Earlier this month, CEO of Euro Freelancers Marco Torregrossa spoke at Arcadier Inspire, a virtual summit
and competition for online marketplaces. With his experience as a workforce and
labor market advisor, Marco has specialized insights on how entrepreneurs can
better design, scale and govern freelance platforms.
The labour economy is facing disruption
The freelance economy is on the
rise. In his presentation, Marco shared that there has been a 45 per cent
increase in freelancers in Europe since 2004, and the freelance workforce grew
three times faster than the employee workforce since 2014. It also seems like
no sector can escape from the trend of becoming more flexible. Even professions
like medicine, engineering and law that once seemed invulnerable will be affected.
At this rate, the future of work will see the number of freelancers outgrowing
the freelance economy. With more work and less conventional ‘jobs’ in the
future, it means that everyone, from students, employees and employers to
organizations, should look ahead and prepare themselves for this reality.
For companies, it is time to find
out how to leverage the freelance economy to get work done more productively.
For employees, income may have to come from various sources, not just from a
job. People will have the option of being just an employee, a freelancer, or
both. Whatever the case, Marco predicts that the future of work will see a
symbiotic relationship between employees and freelancers.
How can entrepreneurs scale their freelance platforms?
At present, freelance platforms
are still considered a novelty. While there are some large freelance platforms
like Upwork and Fiverr, there is room for more. In his
presentation, Marco categorized the current majority of freelance platforms
into three categories - platforms that provide technology services, (such as
software development), platforms that connect clients to specific services
(such as copywriting) and those that offer generic services. This means that
there are many verticals which aspiring freelance platform entrepreneurs can
consider exploring.
As the sharing economy and
freelance work have become more common, corresponding technologies have emerged
to expand these sectors. Take Arcadier
for example - with Arcadier’s easy-to-use marketplace technology, entrepreneurs
are no longer limited by the lack of technical expertise. Aspiring freelance
platform entrepreneurs can leave the technical aspects to Arcadier and focus on
building and scaling their freelance platforms.
On the topic of scaling, Marco identified four clusters of freelance platforms. Leaders are those which are highly rated by users, with substantial market presence. Similarly, contenders are highly rated by users but have yet to achieve the market presence of leaders. High performers have significant market presence but need to work on enhancing user satisfaction ratings. Lastly, platforms that don't have significant market presence fall into the niche cluster.
Marco’s
advice for new freelance platform operators is to first develop a strong market
presence, then focus on creating strong
user satisfaction. In other words, Marco recommends a strategy to develop a
niche freelance platform, then scale up to being high performers, followed by
becoming contenders and eventually achieving the leader status.
What are the biggest shortcomings of the freelance economy?
Marco shared three main
challenges that freelance platforms face. Firstly, users may be turned away by
the high fees that platforms charge. There are many revenue models that
platform operators can experiment with, but Marco recommends the use of a
commission model for freelance platforms that are attempting to break into the
market. Charging a small commission per transaction would encourage more
freelancers to post their services on the platform with no concerns about loss.
Further, when fees are affordable or competitive against other platforms, it
would be more attractive for users to use the platform. At a later stage, when
the platform has gained traction and market presence, the platform may gain the
power to consider higher commission rates while enjoying the larger pool of
users.
The second issue that freelance
platforms face is the issue of trust. Initially, service users and providers
would be cautious of intermediaries. The question of whether the platform has
their best interests in mind needs to be answered. To enhance trust, platform
operators can enhance the quality and consistency of their service providers by
qualifying the freelancers before allowing access to assignments.
Finally, there’s the question of
portability and data ownership. Most freelance platforms do not facilitate the
easy extraction of data from their platforms. If freelancers are unable to
export their data for their personal use and move to other platforms, they will
be less willing to joining the platform. Platform operators will need to
understand the needs of their users and meet them to convince even more users
to come on board.
Tips for freelance platforms
With the freelance economy set to
expand and disrupt the labour market further, platform entrepreneurs would do
well to learn more about the freelance economy. Freelance platform
entrepreneurs should consider themselves as the next generation of HR
specialists. Having a keen understanding of the positions of freelancers and
the needs of users will help in enhancing platforms to meet those needs, expand
their business and influence the growth of the freelance economy.
Watch the entire Arcadier Inspire Summit talk by Marco Torregrossa:
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