The enduring power of the Freelance Economy has been revealed. While independent contracting grew during the recession as businesses were reluctant to commit to new salaried hires, it hasn’t slowed now that the recession is over. In fact, it’s only gaining momentum. Freelancing is fast becoming a major force in investment banking, where we see increasing numbers of younger M&A professionals going freelance, coupled with a growing demand for their services.Constantly evolving technology, the rise of online freelance marketplaces like Graphite, business development networks such as Axial, and crowd-funding sites like Angel List have made it possible to source transactions entirely online. Compared to even five years ago, it is far easier and more feasible both to be a freelance financial professional, and to engage one, than ever before.
Indeed, these wide-open portals of opportunity have made it possible for younger professionals to gain experience and build their networks. Whereas in the past an independent consultant would need to have had at least a decade of experience and time gathering personal contacts, the modern deal professional leverages online tools and networks to succeed.Several recent industry dynamics are driving younger M&A professionals toward freelancing:
- Declining management fees are forcing investment firms, strategy consulting firms, accounting firms and advisory firms to lighten up on full-time staff.
- The rigorous training programs at large investment banks, where most of them are starting their careers, create large new talent pools every year.
- There’s limited room at the top – senior professionals at these firms tend to stay put, so talented mid-level and junior professionals looking to advance are by default forced to fledge from where they started.
- Besides this, the long hours required at investment banks cause many talented M&A professionals to voluntarily leave the industry each year in order to enjoy more personal time.
As the outlook for M&A freelancers continues to improve, so do the tools for managing their work. 2015 is the year we will see increasing development and usage of data-driven metrics for hiring and managing freelancers. Think crowd-sourced marketplace reviews and ratings…. background checks…performance metrics…and analytics tools for measuring and comparing results, instantly. They’ve even spawned an acronym for this collection of worker performance software applications: FMS, or Freelance Management Software.As these tools get more sophisticated, they will enable businesses to bridge the gap in their current HR Management Software, which seldom can handle the different categories of tasks needed for managing independent contractors vs. employees. Just as HRMS can be used as a strategic tool for optimization and productivity output, FMS can be deployed to optimize the strategic use of contractors.Personally, we’re thrilled by these developments not just because our company (Graphite) is riding this particular wave, but also because of the worlds of opportunity it offers for talented professionals and companies alike to maximize their paths to success.