The Rise of the Freelance Management Platform
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14 September 2018

The Rise of the Freelance Management Platform

With most disruptive ideas and technology there's a familiar evolution and refinement -  where we start is not always where we end up.  The rise of the freelance management platform in many ways stands on the shoulders of the early gig economy and talent marketplaces that formed as a result of the basic concept of connecting workers with work. The impacts of this concept have already rippled through our society and economy and will continue to do so, but what happens when the workers shift from low skilled to high skilled, and the work they do goes from simple to complex? The rise of both the  the freelancer and the freelancer management platform in recent years provide a glimpse into the future world of work.

The internet was created to connect people, and from its earliest days, the potential for online marketplaces was clear. Online marketplaces quickly emerged for everything from food to cars to used furniture. Then marketplaces for people—Taskrabbit, Postmates, Uber, Lyft, Thumbtack—arrived to connect those who need a service with those who can provide it. These marketplaces make up what’s known as the “gig economy. The early days of the gig economy and these types of marketplaces focused on task oriented, low skilled , one-off work that full-time workers didn't want to do. In recent years the gig-economy has expanded to include highly skilled knowledge workers of all types ranging from photographers to marketers, to developers and C-level management. 
In response to this shift, marketplaces and management platforms (such as Kalo) for highly skilled workers have emerged to meet the needs of this growing highly skilled and valued freelance workforce and the companies they work with.

From Marketplaces to Platforms

The freelance economy is growing at a rapid rate. There are an estimated 53 million freelancers in America today, and by 2020 some project that 50% of the U.S. workforce will be freelancers. There are a number of intersecting reasons for this trend. One is economic. After the financial crisis of 2008, the job market was tough and people had to find ways to make money on their own. There are also generational and cultural reasons—millennials are drawn to the independence, freedom, and flexibility that freelancing offers.

What are the differences between a Freelancer Management System and a Freelancer Marketplace?

For businesses, forces like globalization and digitization mean they have to create more content at a faster pace to keep up with a 24/7, always-on world. They also have to create content for a global audience with the personalization and localization in mind. Third, the internet has lowered the barrier to entry for new businesses and enabled the rapid transportation of ideas and information, so standing out as a brand requires creativity and a distinct voice. To generate content at the quality, volume, and scale required to be competitive, companies need freelancers. Moreover, freelancers are more cost-effective than full-time employees and give companies the agility to scale their workforce up and down as needed. Demographic shifts, workplace trends, and economic forces have all converged to create an explosion of freelance talent and a high demand for it.

However, these shifts have also created a huge unmet need for a way to manage freelancers. Whether a company works with dozens of freelancers or hundreds, managing the relationship, from recruitment to invoicing, is essential for productivity. Spreadsheets just don’t cut it. Freelancers may not have the same administrative requirements as full-time employees, but that does not mean they have none. They still need to be onboarded, communicated with, and paid. Companies without defined processes and systems in place for managing freelancers can find themselves saddled with tremendous administrative burdens and major compliance risks. In addition, a lack of structure makes it easy for things to fall through the cracks and mistakes to be made, which creates a negative experience for the freelancers.

This is why the emergence of freelance marketplaces has led to freelance management platforms that streamline and automate working with freelancers from end-to-end. A Freelance Management System (FMS) is a cloud-based solution that helps companies manage their freelance workforce. Freelancer Management Systems typically cover: freelancer onboarding, assignments, invoices, and payments. An FMS can also be used to track freelancer tax forms and monitor employment risk. These systems serve as a formal system of record in place to keep track of this workforce and guarantee visibility and standardization of who your freelancers are, the contract they have signed, their availability, the projects they have worked on, the invoices, and the payments that have been made to them.

What is a Freelance Management System/Platform (FMS)?

 

The Hype Cycle

In 2018, Gartner identified Freelance Management Systems as on the upswing of the “Hype Cycle” for procurement and sourcing solutions. The Hype Cycle is a methodology created by Gartner to interpret the evolution of new technologies that make bold promises. On a X-Y axis of time and expectations, respectively, there are five stages of the cycle: Innovation trigger; peak of inflated expectations; trough of disillusionment; slope of enlightenment; and the plateau of productivity. In a July 2018 report, Gartner found that FMSs are on the rise and have “projected high growth potential.

Gartner Hypecycle
Source: Gartner

Organizations with significant annual spend on non-employee labor should evaluate FMS technology as a means to streamline and improve collaboration with freelancers. Small and midsize companies may also consider reviewing FMS solutions as ways to consolidate processes for using freelancers or other independent workers as well as to mitigate potential worker classification and co-employment compliance risks,” the report said.

Freelance Management Platforms have also been established as a category on G2 Crowd, which helps companies find the right software and services for their business.

Review Kalo on G2 Crowd

 

Gartner predicts that the FMS [Freelance Management System] will continue it's journey to the mainstream in the coming years. Adoption of this type of software can vary from industry to industry and company to company, but the shifts towards the freelance economy and blended workforces are marching forwards. For any business that works with freelancers and wants to unlock the full potential of their workforce, a Freelance Management System will be an essential tool.

 

Ron Toledo

Ron Toledo

Head of Marketing at Kalo

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