Freelancer reliance rises in U.S., with 20% of work done by them

Organizations are adding more agility to their workforce by increasingly relying on freelancers, according to a new survey conducted by Harvard Business Review Analytic Services.

The shift is allowing firms to save on headcount, which lowers costs, and on real estate expenses. Wages and salaries account for about 70% of employer costs in private industry, while benefit costs account for the rest. By using contingent workers, short-term and project-based work can be completed when they lack the needed skills internally.

“Using contingent workers has a range of benefits, from greater agility and flexibility in staffing to saving money on head count, reducing the need for office space, and being able to bring in new skills quickly,” according to the by HBRAS, an independent commercial research unit within the Harvard Business Review Group.

The study released Tuesday found that, on average, 20% of organizations’ work is carried out by freelancers, and firms believe this share will rise. More than half of respondents say that in the future, their organizations will likely employ more freelance workers than they do now.

New technologies allowed remote work to go more mainstream in recent years, and while some firms may induce their own workers back to the office, at the same time, many tasks are being assigned to freelancers.

“External talent, contractors, independent workers, contingent workers, on-demand talent. Whatever they’re called, companies will increasingly turn to them instead of hiring more full-time employees or replacing those that leave,” according to the report.