How the increase of freelancers will impact businesses

There were 57 million freelance workers in 2019. According to fresh research from UpWork, there could soon be as many as 70 million. For the many companies that utilize freelance workers, this sudden surge could present a plethora of unanticipated obstacles.

In this episode of IT Availability Now, Chris Butler, Lead Principal Consultant, Resilience and Security at Sungard AS, walks us through the budding freelancer movement, the impact it will have on businesses and measures they can take to prepare. Listen to the full episode to learn:

• What’s driving the recent freelancer movement
• Why organizations consistently turn to freelance workers and why this sudden increase could be more problematic than they realize
• The correlation between freelancers and greater IT cybersecurity risk – and how businesses can address this concern
• Additional steps organizations can take to maximize the gig economy without worry 

Alison Brooker is Director, Global Corporate Communications at Sungard AS. With over 16 years of experience primarily in B2B technology, she leads Sungard AS’ global external communications programs. Alison is passionate about how technology enables digital transformation for businesses.

A former Lieutenant Colonel and helicopter pilot in the British Army, Chris Butler now provides executive advisory services in the field of organizational resilience, business challenges of the 21st century, and cyber resilience. As a resilience consultant at Sungard AS, Chris provides senior leadership teams with bespoke training sessions on crisis leadership and management, business continuity, disaster recovery, information security, IT service continuity, and crisis response capability building and coaching.

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Transcript

The full transcript of this episode is available below.

ALISON BROOKER (AB): In 2019, the freelance workforce was 57 million strong. If you think that's a lot, you haven't seen anything yet. 

I'm your guest host, Alison Brooker and this is IT Availability Now, the show that tells stories of business resilience from the people who keep the digital world available. 

According to recent Upwork research, the number of freelance workers may soon increase 17% to nearly 70 million. For many organizations, expanding their freelance workforce could create a handful of unforeseen challenges. 

On today's episode, we speak to Chris Butler, Lead Principal Consultant, Resilience and Security at Sungard AS about the freelancer movement, its impact on businesses and what they can do to make sure they're adequately prepared. 

Chris, welcome back to the show. 

CHRIS BUTLER (CB): Hi Alison, thanks for having me. 

(AB): Sure. So the Upwork research reveals we could be looking at millions of new freelancers in the very near future. I assume that the pandemic has something to do with this, but what do you think is really driving this movement?

(CB): You're absolutely right. In a word, the pandemic. And I think what we've seen is people reevaluating what's most important to them from a job and lifestyle perspective. Many people now crave some flexibility in both where and when they work and that sort of improved in their favor work life balance. And this is probably for a number of reasons. Freelance workers can charge higher rates, which offers them some opportunities to increase their wages. But it's really about, I think freelancers feeling more in control of their lives compared to before the pandemic and compared to the routine of commuting and office working. 

And we've seen a lot about this thing called the Great Resignation. It's definitely real and it's not slowing down anytime soon. We found some interesting statistics actually. In April 2021, 4 million Americans quit their jobs. In August of 2021 again, 4.3 million Americans quit their jobs. And by November 2021, a record 4.5 million Americans had quit their jobs all to go and find some other way of working. Globally, Microsoft conducted a survey of its workforce in 2021 as well, and that survey found that 41% of its staff considered quitting or changing professions. That’s a huge amount.

(AB): Yeah, it really is. The numbers are staggering. So, it kind of makes sense from a worker's standpoint, but why are organizations looking to hire freelancers? What value do they bring to the table?

(CB): There's a number of areas I think, and the first one might be around the ability to access quality skill sets or competencies for when they need them. Not all firms need everyone in every job all the time. So some examples of those might be, for example, disaster recovery test managers, where they've got a particular program of activity, or operational analysts or project managers. I mean, those are three examples where certainly we've seen that in Sungard AS. But also another thing is that you start to remove geographic limitations, which means that companies can spread their net a little bit wider. They increase the pool of available workforce. 

And you know, the explosion of remote working capabilities throughout the whole of the pandemic over the last two years. As that’s gone on, we've seen improved security, more people getting VPN access, cloud services have exploded and proliferated as well. And what this has meant, is that many more people can work from anywhere, but this also allows firms to recruit from a far wider basis than perhaps they were before. 

And I suppose the third reason would be around the other end of the quality skill sets, the sort of routine tasks. It might be possible to free up full time employees to spend more time on more important project work if you package out routine tasks to freelancers, such as data entry or data analytics type jobs.

(AB): The relationship really seems like a win-win for both the company and the worker. How do you think a growth or an increase in freelancers would change that and what challenges might an organization now face?

(CB): I think people focus a lot more effort on the benefits of this. So hopefully, yes, it could be a win-win for companies but it depends on their particular situation and what industry they're in. 

In terms of challenges, I think there are three things that spring to mind: the resourcing of gaps, HR challenges and perhaps regulatory issues. 

So whilst you can use freelancers to reduce the skills gaps that you have, you might end up with people with overlapping skills in the company and that's a little bit inefficient. And for critical skills in particular, there might be a lot of competition for the best freelancers. A good example there might be in the creative industries, where many copywriters are freelance and the best of them command some pretty high earnings. 

If you think about HR, regulatory or possibly even tax issues, if you're employing people from different jurisdictions or different countries, that also throws up challenges. So for example, different states in the U.S. have different approaches to rules for working during COVID. Or indeed actually if you think more globally, the four home nations that make up the United Kingdom - that's England, Scotland, Wales and Northern Ireland - or if you think in Europe, lots of people in Luxembourg commute in from Germany, Belgium, France and Switzerland. All these throw up some serious issues that firms will have to address.

(AB): So how do you think they can prevent any of this from happening?

(CB): Good planning, balancing out those requirements to understand what they need and to find what the best way of delivering those resources are. It’s really focusing your requirements on your business priorities. So, work out how you can maximize the value of your freelance workers, whilst ensuring that you don't stray too far over that line. The business still has to hold on to the right structure and number of full time employees for this sort of business priorities. You're trying to balance out having too much staff turnover and disruption whilst also retaining that flexibility to treat what's important to the business.

So you know, for your full-time employees, really work hard on working out who you need, the best ones you want to keep. Compensate them well in your compensation and giving them a good chance to progress in their career. Give them good training and help them achieve this work-life balance to stop them from looking to become freelance themselves. You bring this slightly more flexible approach into the workplace for your own staff. And then using your freelancers to complement that core team once you've understood what you need to do.

(AB): Yeah, that makes a lot of sense, not leaning too far toward freelancers. What other pitfalls must organizations plan for?

(CB): Well, I think it's top of mind of pretty much every CEO at the moment and I'd say the big one would be cybersecurity risk.

(AB): Yeah, it definitely is. Can you dig in more to that?

(CB): I mentioned earlier about remote working and how it has proliferated and cybersecurity controls have gotten a lot better. But it wasn't like that at the start and it's not a uniformly improved picture. Remote working absolutely does expand the attack surface outside of your corporate network and therefore using freelancers who aren't inside your corporate network by default may further complicate that and add those greater risks in. 

Businesses need to be able to understand that and work out the best way to let freelancers securely access parts of the network, business data and applications that they need to. And it may be that you need to start thinking about whether you need to find a company device to those freelancers, and that then will increase costs and complexity. But if that's the only way to mitigate the risks that you've identified, so be it. You've got to balance those two things out. 

(AB): Right. So what can organizations do to really plan for this greater IT security risk?

(CB): If we go back to understanding your business priorities and how you hope to use the right resources to address all of those, you then use that information to really plan your entire engagement for freelancers. And that would start with all the onboarding and it would end at the offboarding stage. And you kind of need to then in that planning phase, understand where exactly you want freelance work and actually limit their network access realistically to what they need to do their job. And obviously, then, at the end of it, at the offboarding stage, make sure that that does not stay open for a minute longer than is needed. And that will involve that sort of planning and that coordination across the whole of your organization with HR, with IT, with IT security, with procurement, to make sure that everyone understands the correct approach. 

And if you have decided to go down the route of providing hardware, how are you going to get that back? I suspect you're not going to be FedExing your laptop to somebody in a different country, but if you have provided the hardware, then there's going to be challenges to be faced, but it's not that simple. It becomes more complicated when you start to sort of package this all together. And you know, there's an argument that says you start from a principle of a zero trust model for any freelancer who's not an employee. The trick there then is who does that cover? Is that freelancers, any other contractors, some of your service providers? There's a lot of planning involved which I guess is the bottom line.

(AB): Yeah, that definitely makes sense. What can companies do to ensure that they cover all their bases? Is there anything else that they can do?

(CB): Well, it's really all about good controls, I think. We talked about the planning, but, you know, it's becoming increasingly important that firms have multi-factor authentication as a really good way of controlling access, but that's not the only one of the relevant controls. Ensuring you've got network segmentation is another good technical control. But also think about what platforms you could employ and using a lot of software as a service or in the cloud platforms - for example, SharePoint, but there are plenty of others. But using those sorts of applications would stop or try and minimize freelancers from retaining data locally on their devices. We even want to think about whether you can control that technically. So basically, yes, it’s all about the controls, good security tools, working with your managed service providers to make sure that your whole environment is monitored properly, regardless of who's trying to access it.

(AB): Chris, any other advice you can offer?

(CB): One other thing to consider would be the challenges if you are in a regulatory industry, so financial services is the most obvious one. But if you've got significant regulatory pressures, which come from the types of risks that exist in those sectors, such as harm to consumers or market stability, for example. The challenge for a firm is to work out how it owns those risks if a freelancer is working with you in those areas. You can't necessarily transfer that risk to a freelancer. And the questions you'd have to consider include what level of insurance cover they have for their professional services. Is it sufficient? Does it cover all the risks that you've got? 

So in certain types of industries, you're going to have to make sure that you've got the suitably qualified and experienced and insured type of freelancer, so there's a specific extra challenge for certain types of firms in certain sectors. That's going to be a real challenge, as well. So you know, understand what the rules are for that sector, how well are you in a position to control those risks before you start introducing freelancers, how are you going to govern them and plan and all the things we're talking about so far. So, I think that area of risk in regulatory sectors is one for firms to really focus in on.

(AB): That's really great, Chris. As more freelancers enter the workforce, organizations need to prepare. By outlining your long-term business objectives and strategically investing in the full-time employees and freelancers who can help you meet them, while also shoring up any security risks, you'll be better positioned to maximize the burgeoning freelance economy without fear. 

Chris, thanks so much for joining us today. 

(CB): Alison, as always a great pleasure. 

(AB): Chris Butler is Lead Principal Consultant, Resilience and Security at Sungard AS.

You can find the show notes for this episode at SungardAS.com/ITAvailabilityNow. 

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IT Availability Now is a production of Sungard Availability Services. 

I’m your guest host, Alison Brooker, and until next time, stay available.