It is no news that the world has been taken aback by the freelance economy. More so,
there is a high probability that in the nearest future, say 20 years, the developing countries of the world would have more freelancers than salary earners.
This is predictable since one of the driving forces is technology. Technology, for over thirty years, has dictated the pace of global economy and this intends to continue at an even faster pace.
One of the very interesting online middleman/freelance platforms is Fiverr which hosts billions of dollars’ worth of freelance gigs annually.
Even though Fiverr and Upwork (online middle man platforms for freelancers) are very popular, they still experience and have difficulties in certain intricate areas.
Problems in online middle man platforms
Making prompt and efficient payments to millions of freelancers in hundreds of different countries.
Ensuring the quality of work delivered to clients.
Assisting new freelancers get started on these platforms.
Good news is that technology revolution promises to disrupt this industry and make available relevant solutions to the above problems. There appears to be light at the end of the tunnel as many Blockchain-based alternatives are promising a brighter future for both freelancers and employers with low charges, quick payments and new incentives that make the experience better for everyone.
Observe these problems and lets determine if they are realistic and if their prospective solutions are well able to buy the hearts of the employers and freelancers alike, to the new decentralized way of transacting business.
The State Of Freelance Market
Freelancing is insatiable and is only getting bigger and hungrier for new and better ways to connect.
So the question remains, what are the most successful businesses that freelancing encourages? The answers with the help of statistics from Upwork, the largest online freelance platform are;
- 8% Administration and Support
- 11% Writing
- 15% Sales and Marketing
- 18% Design and Creativity
- 33% Web, Mobile and Software Development
- 15% others
On a global scale, about 20% of organizations with, more than 1000 employers have a work force that is made up of 30% or more Contingent workers (freelancers).
Global Contingent Workforce Study
According to a reliable survey by Payoneer, about 70% of freelancers use online market places to find work.
Types of Freelance Platforms
To enable us capture all the freelancing niches we would consider these few broad categories of freelancing platforms.
- TopTal – Like – For high quality freelancers. They take time to screen intending members via a rigorous process.
- Codeable – Like - For niche talents. Her site operators hand pick this freelancers to ensure that they have the required skill for a particular niche.
- Fiverr – Like – For small gigs around $5, where the site gets its name. There are simple low skilled jobs. Gigbucks has a similar structure.
- Upwork – Like – For all kinds of jobs including hourly, and even full time or part time positions. That eat gory has all the bells or whistles once can even set up one’s agency or team.
To see full scale, refer to FREELANCE.COM
The Advantages of Challenges of Each Platforms
Upwork has initially all available features; but the company’s real value is delivered on the size of her network.
This is also because Employers/Clients have access to millions of freelancers with profiles and ratings.
That is to say that there is a high possibility of finding someone with the exact skill or set of skills they need for a low rate.
Other feature such as recruit services (to help companies find the right talent) also exists.
In addition, provision of data/information on available jobs for which freelancers can apply is available.
This would save time and money as compared to expensive online advertising.
Sadly, there are a few challenges experience. The large battalions of freelancers are those dominated by those of poor qualities works and this create an assignment for employers to have to sift through poor quality works and scrutinized sub standards applications
Another important challenge is that freelancers have their profile, business and income at the mercy of a centralized authority. Which often time leads to unfortunate loss of control over the above listed freelancer’s right to ownership
Other platforms have similar challenges.
Profit Circulation of Freelancing Platforms
Currently the available centralized have a single pay structure. The platform takes cut of all payments. While some charge variable rates, others take after rate on all transactions
A quick break down of fee of the Upwork platform as a possible guide
Upwork 20% up to $500
10% up to $10,000
5% over $10,000 per Client
The modes of payment are quite similar for the platforms- with most of them accepting credit cards, pay pals, or bank transfers and paying freelancers via PayPal, pioneer or bank transfers. None of these major platforms accept or payout in crypto currency yet.
While it’s is laudable that some smaller startups like (a 100% bit coin based freelancer platform) accepts crypto currency payments, it is also a thing of concern that they are yet to take off globally with only a few projects posted a day in all categories
How Blochain will Disrupt the Freelance Marketplace
It is no news that blockchain technology is already disrupting banking, money transfers and healthcare. Thus the freelance market would not be an exception.
The main ways the blockchain could improve the current services for both freelancers and employers are;
- Faster and more efficient payments with Cryptocurrencies
- The elimination of middlemen fees
- The use of tokens and smart contracts to giver new incentives for a better overall experience.
Cryptocurrency Payments
According to findings 16% of freelancers wants faster payments from, their freelance work. This is fuelled from poor and high impracticable online payment systems. With Upwork, (our case study) you find that you have to wait for a client to approve a payment, then wait another five days just for the funds to be available in your account, and then again, some more waiting period for the fund to be processed into your bank account. It can easily take weeks.
But if cryptocurrency is introduced, there is bound to be a speedy approval after funds transfer. The freelancers will be even, more passionate to deliver on projects. Recall also that many don’t have access to bank accounts but cryptocurrencies are limitless, with easy access to internet and as such, many potential high quality freelancers would be engaged and remunerated with ease.
Lower Middleman Fees
Blockchain applications have taken it upon themselves to threaten middlemen in the freelance economy. The value of middle men plummets since users can simply interact with each other through a protocol than through a centralized system. This is already in vogue in online marketing/advertising and international money transfers.
Tokens and Smart Contracts for incentives
Crypto-tokens and smart contract can be used in clever ways to incentivize everyone to act fairly and professionally at all times. This is so because one of the biggest challenges for employers and freelancers on the current platforms is Trust.
Recall that
Decentralization can also mean fairer, distributed resolutions leading to better contract outcomes, more accurate ratings and less centralized authoritarian control.
Benefits for Freelancers
Freelancers get full benefits such as;
Cash in their wallets faster.
Lower transaction fees
Unbanked billions can start participating in the freelance economy
Tokenized reputation
Less centralized control meaning that their business and income is safer and can not be unfairly held hostage.
Benefits for Employers
Quite true, employers do not really gain directly from the introduction of a decentralized system.
But from a closer perspective, some indirect benefits could include likely reduction of fees owing to zero or little transfer charges and as such projects are billed at lower rates.
This would encourage competition and then high quality would easily be sorted.
Also, if the blockchain platforms are significantly better for freelancers, it will lure the best freelancers.
Finally, the Employers will gain maximally if the platforms run efficiently by using the blockchain and leveraging smart contracts and tokenized incentives. This would lead to less risk when hiring and determining higher quality works.
Conclusion
Truth be told, there are numerous inefficiencies in the freelance market space on a global scale. These inefficiencies range from high fees, low work quality, slow payments, integrity issues and an all-powerful centralized control structure that can ruin prospective projects in no time.
The Blockchain has provided decentralized solutions with fascinating project which will make the market place better for everyone still in the pipelines and hopefully would be in effect sooner than later.
#Thanks for reading.
Special thanks to Kirill Shilov co- founder https://www.howtotoken.com for his input