising number of freelance positions, which typically lack benefits and other protections that come with being a full-time employee, has been the subject of much handwringing in recent years. Kasriel says platforms like Upwork should benefit both the freelancers and the corporations hiring them.

Lehdonvirta says that while the use of freelancing platforms could disrupt the way workforces are organized, that hasn’t happened yet—and a whole new ecosystem will have to develop to support an independent workforce if it does. For corporations, there are coordination costs—the challenges that come with managing both an internal workforce and interfacing with an external one. And for workers, there is risk and not a lot of support—a system that produces winners and losers. “If you’re a skilled freelancer, you can work anywhere in the world with flexibility and good earnings, but if you don’t possess any marketable skills and you’re driven to platforms out of desperation…you’ll have to upskill” says Lehdonvirta.

He notes that such a system may mitigate some inequalities in the labor market—the premium placed on degrees from certain elite institutions, for example—while creating others, like the premium placed on those who have performed more tasks on certain platform.But you don’t need to fret about that just yet. Lehdonvirta says large enterprises are at this point using online freelancers not to replace their core workforces, but to complement them, usually for special project work, he says. “You need the in-house employees to carry the culture,” Lehdonvirta says. That means the 9-5 isn’t obsolete just yet.



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