Technology has become so pervasive that many of us will laugh to remember – though it wasn’t that long ago – the workplace before Google, broadband, or smart phones. While these reminiscences may be humorous, technology has changed the relationship between worker and employer in ways that expose both to potential benefits but also to inefficiencies and other risks.

Working remotely provides benefits to both employer and employee. However, to leverage these benefits without exposing your company to risks takes care and planning.

The Benefits

In the US alone, more than 50 million people use modern technology to work remotely as freelancers. While they are some similarities between freelancers and contractors, there are important differences.

• Freelancers are self-employed and aren’t part of a larger organization. They likely work for multiple clients at once, their professional relationships are informal, and their responsibilities sometimes poorly defined.
• Contractors have formal obligations defined in a legally binding contract. For this reason, their professional relationships tend to be equally formal. Their responsibilities are clearly defined, such as the length or purpose of their contract.

People are opting to freelance – and businesses to hire freelancers – for many reasons. From the freelancer’s perspective, the arrangement gives them flexibility and independence. Companies adopting a business model that includes an external workforce are taking advantage of its efficiencies and the access it gives to knowledge and skills.

The Challenges of a Freelance-Based Workforce

While the freelance economy can benefit both workers and employers, companies should find the right mix of traditional to freelance employees and balance their workforce so that it isn’t overly reliant on freelancers.

A workforce made predominantly of freelancers has some major drawbacks, including:

·        Poor Prioritization: To budget their time, freelancers juggle multiple projects at once. Moreover, they prioritize better-paying projects to the point that they may miss deadlines. Many freelancers spend as much time finding the next project as they do finishing the existing one.

·        Lack of Loyalty: Freelancers aren’t devoted to your company. They are busy and aren’t willing or obligated to make themselves as readily available as a traditional employee.

·        Inadequate Quality Assurance: In poorly arranged relationships with freelancers, employers sacrifice control of the work, making quality assurance difficult to impossible.

·        A Shifted Knowledge Base: Freelancers sometimes hoard some critical knowledge that is key to an organization. This guaranteed need for their services provides them job security at the expense of the way your organization’s knowledge is institutionalized.

Don’t Risk Institutionalized Knowledge for Short-Term Gains

The gig economy offers more than mere convenience, flexibility and costs efficiencies. When created thoughtfully, relationships with an external workforce can benefit both the employer and the contractor. This is especially true when the demand for talent exceeds the local supply.

Data capturing, administrative tasks, and scope-defined projects such as design, multimedia, translations or marketing campaigns are all jobs that an off-site freelance workforce can perform well as an alternative to traditional workforce. These tasks are not at the core of a business and offloading them will not negatively affect the company’s future.

However, technology companies – or any business whose trade depends on expertise – should not hire freelancers in knowledge-focused processes; this can jeopardize the way the organization’s knowledge is kept and institutionalized. This can directly affect the sustainability of key business processes, and ultimately the entire business. Access to the company’s knowledge base – including products, services, and customers – cannot depend on a small group of people, especially when that personnel is not committed to the company, its people, values, or goals.

Establish a Healthy Contractor Relationship

When a company needs the expertise that an offsite workforce can provide, they should look to establish relationships that are mutually beneficial, in which both parties work to achieve shared goals.  In these relationships, the focus is not placed only on the contracted work, but on a fruitful partnership where the company and the service provider are committed to the success of each other’s businesses.

Under this model, companies can rest assured that organizational knowledge is managed and shared between the stakeholders effectively, knowing that this is fundamental for a productive business relationship. It is through knowledge sharing that organizations capture explicit and tacit knowledge, learn from accumulated experience, and enable a solid base for decision making.

By sharing their expertise and aligning their goals, both parties lay the foundation for a trusting and long-lasting relationship. Together, they are better able to adapt to the changes in the marketplace and drive innovation in their search for mutual success.

If you’re struggling with a tech-talent shortage that hampers the growth of your company, then know that there are innovative resourcing models that can help. We would love to hear about your experiences and offer any support or guidance your business may need.