The Rise of Freelancers Spawns A New Industry: Freelance Management Software

The Rise of Freelancers Spawns A New Industry: Freelance Management Software

The Freelance Economy is doing so well that it’s given rise to a new industry - freelance management software - designed to manage employer-freelancer relationships. It had to happen sooner or later. For years, large corporations have relied on Peoplesoft, SAP and other HR automation systems, and by now there are dozens of specialized HR software systems aimed at small businesses with as few as 25 employees.But since the 2008-09 recession, businesses of all sizes have scaled back on hiring full time employees in favor of contingent workers and freelancers. With all these temporary workers around, demand has grown for software systems aimed at managing non-employees, since HR management platforms aren’t really equipped for that.Freelancer Management Systems (FMS) are designed to solve particular problems of selecting and working with freelancers:

  • Gain online access to screened talent;
  • Reduce risk and ensure compliance on things like employee misclassification, which can bring on hefty IRS fines;
  • Increased visibility, efficiency and control with a single tool that can replace the usual mishmash of different tools you typically need with freelancers such as third party payment systems, project calendars, virtual meeting platforms, and spreadsheets.

Staffing Industry Analysts recently published a report, The Rise of Freelancer Management Systems, discussing the results of a survey they conducted of the players in this nascent software industry. It’s so new that most of the surveyed companies, like Elance/ODesk, are actually online hiring platforms that include elements of FMS for the convenience of their users. Others, like FieldNation, OnForce and WorkMarket, grew out of a specialized vertical (IT Field Services). Only a few were native applications aimed at a broader market.They queried lots of areas (more than I’ll get into here), but it’s their conclusion that really provides a lens into the future. The number of users is still small relative to the potential market. It’s still in its “Introduction” phase. In a separate report, Staffing Industry Analysts note that only 9% of freelance workers avail themselves of online hiring platforms, so maybe it’s so new that a lot of people don’t even realize that kind of product is out there.But we predict that will change as both companies and freelancers grow tired of using homegrown, patched-together hiring and payment systems and start to look for more elegant solutions.Graphite's hiring solution is a good example of the type of seamless user platform sought by employers and freelancers. For a look at how it works, go here.

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