Online Freelancing

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ONLINE FREELANCING

As the Internet and e-commerce make it possible for companies to market and sell to customers around the world, it allows workers to apply for jobs and work for employers anywhere via their computers. These online workers go by many names—teleworker, free agent, contract professional, Netrepreneur, and most commonly, electronic freelancer or e-lancer. E-lancers represent another step in the globalized, down-sized corporate culture of the twenty-first century, in which company staff are cut to the bone and workers are hired on a temporary project basis.

E-lancers frequently never set foot in the companies they work for. Unlike workers with day jobs, they must continually plan for the next job; they must provide their own benefits and pay their own taxes. However, they are also able to choose when, where, how, and to an extent for whom they work—a degree of freedom the traditionally employed might envy. The first e-lancers in the 1990s were programmers, Web designers, and other information technology (IT) professionals. IT workers remain the fastest-growing segment of online freelancers in the world. It is quickly spreading to other fields, including writers, editors, translators, accountants, marketing specialists, lawyers, data entry personnel, and salespeople.

E-commerce insiders maintain that the number of e-lancers is booming, but hard figures are not easy to come by. The U.S. government reported that 11.5 million Americans were self-employed in 2000 but did not indicate how many worked primarily via the Internet. A large number of U.S. workers might be e-lancing as early as 2005, according to the U.S. Department of Labor, and two important online brokers of e-work, eLance and Guru.com, experienced rapid growth in the early 2000s. E-lancing is clearly an international phenomenon with much anecdotal evidence of programmers in India, Asia and Eastern Europe telecommuting with U.S. firms. Illustrating the importance of international workers, eLance.com, a leading online job board for e-lancers, is set up to pay workers in their local currency.

E-lancing may not be catching on at the same rate the world over, however. One Austrian study released the paradoxical finding that in Europe, a greater percentage of regular company employees—rather than freelancers—are teleworkers. One reason e-lancing is taking root more quickly in the United States is that European cultures have a stronger commitment to company employment and place a high premium on face-to-face contact while forging an employment relationship.

E-LANCE MODELS

Online labor brokers have been founded to bring together firms and e-lancers—often referred to in this context as service providers or vendors. Different broker models have arisen. Some serve all e-lancers, regardless of industry; others cater to individual professional groups, such as IT workers or writers. Some are set up as online communities run more or less by members; more commonly they are pure commercial enterprises. Traditional employment agencies like Kelly Services have also become active online brokers, having discovered that the Web enables them to recruit within hours rather than days. Methods for selecting service providers vary from site to site. Some are simple bulletin boards where firms can post new jobs or where e-lancers can post their resumes in hopes of attracting an employer. Some sites require e-lancers to put themselves up for auction, an idea pioneered by a group of IT professionals in 2000 with the formation of bid4geeks.com. However, with the lion's share of auctions on such sites getting no bids whatsoever, this concept has been slow to catch on.

A more popular version of the auction enables e-lancers to bid on jobs posted by companies, a concept Heather Stone, president of online broker myjobsearch.com, called "the beginning of the transition to the e-lancer economy." Typical of such sites and one of the leading online job brokers is eLance. Founded in 1999 and launched in earnest in 2000, eLance serves employers and workers of all kinds in over 140 countries. After e-lancers register at the site and pay a subscription fee ranging from US$360 to US$1200, they are entitled to bid on jobs posted on the site. Besides quoting their price, bidders also post their qualifications and experience. A feedback forum provides evaluations given by previous employers. The forum provides an incentive for e-lancers to do their best work as well as an additional means for employers to evaluate potential workers. In addition to the subscription, eLance, like traditional employment agencies, also takes 10 percent of the e-lancer's paycheck.

BENEFITS AND DRAWBACKS

Online freelancing enables self-employed people to find jobs all over the world and do them in their own homes, jobs that without the Internet they never would have known about. Online labor brokers are by and large easy to use and often low in cost. E-lancing provides the freedom to decide when, where, and how long to work, and what jobs to take. Sex, ethnic, and age discrimination are virtually nonexistent.

There are a number of disadvantages, however, that e-lancers must consider. First, there is no guarantee you will find work online. Competition is fierce, with hundreds of qualified workers available for most jobs, and some e-lancers who post resumes never receive any inquiries from employers. Like all self-employed people, e-lancers are required to pay more out-of-pocket taxes because there is no employer covering a share. E-lancers have to track their own taxes and pay in quarterly installments; they must find and pay for health insurance, vacation, and retirement packages on their own.

Worst of all, e-lancers have to do without the human contact that comes with a regular job—there's no boss looking over one's shoulder, but there are also no co-workers to talk with. Theorists like MIT's Thomas Malone—who coined the phrase "e-lancer economy" to describe the changes wrought by online freelancing—believe that bodies similar to medieval guilds will eventually arise to fill this need. Online communities and chat rooms already exist, but it is not clear to what extent such virtual relations can really substitute for direct contact with a real person. Some groups, like the National Writers' Union, organize branches throughout the country that in turn organize regular social as well as professional get-togethers for members.

There are also pros and cons for companies. As the e-lancer economy takes hold, firms will presumably have greater ability to obtain top talent from around the world. Organizations will be able to streamline, use their resources more efficiently, and focus on core competencies. Projects can be adapted quickly to changing needs and new technologies. On the down side, managers will have to select help without face-to-face contact, losing important intangibles in the hiring process.

The human factor may be the wild card that most inhibits the growth of the e-lance economy. Karsten Gareis, a European researcher, believes that the e-lance economy will not develop as a volatile open market in which "lean" companies drive down e-lancers prices—the laissez-faire model favored by many U.S. thinkers. Instead, Gareis wrote, the e-lance economy will come to favor stable relationships built up between firms and small pools of workers with whom they have worked before and trust. Pools will change as new workers enter and older ones leave, but there will be continuity. Under this scenario, a firm's e-lancers will be as important as an asset as their permanent staff were towards the end of the twentieth century, and rather than cutting fees companies will offer trusted, proven e-lancers better pay and benefits to increase their loyalty to the firm. As with traditional employee-company relationships, loyalty and trust will be uppermost.