Contract work is becoming the new normal. Consider Uber: The ride-sharing startup has 160,000 contractors, but just 2,000 employees. That’s an astonishing ratio of 80 to 1. And when it comes to a focus on contract labor, Uber isn’t alone. Handy, Eaze and Luxe are just a few of the latest entrants into the “1099 Economy.”
Though they get the most attention, it’s not just on-demand companies that employ significant contract workforces. Microsoft has nearly two-thirds as many contractors as full-time employees. Even the simplest business structures, sole proprietorships, have increased their use of contract workers nearly two-fold since 2003.
Four trends are converging to make contracting more attractive for both employers and workers, and reshaping how businesses and employees look at the traditional full-time model.
Pick A Platform, Find Customers
Historically, contractors have needed serious hustle to get referrals, early customers, and a stream of repeat business. For local services, platforms such as Homejoy and Handy upend that dynamic. These platforms take on much of the marketing, job finding, payment and management costs necessary to run a small business.
Local service contractors join the platform and are quickly plugged into a stream of consumers. One Homejoy cleaner says, she’s “never been busier.” She just needs to say when she’s available, show up for jobs and do the work.
For knowledge workers, platforms such as Upwork fill a similar gap. Workers around the globe get access to a pool of potential customers. Payment collection and reporting are handled by the platform, which means contractors, whether working from their kitchen or a beach in Thailand, can focus narrowly on doing the work they do best while the platform handles the less glamorous parts of the business.
Businesses themselves are benefiting from this simple, streamlined way to source contractors, as well. With flexible human capital, they seamlessly develop the ability to rapidly scale up and down. By becoming less of a “within these four walls” entity to something that’s much more amorphous, they can focus on assembling the right talent at the right time to accomplish a given project.
It’s similar to a movie set: A director assembles the people with the skills necessary to create a complete movie (casting, lighting, grips, sound, etc.). They come together and focus intensely on one project and then disperse when it’s complete. It’s very different from a business world that’s typically described with a rigid org chart, but still highly effective.
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