Why freelancing is the new 'job for life'

When Ben Davidson realised he could make as much money working for himself as he could for someone else, an idea began to form.

So three years ago, armed with a degree in computer science and five years' experience working for a Sydney-based internet service provider, he took the plunge and left full-time employment to join the growing ranks of Australia's freelancers.

“I was enjoying my job, I was on a good career path progression, and everything was going good,” Davidson says. “But I had a burning desire to do my own thing and be my own boss, and set my own hours.”

It is a desire that that more Australians are giving in to, especially as technology is making easier to fulfil. At it is reshaping how corporate Australia will look at acquiring and retaining skills.

According to a study released in October by the US-based online outsourcing service provider Elance-oDesk, 30 per cent of the Australian workforce -- 3.7 million workers -- had engaged in supplemental, temporary, project, or contract-based work in the previous 12 months. Between them they earned $51 billion.

The study found that more than half worked this way by choice, with a third claiming to make more money than when employed.

Many also work as moonlighters, holding a primary job but earning additional income on a freelance basis. The study found that 31 per cent of moonlighters have thought about quitting their job to work independently.

The prevalence of freelancers in the Australian workforce is in part due to web-based services such as Elance-oDesk, or the Australian services Freelancer.com, Expert360, Nvoi and AirTasker, which create markets for workers to connect with suppliers.

These services enable workers to market themselves and compete for work on both international and local projects, performing tasks ranging from complex software development projects through to home cleaning.

For Davidson, seeing freelancers with similar skill sets build their profiles and win lucrative projects on oDesk gave him the confidence to quit full-time work.

While work was not consistent initially, as his profile has grown he now finds that more work is offered to him than he seeks out. He has now completed projects for businesses ranging from an ebook supplier to a university.

“There was definitely some downsides, but overall I felt from very early that I had a very high chance of success and making a good go of this,” Davidson says.

“As a freelancer I work really hard -- in fact I work harder than I ever did in my regular job -- but it's much more rewarding, and I set my own hours. It has a flexibility that is very attractive.”

The country manager for Elance-oDesk Kyri Theos says the two demographic groups that are most strongly represented amongst freelancers are Gen Y workers and older Baby Boomers, who respectively use the service either to find more interesting or more convenient work.

Theos says registrations on Elance-oDesk have grown 270 per cent in the last three years -- something he sees as symptomatic of the death of the ‘job for life'.

“Underemployment is a real issue, low wages are also a real issue,” Theos says. “So people are turning to these new ways of working to earn an additional income, to earn new skills and to make themselves more employable, but also to have the freedom to choose what they want to work on.”

The founder and chief executive of Australian-based service AirTasker Tim Fung is also reporting rapid growth, with freelancer registrations having grown seven-fold this year.

Similarly, the temporary and contract management service Nvoi has signed up 12,000 workers, despite only having recently launched,

Fung points to Australian Taxation Office figures that demonstrate 1.1 million Australians are claiming a second form of income as further proof of the strength of freelancing and moonlighting.

“That's a huge stat, because you have 1.1 million who are claiming it, which you would imaging would be a small subset of the overall people who actually are making money in means other than their full time job,” Fung says.

Fung also sees a growing pool of freelancers who are throwing in their day job.

“We have a number of users who are now earning over $2000 a week, and when you scale that to an annualised salary, that's over $100,000 a year,” Fung says.

But if more workers choose to work on a freelance basis, there is the potential for shortages to appear in the pool of potential full-time employees within certain skill sets.

Theos says it is important that corporate Australia recognises that people are seeking flexibility in the kind of work arrangements that they want.

He also points out that the benefits of flexibility also extend to employers.

“They are able to scale very quickly and bring talent on demand as their demand grows and respond to changes in demand, instead of having a stock of full time people,” Theos says.

He adds that the average time to hire a freelancer is three days, compared to 30 days for an employee.

The trend for larger organisations to take freelancers seriously has also been noted by Bridget Loudon, co-founder and chief executive officer of Expert360, a global marketplace for professionals.

“It's not just that people are choosing to go freelance, but companies are becoming more project driven, and are valuing the freelancer and the independent worker much more than in the past,” Loudon says.

Expert360 has recruited a pool of 4000 professionals in just under 18 months, with revenue and project volumes growing at 30 per cent each month.

But it may take some time before corporate Australia fully embraces its freelance workforce.

According to Anne-Marie Orrock, a former human resources director in the technology sector and now a freelancer in her own right through her HR consultancy Corporate Canary, HR managers traditionally have are trained to 'retain, retain, retain' talent and skills.

She says they also hold concerns around insurances and occupation health and safety regulations, as well as difficulties that may emerge through freelancers receiving higher wages per hour than in-house workers.

“HR will also usually prefer to contract as employees as it satisfies the 'control' test,” Orrock says. “This means the employer can direct the employee ‘how, when and with what' a result is produced.”

However, she says many employers are finding that ‘renting' skills and knowledge through use of freelancers can be cost-effective, particularly when the same freelancers are rehired. She says it is also possible that relationships with freelancers may last much longer than those with employees.

“Every day is a high productivity day for the freelancer as their return rate depends on it,” Orrock says. “When an employer has an existing relationship with a freelancer they are not stopping work progress to start a hiring process. Work can continue, or start very quickly when you engage with freelancers.”