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?

Image courtesy of Flickr user Kenny Holston 21. 

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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?

Image courtesy of Flickr user garryknight.

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In conjunction with Genesis Research Associates, oDesk reached out to more than 7,000 clients, ranging from solopreneurs looking for some extra help to managers at medium and large enterprises, asking them about their views on online contracting and the future of sourcing talent through platforms like oDesk.

The results put a final nail in the coffin of the argument that increased interest in online labor platforms like oDesk is largely down to the troubled economy and firms’ short-term scramble to get by or their need to cut costs.

• A massive 76 percent of respondents told oDesk that their use of contractors was a long-term strategy.
• Only 24 percent characterized their remote hiring as a temporary solution to short-term problems.
• More than 80 percent either agree or strongly agree that remote hiring increases competitiveness and that the practice will soon be common.

“The CIO of AOL came to us and said: ‘Hey, I’m having a hard time finding and hiring enough technical talent,’” oDesk CEO Gary Swart told GigaOM to illustrate the point that, for many of his company’s customers, online contracting is about strategy and competitive advantage, not just cost pressure. “oDesk enabled engineers at AOL to hire, as [the CIO] calls it, ‘a brain extension,’ so the ability to get leverage by enabling any engineer to hire talent in order to get more work done.” Gene Zaino, the CEO of MBO Partners, made a similar point a few months ago, noting that his firm has seen more and more businesses touting their ability to be agile through the use of contracting talent as a competitive advantage.

Also of interest was what respondents told oDesk about the alternatives to remote hiring. When asked what they would have done had there not been a suitable oDesk contractor available, 50 percent said they would have found someone through another contracting source, 22 percent would have simply worked longer hours and nine percent would have delayed or canceled a project. Only 15 percent would have made a local hire, indicating that oDesk-style hiring isn’t replacing local jobs but creating new, if small-scale, gigs.

The company also announced a new CFO, Gregory Stanger, who formerly served in the same position at Expedia and Chegg.

Do you agree with Swart that enthusiasm for online labor platforms like oDesk outlive the tough economic times?

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