More on the great freelancer movement

(Editor’s note: This is the second of two parts. Read Part 1.)

Millennials are in the driver’s seat. It may not feel like it to them, but they come with far more flexibility, a less encumbered lifestyle and a resilience that makes them perfect for doing project work.

Their willingness to “do what it takes,” coupled with an innate ability to shift gears quickly, is positioning them for an adventure-based lifestyle with far greater freedom and an ability to select meaningful work, two things that mesh very well with Gen Y thinking.

Here are eight overarching drivers that will make this shift to project work seem exceedingly normal: 

1.) Companies are no longer a place

For many companies, the need for a physical location is either dwindling or disappearing. Business is becoming very fluid in how it operates, and the driving force behind this liquefaction is a digital marketplace that connects buyers with sellers faster and more efficiently than ever in the past.

Even though Yahoo and others are pushing for a more in-house workforce, the overarching trend is still in the other direction.

Yes, there will still be physical businesses in the future, but the concepts of proximity and place will have less value in the years ahead.

2.) Freelancer toolbox is improving

The Internet is a sophisticated communication toolbox able to match the needs of a business with the talent of individuals in far more precise ways than ever before, and these tools are getting better every day.

As an example, oDesk, the online work marketplace recently announced they hit the magical tipping point of $1 billion in brokered work between businesses, many of them solopreneurs and freelancers who moonlight, and in many cases earn their entire living, online.

According to MBO Partners’ State of Independence in America report, the number of independent workers is expected to rise to 23 million by 2017.

(Insert “Longtail Job Niches” from oDesk graphic here)

Caption: Long tail job niches at oDesk

3.) Proliferation of long tail job niches

In the past, if you produced a product that only appealed to 1 in 35,000 people it was a very hard sell. Few retailers would have wanted to carry that product on their store shelve. Today, however, the Internet enables us to connect buyers and sellers of niche products far more efficiently.

The same goes with niche skills. The above chart from oDesk, shows jobs employers are requesting and skills specialists are offering.

With niche skills and niche demand for those skills, people specializing in Econometric and Robotframe (see chart above) are well suited to be freelancers. They can charge a premium for their service, but employers only need them for short periods of time.

4.) Companies have an obligation to hire the fewest number of people they can get away with

Hiring a full-time staffer is an expensive proposition. According to Microsoft, it costs them $24,000 to replace a Gen Y worker.

Over the years a tremendous number of laws have been written to govern the employer-employee relationship, and managing a business in what some would term an onerous HR environment, have many searching for alternatives.

The overhead costs alone for the average full-time employee in the U.S. are now in excess of $10,000 per year.

For these reasons, companies have an obligation to hire the fewest number of people they can get away with. They have an obligation to their shareholders, current staff, and even their customers to find cheaper ways of doing business, and to survive.

As a result, employers are constantly looking for ways to circumvent the traditional hiring process.

5.) The appeal of the sampler path

When stepping into a brewery or winery its easy to get overwhelmed with dozens of choices. To solve this dilemma, most places simply offer a sampler tray to allow you to taste your way to a good decision.

Similarly, most young people have little understanding of the job that will best fit their personality, giving the sampler approach great appeal Working a dozen projects in a dozen different industries will naturally give someone a better appreciation of the work involved and will offer a more logical approach to finding their best career choice.

6.) The freelancer benefit package

No, being a freelancer doesn’t come with health insurance, vacation time, or a 401k plan. But what it does offer is far greater.

You’re in control so you get to decide who you want as a client, when you’re available for work, and most often, how much you’ll get paid. Yes, sometimes you’ll get fired from a project, but you can also fire your client.

Freelancing done right will give you a far higher salary, a far more influential circle of friends, and an ability to make a difference.

7.) Freelancing can create a powerful win-win relationship 

People who hire a freelancer have respect for your abilities. At the same time, with any good relationship, you’ll have respect for the work they’re trying to accomplish.

Over time you’ll be able to influence the nature of projects, as well as the path to accomplishment, and take pride in your achievements.

Rather than settling for whoever wanted to hire you, you have the ability to migrate to the top quickly, avoiding all the infighting and office politics involved in climbing the corporate ladder, sway people’s thinking, and make a meaningful difference along the way.

8.) Ability to control your own destiny

Naturally the greatest appeal comes from the feeling of being in control.

Rather than letting some manager decide every detail of your life, when to arrive, what your priorities are today, and who you get to work with, a freelancer gets to sit behind the steering wheel of their own life.

Certainly, when you choose the life of a solopreneur, not everything is within your control. And not everyone can manage all the variables of a project lifestyle. But for those who can, the differences are startling.

When you add up all of the positives – flexibility, freedom, purpose, meaning, and an ability to control your own destiny – the freelancer lifestyle brings with it some powerfully compelling reasons to switch.

Business Colonies

Since many freelancers won’t be good at lining up one project after another, I have predicted that many of today’s co-working facilities will begin to evolve into what I call Business Colonies.

Most coworking spaces consist of an aggregation of talent with additional capacity to take on extra projects, so this makes them a natural forerunner.

However, Business Colonies will form in many different ways. Some will be private colonies run by large corporations. Others will form around a specific talent pool with specialties in such areas as metallurgy, bioinformatics, data mining, social mapping, or video production. Still others will be non-profit colonies formed around a specific cause like clean water, halting the spread of malaria, or rebuilding Haiti.

Final Thoughts

The business world is constantly being tasked with doing more for less. Virtually any company that cannot find ways to do things more efficiently and reduce costs will not survive.

Typically the largest number on a company balance sheet is the cost of labor. 

Business colonies are an organic process of matching labor to projects for the exact duration of the contract. No more, no less. Overhead costs, compliance and accounting issues are all minimized to improve the overall efficiency of the operation.

I don’t see business colonies as a way for corporations to take advantage of cheap labor, although some may try. Rather, the coming era of skill shortages will put talented people in the driver’s seat with many commanding increasingly high rates for their unique abilities.

Over time, people will be credentialed by the colonies they are associated with. Each colony will carry a certain pedigree, and the earliest among them will become the Harvard’s and Yale’s of the colony world.

In the future, few will be able to relate to the elaborate hiring and firing systems that we use today. As we enter the era of freelancers and business colonies, business, as we know it, will become a thing of the past.