Watching your LinkedIn feed nowadays can feel like watching a particularly grisly episode of Game of Thrones —who will meet their doom next?
In 2022, there were 1,535 layoffs at tech companies with 241,176 people impacted, and just 2 months into 2023, TrueUp reports that there have already been 379 rounds of layoffs at tech companies with 113,082 people impacted. That’s more than 3,100 people every single day.
How do these large swathes of redundancies and brutal tech firings impact freelance talent? We’re dropping the knowledge.
Businesses Turn to Freelancers to Fill the Gaps
The truth is, even before tech layoffs began, organizations were struggling with skills shortages. During the pandemic and the Great Resignation, many companies increased their hiring activity, but suffered from the law of diminishing returns. The idea is that you can add staff to achieve productivity gains up to a certain degree —and after that, you’ll start to see less positive impact, and perhaps even a negative impact. If you add more employees to your headcount without making any other changes, the rest of your employees may actually start to achieve less.
In many ways, the tech layoffs that we’re experiencing now are a correction to this mistake, with businesses asking —do we really need this many employees, or is it actually negatively impacting productivity, and can we find a better way? That’s why according to Forbes, many tech companies actually saw their stock prices rise when they announced their layoffs, as losing staff is a way to show investors that companies are trimming the fat, and looking for more productive ways of working.
One example of a better way of working is to have a much smaller core staff in-house, and then augment this with a talent cloud, regular freelance talent that you can pull in for specific projects where needed. This solves the issue of full time employees feeling overstretched, and yet has no negative impact on the core team’s productivity.
Ex-employees Turn to Freelancing to Fill their Time
Meanwhile, as businesses look to the freelance world for the solution to their skills gaps, what of the ex-employees they left behind? Ironically — freelancing is the answer to many of their challenges, too.
According to industry expert Margaret Lilani, talking to HR Executive, “We are experiencing a once-in-a-lifetime, tectonic shift in the notion of work, where skilled professionals are rethinking what they want from their careers and are gravitating toward the flexibility, autonomy and benefits of freelancing,”
While many people would never have considered leaving full-time employment to start a freelance career, now that they are left out of work, it suddenly seems like more of a viable option. This could be prompted by the need to embrace a side-hustle while they look for another full-time job, (which could easily turn into the main event once they experience the flexibility and autonomy of a freelance career), or it could equally be fueled by a realization that being an in-house employee is no longer the most reliable option.
We live in a climate where employment laws, especially in the US, do not protect full-time employees effectively, and recent tech layoffs have seen many people left without work at a moment’s notice. Freelancing offers the ability to work for many companies at once, spreading your metaphorical eggs across multiple baskets. Sorry Mom, but getting and holding onto one “stable” job just isn’t that stable anymore.
The Market Turns to Freelancing as a Smart Employment Model
As individuals and businesses alike look to freelancing as a critical part of the current employment crisis, technology will be needed to support both groups in meeting new challenges head-on. Examples include:
- Companies who aren’t sure where to find the right people and skills, and want a structured way to source and onboard talent, rather than relying on word of mouth or crowded marketplaces.
- Organizations who are new to compliance mandates for hiring freelancers, and want to stay on top of misclassification risk by onboarding effectively and with all the right documentation in place.
- Businesses that are used to working ad-hoc with one or two freelancers, and have now scaled, so need to manage dozens of independent contractors across different departments.
- Individuals who have never freelanced or worked for themselves before, and want support tracking projects and milestones, and understanding best practices for communication.
- Payroll and payment teams that have previously relied on a standard monthly payroll, and now have different currencies, methods of payments, and invoice formats to consider.
Tech layoffs have set off a ripple that is being felt across all areas of employment, but when businesses and individuals pick themselves up and dust themselves off, we could be seeing a brighter future for both groups as a result. Businesses will see improved productivity with the help of leaner teams and a ready pool of freelancers that can be used as and when they are needed. Individuals will get greater autonomy, flexibility and security from branching out into freelancing, taking on multiple clients and higher-value tasks at their own discretion.
However, to make this work smoothly —technology is a must. Fiverr Enterprise’s Freelancer Management System (FMS) supports businesses in seamlessly scaling the number of freelancers they work with, automating onboarding and compliance workflows, managing ongoing tasks and milestones, tracking and approving budgets across the business, and paying each and every freelancer on the business’ behalf.
For your freelancers, they gain transparency into workload and payments, an easy method of communication, and the confidence that the business has the systems in place to manage the relationship without friction.
Interested in seeing how it works for yourself?