It’s a question we posed to Fabio Rosati, CEO of Elance, when we spoke to him a few weeks back. In a nutshell, he said that the categories used by the BLS don’t fully capture new, more flexible ways of working. “I believe that the trend of increased flexibility in the workforce is substantial and is significant,” he said, suggesting several ways the statistics might not fully reflect that trend, including labeling solopreneurs as small business employees and missing all those that work flexibly through staffing firms. “If you look at the number of individuals that have been hired by staffing firms and then in turn placed as temporary workers with clients of the staffing firms, that number is increasing significantly. The BLS numbers don’t tell the full story,” he said, pointing as well to the increase in the number of folks telling the BLS they work part-time for non-economic reasons as more evidence of an increasing incidence of flexible working.

Rosati may have a point that the BLS criteria are more rigid than the current reality of the job market, but there may also be another explanation at work – an increasing number of “stealth freelancers.” When GroupTalent, a site that matches top-tier design and development talent with projects in need of extra hands, sifted through its data recently they discovered something that CEO Manny Medina found startling. More and more workers selling their services on the site also have full-time gigs.

66 percent of freelancers, it turns out, hold full-time jobs. That’s a 50 percent jump from when the site launched in November. Speaking to these freelancers, Medina found they constitute a “dark pool” of talent, which doesn’t advertise but can be quietly recruited through sites like his or through personal referrals for the right sort of challenging projects.

The site screens freelancers by examining a candidate’s portfolio and then conducting a short interview. “At the very beginning it was 50/50 people who were doing full-time freelancing and people who were in startups. What we started seeing is a lot more of those who were coming in to our site were those who had full-time jobs. A lot of these people don’t want it to be known that they’re freelancing,” Medina explained in an interview.

“There’s not enough talent to go around and on top of that there’s a quality signaling problem. Employers are so desperate looking for developers right now that they’re willing to take someone on a part-time basis,” Medina said, explaining the increase in stealth freelancers from the perspective of employers. From the perspective of the worker, you might think that a full-time job plus high-octane freelance projects sounds like a stressful drag you’d only take on if you needed the money, but Medina has found that most of the stealth freelancers on his site seem pleased with the arrangement.

“We’ve been interviewing some and some of them do it for fun. If you work for a company, you get antsy. They like the challenge of building something new. They get that start-up rush again. Most of these people work on projects anyway on weekends, it’s just nice to get paid,” Medina said. He noted that any talk of motivation was partially speculation, but gave as an example a guy who works at Gilt, has his own startup on the side and rents out about five hours a week on GroupTalent. “We’ve only been in business for three months, but people return,” Medina said to illustrate that freelancers didn’t seem motivated only by short-term economic need (though of course extra cash flow is great for those with startups) but viewed this stealth freelancing as a long-term work style.

“You see a lot of articles talking about the freelancing world and in reality you’re not counting those that would be willing to freelance on the side. I think that the real number of freelancers is a metric that hasn’t been really accounted for,” says Medina, concluding, “we’re firm believers that the world will move to freelance.” Perhaps it’s moving that way slightly faster than official statistics indicate.

Do you agree that official employment statistics don’t fully reflect that shift towards the so-called gig economy or is the ‘everyone will be a freelancer story’ overblown?

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All of the gloom and doom is a stress for bankers and politicians, but for workers on the ground the challenges are severe and immediate, and their ability to influence their situation (short of immigrating) limited. But the quarterly Global Online Employment Report from online job board Elance released today suggests there is at least one refuge from the economic storm that workers are increasingly utilizing– remote work.

The analysis of hiring across the globe on the site showed a sizable growth in earnings for contractors in crisis-stricken European countries. Greek workers on the platform earned 122 percent more compared to the previous year, while Spanish contractors earned 142 percent more.

“One of the benefits of online work is the ability for contractors (and businesses) to ‘escape’ their local economies. A number of countries in Europe have weak economies and the workers in these countries are seeking work online. It’s a great solution – temporary or permanent,” said Kjetil Olsen, vice president, Europe at Elance said in a statement accompanying the report.

Konstantina Zoehrer, head of business and strategic partnership development at Athens coworking space Loft2Work, confirmed in an email that, unsurprisingly, space members are hungry for alternatives to largely non-existent local jobs. “What we see is a increasing demand of targeted networking and skill development as there is a trend towards entrepreneurial activities,” she wrote, explaining that her space has tried to help along those looking to sell their services outside the stricken traditional job market. “We adapted our pricing policy to the current socioeconomic circumstances,” she said. “As a social enterprise we work towards the integration of inactive workforce in the labor market.”

In an overview of the embryonic Greek coworking scene that appeared earlier this year in coworking magazine DeskMag also confirms the general thrust of the Elance findings. Terrible economic realities on the ground, “have added fuel to the growing trend of independent and contingency workers who make up the majority of the membership at coworking spaces,” wrote Anna Cashman.

Do you think the economic crisis in Europe will spur the uptake of remote working? Will the effects outlast the crisis?

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Consultancy Zinnov recently reviewed the entire online hiring market, looking in detail at 30 platforms like Elance and oDesk. They came to what may be a surprising conclusion for some – not only are women doing well with online work, they’re actually currently the majority of the online workforce. Of the approximately 4.5 – 5 million folks selling their services through these sites, 55 percent are currently women.

With women still carrying a larger share of childcare and household duties, this result makes intuitive sense in some ways. You’d expect those with greater time commitments outside work to be more keen on flexibility, and stay-at-home moms to be a significant portion of the online labor pool.  As VentureBeat reports,  ”Zinnov said its study showed women more willing to work virtually to give themselves a better work/life balance.” The study further predicts that going forward women will make up an even larger segment of the online hiring pool.

While the idea that women might desire flexibility seems reasonable (despite studies showing men want work flexibility just as much, if not more than, women), the image of online hiring as largely focused on technical jobs may have suggested to some that women, who are still relatively rare in these type of gigs, would be under-represented. But Zinnov’s data don’t back that up, though they did find online hiring is most mature in the tech sector. They report, however, that skills such as multimedia, writing and editing are growing rapidly.

As is the sector as a whole. In the next three years, ten to fifteen percent of the total workforce will be hired from online talent marketplaces, according to the research, which also claims the total online hiring marketplace will climb towards $1 billion by the end of the year. Zinnov also confirmed that small businesses are leading the way for larger firms when it comes to the practice of hiring online. If you’re interested in further details, check out the presentation below.

Are you surprised by these findings?

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But where is all this interest in online labor platforms heading over the coming years? How will the uptick in interest in the so-called ‘human cloud’ shape business? In addition to statistics, Elance has also given GigaOM an exclusive sneak preview of three long-term industry trends it is predicting will shape the future of work.

One in three people will be hired online by 2020. The likes of Monster and LinkedIn are only the starting point when it comes to using the internet to find talent, according to Elance CEO Fabio Rosati. In future, it will be common for businesses not only to identify candidates online, but also to interview, hire and work with them at a distance. “The initiation of the search begins online already,” he told GigaOM in an interview. “The piece that we predict will be accelerating is the amount of hiring that will actually be completed online to result in an online working relationship. Within a few years, your ability to work remotely will be so extraordinarily compelling that we will literally not even feel the need to meet in person.”

Half of businesses will have online teams by 2020. Both a recent survey from Elance competitor oDesk and recent comments made to GigaOM by Gene Zaino, CEO of MBO Partners, have indicated that businesses increasingly see hiring contractors as a long-term strategy and competitive advantage, rather than a short-term stopgap or simple cost-cutting measure. Elance apparently agrees with Rosati explaining how more and more businesses will come to see the benefits of online hiring and come to view the practice as a normal, if not essential, business practice.

“We estimate probably less than ten percent of businesses have online teams right now. We are pretty much at the same stage where eCommerce was at the beginning of the last decade,” he said. “Around 2000 probably one in ten had a website and an online presence. By the end of the decade about half of businesses had an online presence and if they didn’t, they were planning to. We believe the same thing is happening to building online teams and having workers who work for you in the cloud. In the next eight years we’re going to see substantial acceleration of this trend and it will become a mainstream phenomenon.”

Global professional guilds will emerge online. It may be hard to imagine traditional labor unions surviving into a future featuring lots and lots of online work, but Rosati doesn’t expect that future independent pros will be left entirely to fend for themselves. Instead, Elance predicts they’ll band together in professional guilds. Citing the Freelancers Union and the Writers Guild of America, which went to bat for Hollywood writers a few years ago, as possible precursors and models to the phenomenon, Rosati explains that, “it’s easier than ever to create communities online. As online work becomes a mainstream phenomenon, the need for professionals with similar mindsets to come together and agree to guiding principles and what will be responsible behavior online professionally is going to emerge.”

He even predicts that these guilds could become a force advocating for the rights and interests of independent workers. “Independent professionals working online will coalesce around common standards, and as they coalesce and establish a united voice, I expect they will definitely play a major role in endorsing certain platforms and rejecting others. I think that we will see a greater voice and a greater influence,” he says.

What do you make of Elance’s predictions?

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Elance has grown pretty dramatically over the past few years, as more and more jobs move online and work becomes more virtual. To provide more value to its users, the company wants to do more than just connect employers and contractors. That’s why it has a virtual workroom that enables collaborative work and communications tools between them.

In their virtual workrooms, contractors can send messages, submit invoices, respond to to-do lists and other features. And now, Elance has added a new video chat feature to enable more “face-to-face” contact between collaborators, without users having to enter a whole different application to connect.

According to Elance VP of Small and Medium-Sized Businesses Ved Sinha, the addition of video chat to the virtual workroom will reduce the friction that comes when employers and contractors work together. While many had previously interfaced through other applications, building the chat window directly into a contractor’s dashboard enables instant communication with the click of a button.

To do this, Elance uses Tokbox’s OpenTok video chat client, which enables businesses to embed video chat into their websites. While there are plenty of video chat offerings available on the market today, Sinha told me by phone that OpenTok was the only solution that allowed Elance to build video chat directly and seamlessly into the virtual workroom.

That was a big advantage for Elance, which wanted to ensure its users didn’t have to open a different client or application to get in touch with one another. And for its clients, the feature should enable better coordination and more productivity.

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At the start of each new year, jobs site CareerBuilder polls several thousand HR pros and hiring managers about their outlook for the year ahead when it comes to hiring contract and temporary workers. And just like the last three years, the survey this year found a steady uptick in the number of businesses planning on hiring contract staff, with 36 percent responding they will hire such workers in 2012. That’s up from:

• 34 percent for 2011
• 30 percent for 2010
• 28 percent for 2009

Certainly plenty of these temp positions may be traditional seasonal workers taken on to deal with the summer rush at a resort or as short-term fillers when an employee is out on maternity leave, for instance. But the steady rise in the number of contract employees firms plan to take on does support the argument that lean economic times are opening more and more business’s eyes to the advantages of agile hiring practices.

“Employers are relying on temporary and contract workers to support leaner staffs,” commented Eric Gilpin, president of CareerBuilder’s staffing and recruiting group in the release accompanying the survey. But he also noted that many firms plan to move contract workers to full-time roles if and when the economy picks up.

Do you foresee most employers reverting back to full-staff when the economy finally picks up?

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Cronin decided there must be a better way to match businesses in need of professional services with those able to help and ExpertBids was born. An online labor platform that aims to connect small- and medium-sized businesses looking for help with accountants, lawyers and consultants hoping to build independent practices, Chicago-based ExpertBids launched in November 2010.

A standard post on the site is free for companies (though a premium post which guarantees three bids within a week costs $50), while professionals pay small amounts to bid for work depending on the size of the project’s budget – larger projects have slightly higher fees. Quotes can be either a flat fee or hourly rate and the once the parties agree to a price, monitoring and billing for the work is entirely their responsibility. The site now has over 10,000 users, about 80 percent of which are US-based experts looking to sell their services and 20 percent are businesses hoping to hire.

Of course, ExpertBids is far from the only labor platform out there, with space leaders Elance and oDesk, reporting impressive growth. But Cronin feels his little site serves a need the big boys don’t by focusing specifically on professional services. “Some legal needs, you need to be able to go into the lawyer’s office and discuss with them, so we focus a little more on location than some of the other platforms,” Cronin says. But even in this relatively specialized niche, Cronin has company — oddly named Shpoonkle restricts itself to lawyers but aims to do basically the same thing.

Cronin acknowledges that there are hurdles for his fledgling business to overcome, including trust issues when clients are shopping for higher-end services. “For some people that’s their first hesitation with using the site,” Cronin concedes, but he notes, “the alternative is that you go through your phone book and you make a bunch of calls and you have less information.” ExpertBids also verifies the identity of the professionals who use it, checking bar numbers or CPA license numbers, as well as encouraging users to do their own research through relevant professional associations.

Perhaps a more troublesome objection is that sites like ExpertBids drive prices down for professionals. Cronin notes that pros on his site can’t see competing offers to discourage a race to the bottom. “We’re telling the experts to give whatever price makes sense for them, and if it’s not good for them then they shouldn’t be bidding that amount,” he says, though he also understands that, “if I was a professional, I would not like how cost conscious some of these companies are, but that’s a reality.”

Cronin sees the online labor platform model not as undermining professionals economically, but as empowering small operators to reach larger markets and give huge firms a run for their money.

Over the years, the legal industry and especially big firms just started to get so fat, inefficient and expensive, so there’s really an opportunity for solo and small firm lawyers to undercut these people without the high overhead of these humungous firms who have offices in all the downtown areas. If you can cut your overhead as a small firm, you’re going to be able to lower your prices significantly and still make a very decent profit.

Rather than view ExpertBids and the like as only a tool for businesses to drive down costs, Cronin paints a picture of platforms like his as arming professional David’s to take on complacent Goliaths. If he’s right, we should be seeing more of them popping up.

Do you think we’ll be seeing more niche online labor platforms as other industries embrace the model?

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At the GigaOm Net:Work conference on Thursday, Fabio Rosati, President and CEO, of Elance and Trevor Blackwell, the Founder and CEO of Anybots discussed how this future is now. Elance is a consultant-based freelance organization and its resources use Anybots to virtually be on-site for customers. “Our workers commute two to three thousand miles to work in seconds,” Rosati said.

These “white collar” robots, controlled by a freelancer, can handle front lobby greetings, business deliveries and more. Because the human workforce doesn’t work 24 hours a day — and robots generally can — Anybots can be used by multiple people at different times, allowing for economies of scale. Blackwell mentioned this as the “Zipcar approach” as idle robots could be tapped into as needed.

But using robots to crowdsource work isn’t just about saving money or spreading out the workload: Even a virtual presence may be more important than a caller in a conference.

Panel moderator, Thomas Vander Wal, Principal and Sr. Consultant, InfoCloud Solutions and, Analyst, GigaOM Pro, recalled a recent encounter with an Anybot in the office. “I was on the phone,” he said, “and an Anybot was in the room, as were other people. I was so focused on the robot and people that I forgot we had someone on the phone.”

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Elance’s look back at the year reveals that online hiring has soared more than 100 percent from 2010, and the number of professionals working on the site is up more than 120 percent. Cumulative earnings this year should surpass $500 million.

And like his oDesk counterpart Gary Swart, Elance’s CEO Fabio Rosati (who is speaking at Net:Work Thursday) doesn’t feel the economic doldrums are the sole cause of the growing attraction of online labor platforms. What is? Structural change to work, Rosati told us in an interview:

The state of [the] economy and unemployment is acting as a catalyst. It’s forcing a large portion of the workforce to look for alternatives. It’s forcing business to remain more flexible. But what we’re seeing is a change in how work is done and it’s similar to commerce. What caused e-commerce? Did the rise of e-commerce result from problems in the economy? Not really.

E-commerce started to be more effective in some categories than regular commerce, and I think that’s exactly what’s happening in the world of work. Working online in many ways is more efficient, more effective and more immediate than traditional employment. Businesses that use the flexible work model have distinct advantages over businesses that don’t, and there are some departments within these companies that have always used a flexible work model anyway. Creative departments, marketing departments [and] IT departments have always approached talent in a very flexible way on a project basis. They’re just doing it online now. So I don’t think we’re going back. I think this is really structural.

And while some may feel this shift towards global, online labor platforms undermine American workers by opening them up to competition from lower wage workers abroad, Elance is predicting in its report that professional services will become “America’s next great export.”

“The global demand for US talent has increased steadily over the past year and is set to grow even faster as online platforms like Elance break down global barriers,” says the release that goes along with today’s numbers. But Rosati is a little more understanding of those who feel the rise of these platforms is a mixed blessing for American workers.

When you create a global workplace and a global workforce, the dynamics are very different. Suddenly, you have a lot more competition cross-border. I know that is a very strong reality, and at the same time, there’s the other side of it, which is that for the first time, a very capable, talented, U.S.-based professional can access work and have clients all over the world, and we’re seeing exactly that on the U.S. platform. I feel that it’s an important side of what’s happening, because Americans have amazing talents. We’re seeing companies that may be hiring in some parts of the world for certain types of tasks, but for others, they love the opportunity to hire people based in the U.S.

I don’t doubt there are strong pressures when you compete with someone who is living in another part of the world. For example, it doesn’t even have to be someone who is in a lower-wage country. It could be simply someone who has access to public health insurance. So if you’re working in the U.S., and you have to pay for your own health insurance, you may be at a disadvantage to someone living in Norway who absolutely doesn’t because it’s all covered by the government. So that dynamic is definitely real and a challenging aspect of what is happening, but there are also many positive things.

You have to hand it to Rosati for acknowledging that, for all the psychological and lifestyle benefits of independent work, it does offload tasks and expenses ( (like obtaining health insurance, dealing with tax issues and building retirement savings) entirely onto the worker. Also to Elance’s credit is their partnership with eHealth to help U.S. community members compare health coverage options. “I wish I had the magic wand to address the problem, but I don’t,” says Rosati.

But health insurance isn’t the only external cost shifted from employer to worker in the paradigm shift these platforms are pushing. Though Elance clearly tries to make verifying work, billing for it and sorting out logistics as simple as possible with everything from an internal file management system to built-in virtual meeting facility, one can’t help but feel independent workers are more burdened with what Craig Lambert recently dubbed “shadow work” in the New York Times.

Lambert defines the term as “all the unpaid labor — including, for example, housework — done in a wage-based economy,” and muses that all of us, not just independent contractors, are being saddled with more and more of it in the name of corporate profits:

Science fiction novels of a half-century ago dramatized conflicts between humans and robots, asking if people were controlling their technologies, or if the machines were actually in charge. A few decades later, with the digital revolution in juggernaut mode, the verdict is in. The robots have won. Although the automatons were supposedly going to free people by taking on life’s menial, repetitive tasks, frequently, technological innovation actually offloads such jobs onto human beings.

The conventional wisdom is that America has become a “service economy,” but actually, in many sectors, “service” is disappearing. There was a time when a gas station attendant would routinely fill your tank and even check your oil and clean your windshield and rear window without charge, then settle your bill. Today, all those jobs have been transferred to the customer.

From automated airport check-in terminals and the near extinction of travel agents to understaffed retail outlets where we find our size ourselves, more and more places are shifting work, with all its attendant costs in time and energy, from companies to individuals, argues Lambert. In its well-intentioned way, Elance and its competitors appear to be doing the same.

Do the larger markets for our services and increase in lifestyle flexibility make up for these extra costs?

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Plenty, argues a recent piece by Rieva Lesonsky on MSN’s Business on Main site, which argues that the tepid pace of small business hiring, while obviously impacted by the dreadful economic situation as a whole, is partially down to rise of freelancers and platforms, like oDesk and Elance that enable small firms to find them. She cites a study from the Kaufman Foundation from earlier this year as evidence:

The Kauffman Foundation suggests the job deficit is actually not recession-related. In fact, Kauffman’s study, “Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation,” shows that new employer businesses have declined 27 percent since 2006. However, when newly self-employed workers are added to the mix, the level of startups hasn’t declined, but instead has “held steady or even edged up since the recession.”

To put this in perspective, in the 1990s, new businesses opened their doors with about eight employees; today, that’s down to five. The culprit? The traditional business model doesn’t apply anymore, due to a number of factors, including technology and a globalized market.

Essentially we’ve created a contingent, freelance economy. There’s still money to be made, innovations to be marketed and ideas to be harvested. The difference is that many businesses today are choosing to hire on an as-needed basis, relying on a freelance workforce.

Numbers from office space provider Regus earlier this month tell a similar story. A survey of 12,000 companies worldwide by the firm found “47 percent say they plan to hire freelance staff and 44 percent plan to hire remote workers over the next two years.”

But this decline in small business hiring might not be entirely a bad thing, according to a recent piece by James Surowiecki in the New Yorker. In it, he notes that while small businesses are beloved by politicians, they are less productive than large firms and therefore do less to raise living standards. Countries with miserable recent growth like Greece and Portugal have some of the highest percentages of workers employed by small firms, he also points out.

Maybe the rise of the freelancer will make for a more dynamic economy even if it means less small business hiring. Does that sound plausible to you? 

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