The level of job vacancies is currently outpacing the UK’s unemployment rate, highlighting that there is clearly a discord at play. Indeed, over the next five years, Microsoft estimates that the global workforce can absorb around 149 million new technology-oriented jobs. Software development makes up the largest single share of this forecast, but roles in related fields like data analysis, cyber security, and privacy protection are also poised to grow substantially. But businesses are struggling to find these skilled workers to boost company growth and drive the broader economy. So where is the talent going?

The conditions associated with this Great Resignation are favourable to the employee. As they seek to prolong the flexibility and opportunities it has afforded them, many have considered alternatives to the traditional working model. People prize independence – and so this trend is most visibly demonstrated through a rise in freelancing.

Nurturing the emerging freelance economy

Professionals across different industries have learnt over the last two years that they can work for multiple clients and get paid more than via traditional employment models. Not only that, they have control over how, where and when they want to work. This is in large part down to the rise of remote working models and increased corporate flexibility.

Research shows that 34% of UK freelancers began their work at the beginning of March, just as the pandemic restrictions began. For many, this may not have been a voluntary decision, but it prompted the start of a movement away from non-traditional working models. As the economy picked up again, the ability to balance professional and personal priorities through more flexible working increased the appeal of freelancing. Now, they aren’t going back.

A recent study found that a third of businesses with fewer than 10 employees now operate as side hustles (this compares to 20.8% in March 2020). And as the UK economy faces the ongoing cost-of-living crisis, it is likely that the appetite for freelance careers will continue to grow, maybe even alongside full-time work. We’re seeing similar trends elsewhere too, with over 80% of full-time employees in the US actively considering a freelance career. It’s clear that the drive towards independent careers has never been stronger.

Coordinating contractors

This trend shows no sign of abating. In fact, a key feature of the post-pandemic working landscape has been the evolution of this trend beyond ‘side hustles’ to include highly skilled workers entering the world of freelance. As if the labour market wasn’t challenging enough for businesses, the competition for skilled employees means they are competing over the best freelancers in their respective fields. The emerging freelance platform industry is evidence of this – expected to grow by 15.3% by 2026 – as businesses look for more structured approaches to engaging freelancers on a more comprehensive basis rather than ad hoc. This is evolving further into the concept of the private talent cloud – communities of specialist freelancers available for deployment.

It’s the start of businesses having to start thinking more strategically about how they access talent to build the teams they need to grow. For example, we are starting to see companies court freelancers by offering tailored benefits and perks packages that would normally be reserved for permanent roles. Furthermore, establishing more structured career development options – the absence of which has long been a drawback to freelance life – allows temporary staff to learn new skills that further benefit the company. For example, offering opportunities to include freelancers in training courses can foster loyalty and productivity. The battle for talent is shifting to the freelance arena – and businesses are doing what they can to win.

Flexible work has a new meaning

This all sounds like a great model for independent workers, but the freedom that is synonymous with freelancing is good for businesses too. More than ever, we are seeing them engage the services of teams of highly skilled freelancers on-demand. In a turbulent economic environment, this allows them to scale an ‘elastic’ workforce up and down depending on immediate requirements. The growing talent clouds are not only a testament to the appetite for freelancing, but to businesses to engage with them.

As much as the emerging flexible working structure can benefit businesses, it does highlight the need for a more coordinated approach to managing freelancers. With economic uncertainty and highly skilled talent flocking towards independent careers, businesses must find a way to seamlessly integrate freelancers into the workforce. If businesses using on-demand staff cite better productivity, efficiency and lower costs, it’s also their responsibility to treat them as valued staff rather than a dispensable overhead.

As freelancing gathers popularity among the most skilled workers, businesses will have no choice but to consider collaborating with them in a more comprehensive way. Ultimately, it is the businesses that understand the motivators behind independent careers and effectively engage with this growing skills pool that will thrive amidst a changing world of work.