Freelancing during these trying times can be a strategic approach. Whether you have freelanced along with a full-time job or you are a full-time independent contractor, independent work can help recession-proof your earnings.
However, we should also not invalidate concerns surrounding financial stability, job security, and when or if all non-essential workers and gig workers will receive their next paychecks during the crisis, reminded PYMNTS, a website that covers payment news and top industry trends. Interestingly, freelancing can be beneficial during an economic recession, according to Lamine Zarrad of business news site Forbes.
The State of Freelancing During the Pandemic
Payoneer, a financial services company, conducted a survey of more than 1,000 freelancers from over 100 countries to ask about how the COVID-19 crisis affected the demand for their services, their hourly rates, and the opportunities and risks they expect will arise. During the crisis, 31.63% said the demand for their services greatly decreased and 28.79% said it slightly decreased. Fortunately, 22.85% said the demand for their services remains the same as usual.
11.43% said it slightly increased and a small number of freelancers (5.30%) reported that demand for their services greatly increased. Regarding the freelancers’ hourly rates, 73.48% said their rate remains the same during the crisis, 23.07% said they lowered their rate, and 3.45% reported increasing their rate.
Many freelancers work for clients across the globe so when asked about how demand from clients in specific regions had been affected, freelancers with clients based in North America said their demand decreased (53.1%). Only 32.7% and 14.3% of freelancers with North American clients said their demand either increased (14.3%) and remained the same (32.7%).
Likewise, 52.6% of freelancers with clients in Europe said their demand for their services decreased. Only 14.4% and 33% of them reported that their demand either increased and remained the same. Meanwhile, freelancers with clients in Asia and Australia had less of a decrease (46.2% for Asia and 44.3% for Australia).
Those with clients in these regions said the demand for freelancers either remained the same (45.5% and 49.4%) or increased (8.3% and 6.3%). The numbers showed that demand for freelancers will bounce back once the world recovers from the crisis. For freelancers managing their own team, comprising 21% of participants, 76.89% said their rate will remain the same. 17.33% reported lowering their rate while 5.78% said they increased their rate. Moreover, 61.50% said the size of their team will remain the same, 25.66% said they will reduce the size of their team, and 12.83% said they will increase it.
Many wonder about what will happen next as the world faces an economic downturn during the crisis. 34% said the demand will slightly increase from what it was prior to the pandemic and 19.14% said it would greatly increase. 20.88% said the demand will remain the same as before the pandemic. However, only 18.41% said the demand will slightly decrease and 7.57% believed that the demand will greatly decrease. The findings revealed that the long-term future for freelancing after the crisis looks very optimistic.
Companies Are Eyeing Freelancing
More traditional companies that shifted to remote operations may be relying on freelancers as they operate their business on tighter budgets and fewer team members following layoffs. These may make freelancing more appealing to companies in the future, conjectured Marlon Litz-Rosenzweig, co-founder and CEO of online freelance hiring platform WorkGenius.
He added, “Companies are shifting to remote workforce models, and they are realizing that, ‘Oh, for a lot of the work we thought we needed people on premises. We don’t really need people on premises.’” Litz-Rosenzweig argued that the shift to freelancing will remain post-pandemic in which freelancers find more opportunities just as businesses search for talent without taking into account your location. The regular hiring of freelancers will prompt companies to shift how they find, work with, and pay independent contractors, leading to a rise in online freelance platforms.
The pandemic will likely not prompt entities to replace full-time workers with freelancers or gig workers. However, the crisis may increase gig opportunities and trigger an increased awareness of the freelancing model. “[Companies] are realizing that being on payroll and being [in-office] for certain functions is not necessary, and I think now they have started to sort of embrace the freelance world a little bit more,” Litz-Rosenzweig concluded. Since companies are hiring online platforms during the crisis, as are freelancers looking for more projects, we can expect the gig economy to be more competitive as time passes.
Recession Allows Freelancers to Shine
Freelancers are usually more appealing to employers during a recession. For example, a sole proprietor or freelance consultant does not require the same heavy benefits package of a full-time worker such as health insurance or a 401 k or paid time off.
Freelancers are also more eager to work more flexibly. Instead of a 40-hour-per-week paycheck, a freelance consultant will often work 10 to 15 hours a week while delivering what the company needs, filling the gaps, and driving the business’s momentum. For full-time employees, losing their source of income can be a devastating experience. But for freelancers, having their contract or projects terminated is part of the norm. This is because independent contractors work on different projects simultaneously, making them inured to the shock and financial stress of losing their income.
“Side hustle” is a new but popular term that refers to the growing appeal of having another income source. During economic crises, income diversification becomes highly important as employees’ corporate income becomes unstable and for them, finding other ways to earn income triggers feelings of confidence.
Freelancers also offer diverse skill sets considering that they spend time working on different projects a month, which makes their resume stand out from the rest. Employees in companies regularly change roles, but they still accomplish their tasks within one corporate culture. This culture hinders them from gaining the experience they need.
Freelancers are known to update their skills and portfolio. They have the opportunity to receive reviews or testimonials from clients after a project has been accomplished. Whether these accomplishments include a new email campaign with stats and figures or case study that discusses a successful project launch, freelancers can concretely show potential employers that they have an edge in the freelancing world.
Being laid off or having one’s income reduced can shatter one’s image of financial security. Job and income loss can be devastating, but these situations are not new for freelancers. Economic recession enables freelancers to thrive, but we must acknowledge that some of them lost clients or have fewer projects to work on.