Strong Growth in Demand for Online Freelancers, Data Shows

Despite a fairly weak jobs market overall, freelancers should be optimistic. Online labor marketplaces oDesk and Elance have both released data showing strong growth in demand for freelance workers over the past year. Elance’s quarterly Online Employment Report, out today, shows a surge in demand for online work in the normally slow Q4, with a 38 percent increase in the number of jobs posted on the site over the same quarter the previous year. oDesk has also published its latest monthly Online Employment Report. Its figures are similarly encouraging for freelancers: the number of jobs posted to the site has grown by a very healthy 92 percent increase over the previous year.

One interesting nugget of information from the oDesk report is that people from small towns (with populations of smaller than 15,000 people) are outperforming their big city counterparts like San Francisco and New York, both in terms of online work activity and number of hours worked per contractor. That’s probably because in smaller towns job opportunities are much more limited, and marketplaces like oDesk and Elance provide access to employers regardless of location.

Overall, it seems that the jobs market overall is recovering more slowly than economists expected it to following the recession, while these reports show that the freelance jobs market is growing quite substantially. With the economic recovery still looking fragile, it seems that some businesses are preferring to turn to temporary contract labor, rather than risking taking on permanent staff. But as the economic outlook improves, will we see a return to the situation where most people have regular paid employment, or has the downturn precipitated a permanent shift to freelance work for a portion of the working population, particularly in areas where traditional jobs might be harder to come by, such as in small towns and rural locations?

Of course, the Elance and oDesk figures should be taken with a pinch of salt. The data is from just two sites, and even though they are both fairly large marketplaces, they still only cover a tiny subset of the working population and cannot be considered to be representative of the freelance jobs market as a whole. The Freelancers Union, a nonprofit advocacy organization, is currently gathering data for its annual survey of freelancers; it will be interesting to see if its results also show a large increase in the amount of freelance work being carried out.

As guest author Ray Grainger noted last week, the landscape of the workforce is changing, with some estimates predicting that freelancers will make up 40 percent of the workforce by the end of the decade. A shift to freelance work for a significant portion of the population shouldn’t necessarily be feared — there are, after all, many benefits to being a freelancer, not least of which is much greater flexibility — but it would have implications for both policymakers and businesses to consider in areas such as access to healthcare, taxation and retirement planning.

Photo courtesy Flickr user Egan Snow.

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