Freelance Work in the Age of AI

A few months ago, I had the opportunity to participate with international experts from various disciplines in a collaborative exercise on the prospective situation of freelance work in 2030. For several days, we had the chance to share and discuss our perspectives on a work model that for decades has been said to constitute one of the pillars of future work in the so-called “knowledge economy.”

One of the themes we explored were the factors that have influenced the evolution of this type of work in recent years and which will probably continue to be determinant in its development up to 2030. Among others, the normalization of remote work (particularly hybrid work), the rapid expansion of artificial intelligence technologies, the decrease in purchasing power of wages and the consequent increase in multiple employment, the difficulties companies have in planning their workforce in the medium and long term, the rise of flexibility and learning among the aspects people value most in their jobs, and the disparities between the regulatory frameworks to which self-employment is subject in each country or region.

Let’s review them one by one:

Normalization of Remote Work

Companies have realized that part of their collaborators can work from anywhere in the world. A distributed workforce not only allows them to maintain continuous 24/7 operations, but it can also help increase the diversity of their human fabric, something crucial in a business environment where new challenges require innovative perspectives. Moreover, this change has democratized access to global talent, allowing companies that never imagined it to now hire the best professionals on the planet for their most strategic projects. If we add to this that for certain professional categories remote work has virtually become a market standard, this could lead to an increase in the number of companies hiring at least a portion of their workers abroad. And many of these cross-border workers could be freelancers.

The AI Revolution

The accelerated development of artificial intelligence technologies, particularly generative AI, can dramatically and in a very short time increase the productivity and quality of work of many “knowledge workers.” This can have very diverse, even contradictory, effects on the freelance professional market. Faced with uncertainty about how much their salaried workers’ productivity will increase, some companies may decide to hire fewer employees and more freelancers, as it is a more flexible formula. But this technological change could also lead companies to automate or internalize creative tasks currently assigned to independent professionals, such as designers, editors, writers, translators, programmers, etc., and assign them to workers who were previously not qualified to do them, but now can, provided they learn to write good prompts. However, given how accessible this new technology is to any company, it may also happen that some company leaders conclude that they are better off ensuring they have professionals capable of going beyond the work these new artificial intelligence solutions can do. It is true that in some jobs this will not be the case, because the quality of the work generated by the algorithms will be more than sufficient, but surely there will be others, which influence the company’s ability to differentiate itself from its competitors, where companies will be willing to do whatever it takes to have the best talent in the market. Even if this means hiring those professionals as freelancers.

The New Multiple Employment: The Rise of “Secondary Jobs”

During 2022, many countries experienced a decrease in real wages, caused by the increase in energy prices and other products because of Russia’s invasion of Ukraine. To compensate for this loss of purchasing power, many employees began to look for secondary jobs that would allow them to generate additional income. Often, these secondary jobs are freelance jobs that can be performed remotely and asynchronously, allowing workers to combine them with their main jobs, mostly salaried jobs. It is common for employers to be unaware of these additional jobs their collaborators have, although there are companies that encourage their employees to seek these secondary jobs or side projects, understanding that these projects can contribute to their professional development. This phenomenon is also fueled by flexible work models and remote-presential hybrid work, increasingly common, as well as the large number of platforms specialized in remote jobs that have emerged since the COVID19 pandemic.

Strategic Workforce Planning. Is it Still Possible?

Companies are increasingly struggling to anticipate the human capabilities they will need in the medium and long term. Technological advances, economic uncertainty, and the profound transformation many markets and economic sectors are undergoing create imbalances between the demand and supply of human capabilities in the labor market. This results in a shortage of certain professional profiles and greater variability in the market prices of others. Faced with this scenario, and the difficulty of planning their needs in the long term, many companies seek formulas that speed up the process of assigning their people’s competencies to the company’s needs as they arise. In large corporations, “internal talent markets” are becoming a common practice. However, this extra flexibility that companies now seek due to the difficulty of strategically planning their workforce could also lead to an increase in the hiring of independent workers (freelancers, interim managers, etc.), even that some companies open their internal talent markets to these types of professionals.

Flexibility and Continuous Learning, Rising Values

The flexibility to balance work with other aspects of their lives and the opportunity to learn new things are aspects that more and more people consider when choosing a job or deciding whether to continue or leave their current job. This is particularly the case for knowledge workers, whose productivity (and employability) depends more on their ability to learn new things than the hours they are “present” at their companies. We saw this in the study on career management we carried out at Future for Work Institute at the end of 2021. Reconciliation between professional and personal life was the most mentioned item among what people most sought in their professional careers. As for learning, last year, in Microsoft’s Work Trend Index report. Hybrid Work Is Just Work. Are We Doing It Wrong? we discovered that for 55% of the participants the best formula for developing their skills was to change companies. Additionally, we saw that this feeling was not exclusive to the new generations. Apart from the boomers, among whom only 41% shared this opinion, members of the other three age groups analyzed ranged between 60% and 64%. The point is that these two trends could make some people who until now had not shown interest in freelance work, start to consider it as a viable option to achieve that flexibility and learning they now value more than before.

Regulatory Differences

How freelance work will evolve in the coming years will also depend on how the regulations applicable to this type of work evolve in the countries where independent workers live and in the countries where the companies for which they work are headquartered, in a context where tensions between the interests of companies, seeking to increase the resilience and flexibility of their organizations in a turbulent and unpredictable environment, and unions, seeking greater protection for workers and a larger role in the political scene, will probably accelerate the regulation of self-employment in many States. We can also expect advances in the regulation of cross-border freelance work. For example, it is possible that international agreements will be developed to protect workers and ensure fair treatment, standardizing aspects of freelance work, such as payment terms and dispute resolution processes. However, we may also face paradoxical situations, such as that freelancers wishing to work from country A for companies in country B, or companies in country A wanting to hire freelancers in country B, may find a more favorable legal framework than companies in country A wishing to hire freelancers in their own territory.

To what scenario does all this lead us?

At this point, I will venture to make a prediction of how the forces we have seen above can shape the future of freelance work.

Although salaried jobs are far from extinct, it is likely that by 2030 the norm in companies in the so-called “knowledge economy” will be blended workforce models, where traditional salaried employees will work side by side with freelance professionals, and tasks will be assigned dynamically based on people’s competencies and availability. On the other hand, remote work will become the standard for many freelancers. This will bring a new dimension to the concept of hybrid work, as in these blended teams composed of salaried employees and freelancers the degree of presence of salaried workers will generally be higher than that required of freelancers, who in many cases may do 100% of their work remotely. In addition, cross-border remote jobs will be more common, driven by the need to serve global markets 24 hours a day. In parallel, companies will adopt more sophisticated technologies for remote collaboration and project management, and freelancers will need to master these tools. AI will play a larger role in increasing the productivity of independent professionals, although, as we mentioned before, generative AI solutions can also lead companies to automate or internalize creative tasks that they currently assign to freelancers. Also, AI can aid greater integration between full-time employees and freelancers, starting with task assignment based on their skills and availability. Another practice that will likely become more common is the hiring of “preconfigured” teams of freelancers for specific projects, whether these are teams built by the freelancers themselves or, what will possibly be more common, automatically designed (again the AI) by the platforms through which these professionals provide their services.

Condition: companies need to update their operating system

Now, for all this to be possible, companies need to evolve their “organizational operating models” towards new frameworks that allow them to optimally combine face-to-face and remote work, the power of algorithms and human capacities, and where salaried employees and independent workers, such as freelancers, contractors, or interim managers, not only join forces, but manage to multiply their collective talent.

For this, companies need to leave behind the hierarchical and isolated organizational structures of the past to embrace more fluid and interconnected structures, based on teams, skills, and projects, that promote agile collaboration and efficient decision-making, and help them better leverage the capabilities of a more diverse and dynamic workforce. In this sense, although we already know that agile methods are not the solution to all problems, for many companies it could be valuable to adopt some of their principles, such as cross-function collaboration, focus on value, iterative progress, or collective learning.

On the technological side, the latest generation telepresence solutions or collaborative work platforms facilitate companies to integrate the best talents in the world into their projects. However, companies also need to be prepared for the cybersecurity challenges that arise as they increase their collaboration with freelancers. Particularly if they wish to integrate their employees and their independent collaborators into a single workflow.

In addition, to effectively manage this new blended workforce, companies need to develop robust data analysis capabilities, for which new artificial intelligence solutions can be of great help. This will allow them to effectively track the performance of both salaried and independent workers, identify capability gaps and make decisions about role and responsibility assignments based on solid information. In this regard, as I mentioned earlier, I would not be surprised if some companies end up opening the internal talent markets their employees already use to their freelance collaborators.

Also, to keep up with the accelerated pace at which their environment is transforming, organizations need to foster a culture of lifelong learning, from which their freelance collaborators cannot be left out. Neither as people who learn new things in their jobs, since this is very valuable for these professionals, nor as sources of knowledge and new ideas, which can benefit both the salaried workers with whom they share projects as well as the company as a whole.

Clear communication and efficient collaboration are also vital in a flexible and agile operating model. This implies investing in the right tools and establishing clear communication rules and guidelines, including clear channels of communication and feedback to ensure that everyone, including independent workers, and particularly those who provide their services remotely, feel heard and valued.

Finally, or perhaps to begin with, to accommodate a diverse and global workforce, companies need to bring the rules of the game to which their salaried employees are subject and those that apply to their freelance collaborators closer together. For example, adopting asynchronous communication practices and setting clear expectations about deliverables instead of focusing on hours worked. But also, more basic things, such offering fair compensation and ensuring timely payments.

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Photo Hannah Wei