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our country is in the top 10 economies with the largest market for “free artists”. Why there will be even more Russian freelancers, and fewer full-time employees, says Solar Staff CEO Pavel Shinkarenko
How project workers affect staff members
The times of “white” and “blue” collars have sunk into oblivion, they have been replaced by “digital” ones – those who work for themselves in the status of self-employed or freelancer. According to PwC, there are more than 14 million “freelance artists” in our country: last year alone, their number increased by 76%.
Due to the development of local legislation, the emergence of such concepts as individual entrepreneurs and self-employed, freelancing has ceased to be associated exclusively with programmers. Now lawyers, sound engineers, hairdressers, bloggers, window pasters and other specialists can work for themselves.
More and more professionals from a wide range of industries, both low- and high-skilled, are choosing project work. They are becoming the main force of the gig economy, where most jobs are temporary, payment is made for the amount of work performed, and the customer and contractor are looking for each other in the virtual world through digital platforms, exchanges and aggregators.
By attracting project performers, businesses save time and money: companies always have the opportunity to quickly hire staff, train them and abandon them at the right time if something goes wrong.
Typically, one company, according to the Human Capital Benchmarking Report, spends 42 days to completely fill a vacancy. This is, of course, the “average temperature in the hospital”: the time depends on the level of the position, the brand of the employer, competition in the market, the number of interviews and vacancies that the recruiter works with. At the same time, according to our estimates, it takes 3,5 days to search for a freelancer. This makes it possible to quickly launch the desired project: the person has not yet started working, but the company has already begun to save.
Transformation of full-time performers into project
A new full-time employee, as a rule, needs time to adapt – to the style of work, team, corporate culture. A freelancer, on the other hand, has purely utilitarian tasks: you need to do quality work on time, otherwise you may not get a second chance to make a first impression. After all, companies evaluate productivity and pay only for the result, and it is easy to replace one employee with another. In addition, the project can be completed at any time, there are no sick days and vacations, and the employee’s productivity, on the contrary, is growing.
Findings from PwC’s 2021 Productivity Roadmap show that the proportion of companies that consider hiring freelancers a more cost-effective hiring option has risen from 39% to 80% over the past three years. First of all, the demand for project workers is caused by the need for digital transformation of business.
But both routine processes and projects requiring high competence are outsourced. Freelancers are already saving businesses in situations where you need to solve narrowly focused tasks. For example, a store owner does not need to hire a full-time designer to draw illustrations – it is enough to conclude a project contract. It is cheaper for a flower chain to hire freelance developers, for example, to launch a mobile application, release it to the market, and then reduce the team to one outsourced technical specialist who will monitor the work and update the application. In this situation, the business wins doubly, because it can temporarily get at its disposal employees with great expertise.
machine instead of man
According to the Future of jobs survey, released at the World Economic Forum in 2020, automation will affect 75 million jobs in the near future. As a result, 400 million people will become “superfluous” in nine years, say the McKinsey Global Institute (MGI), and this is 15% of all jobs in the world. Low and medium-skilled people will either have to change jobs or compete on price with automated systems.
Drivers, cleaners, merchandisers and other similar professions have already turned into functions: it is not so important for the customer, whether it is a business or an individual, who does this work, the main thing is the speed and quality of services. On the other hand, full-time drivers or cleaners already understand that they can earn significantly more by giving up one employer in favor of several. PwC estimates that by 2025 temporary project workers in one company will perform up to 20% of the work. So far, they account for no more than 5%.
At the same time, higher-level specialists of the company will increasingly be transferred to project work. Thus, the demand for accountants, according to the statistics of the Glassdoor platform, is falling every year: employers connect automated systems. The business will hire project accountants to set up all critical processes, such as contracting. Further, a specialist will be needed only in emergency situations: in normal times, the system will use the created algorithm.
The same trend, according to Glassdoor, will affect sales managers, HR and top management: instead of one company, in-demand specialists will serve several businesses on a project basis, acting as consultants, managing partners and mentors.
Freelance market trends
Already now the market of project executors is growing. A new generation is maturing, which is not going to work for one company all their lives. It is not tied to employers, does not trust the government and the brand, appreciates a free schedule, tends to change countries, professions and sell its talents to as many customers as possible at a time. So, from July 2020 to January 2021, about 16 thousand people from 16 to 18 years old registered as self-employed in our country.
Together with them, representatives of the older generations are ready to take risks: the economic situation is changing, there is more space and opportunities on the market to try yourself as a “free artist” and leave a stable job without risking being left hungry.
As a result, in the future, only those who form the basis of the business will remain on the staff – carriers of knowledge that is critical for the company: managers who are able to transfer it further by leading third-party teams. This approach will make the business flexible and allow it to survive crises, volatility, falling or rising demand.
Companies will have managers to work with freelancers. They will take over all the interaction with outsourcers: they will set tasks, monitor their implementation and conduct a dialogue on behalf of the company. Different companies are already using something similar: for example, Yandex.Lavka has a separate specialist responsible for the work of couriers.
Although companies have already begun to return their employees to offices, some enterprises (for example, Google, Amazon and Mail.ru Group) continue to adhere to a hybrid format of work, and some companies are abandoning the office in favor of rental places in coworking spaces.
About 20-30% of specialists will still remain remote, which means that the market will need professionals who will build and supervise the interaction of project workers and remote teams with those who remain working in the office. In many ways, this role will fall on HR. Their task will be to adapt production processes, restructure work communications and create new conditions for career advancement for both office and remote employees.
The reaction of services and the state to the freelance revolution
In our country and a number of European countries, a full-time employee is more privileged than a freelancer: you can go on maternity leave, vacation, sick leave, get corporate insurance, a fitness subscription, in the end, it is much easier for him to get a mortgage and get a loan. There are no such advantages for project workers. However, during the pandemic, the German government, for example, issued financial assistance to freelancers.
In the USA, the situation is different: the degree of social protection of a full-time and project contractor does not differ so much. Perhaps that is why the change of status is not so scary for the population: the freelance market in the United States overtakes other countries and is estimated at $ 1 trillion, more than 50 million people are freelancers.
The Russian government is still eyeing freelancers and is developing a number of bills to make their work easier. Some initiatives involve partnerships with private companies. For example, the Federal Tax Service officially made it possible to pay personal income tax using our service for automating workflow and payments to freelancers. In the near future, we will see less and less social discrimination against project executors – the state will actively protect their rights, seeking to bring more and more self-employed people out of the shadows.
Freelancers earned $41 billion last year, according to PwC. The growth rate of this segment is literally pushing the state to lead the freelance revolution. One way to do this is to simplify and make transparent the interaction between customers and contractors.
In 2019, the Russian government began to actively influence the freelance market by creating new tax statuses. The number of self-employed in our country today is 1,7 million people. This figure is increasing daily by 5 freelancers. The special tax regime attracts both specialists and companies: the number of firms that are ready to build official relations with the self-employed is growing every day, and, accordingly, the taxes that the country receives are also growing.
In order for a business to formalize a relationship with a freelancer, it should be convenient for companies to search, select and connect project executors. Profile classifications (resources with ads) in the manner of Profi.ru and YouDo for hairdressers, makeup artists and other professionals, as well as freelance exchanges: FL.ru, Freelance.ru, Kwork and others help you navigate the variety of performers.
Operators of project specialists will increasingly meet freelancers. For example, Yandex wrote out analogues of insurance and sick leave for its drivers and couriers. We also contribute to the development of the market. For example, we insure the liability of cleaners in case of material damage and compensate for the damage ourselves. Such measures help people feel a little more secure and encourage more professionals to switch to freelancing.