Our Maximum Velocity video series dives deep into current trends and topics with guests that have expert knowledge on the matter. In our latest episode with the Chief Economist of Upwork, Dr. Adam Ozimek, we discuss how outsourcing trends have changed in recent years and the hand that the pandemic played in more recent trends. Freelancing had steadily been rising in demand before the pandemic, and with the option to work from home becoming more available due to the pandemic, freelancing is more convenient than ever for both employees and employers. Watch our video here to find out what Dr. Ozimek has to add about outsourcing trends based on his knowledge and experience.
Official Transcript:
Marcus Grimm:
Welcome to Maximum Velocity from Ascendle; our series that looks at the trends and topics that are moving even faster than ever. I’m Marcus Grimm, and today’s subject is outsourcing. Today’s guest is Dr. Adam Ozimek, who is the Chief Economist for Upwork. Upwork is the largest global freelancing website enabling businesses to find, hire, and pay highly-skilled freelancers for short-term and longer-term projects. There, hundreds of thousands of freelancers are being partnered with an equal, if not greater, number of companies looking to augment their staff. Adam, welcome to the program. We’re thrilled to have you here today.
Dr. Adam Ozimek:
Thanks for having me, Marcus.
Marcus Grimm:
Adam, I want to start by moving back to last year in early 2020, when COVID hit you had been the Chief Economist of Upwork for a bit more than a year, the country, and actually the world kind of goes on pause. Some companies are having mass layoffs, others are just freezing their hiring. Do you recall, as an economist, what were some of your immediate thoughts in terms of how COVID would impact freelancing and other contract opportunities?
Dr. Adam Ozimek:
Well, you know, a lot of that wasn’t very clear at the beginning, just because of the uncertainty about the economic path of COVID. You know, February, March 2020, it seemed possible that we might be able to do sort of a lights off lights on approach to it, you know, that the thing were gonna wrap up pretty quick, and the economy would be shut down for just a little bit, but then things can go back to normal, in which case, you know, that doesn’t necessarily have a huge, huge impact for the freelance economy. I think when things really started to be clear that we were dealing with something longer-lasting, and that we were seeing a huge push towards remote, that’s when it became clear that we were really going to see some impacts in the freelance economy. Also, just the longer it went on and the more that companies had to make fast, temporary adaptations, and they had to move quick. That’s another thing that was really, you know, spurring growth in the freelance economy as well. So not a lot of clarity from the start. But the longer it went on, the more it became obvious that freelancing was going to be impacted for sure.
Marcus Grimm:
In a little bit, we’ll be talking about how much of a trend that that is, and how much we think it’s going to continue. There’s been a lot of tremendous press out there about freelancers who’ve been benefited from Upwork, whether they were freelancing prior to COVID, or found themselves looking for something new since then. But one of the things I want to do here is I want to flip the coin, I want to look at the other side of it. The companies that hire on Upwork and similar platforms, what are they doing now differently? And if so, are they doing things differently? And if so, how?
Dr. Adam Ozimek:
Yeah, I think what the big change that’s happened is that companies are comfortable with remote work. Pre-pandemic, we would hear from our sales folks that they would talk to clients, and some of them would say, “look, we love the idea of this way of working, it sounds very appealing to us in a lot of ways, we see the advantages, but we don’t work remotely”. And so you know, remote work was this huge hurdle to adoption of freelance platforms. And you know, now there’s basically nobody out there saying we don’t work remotely, even if their plans are to bring people back to the office. You know, our surveys and other people’s survey show that almost everyone says, “look, this has gone a lot better than expected”. So even for companies that plan to largely stay in person, they have, you know, learn how to work remote, and learn that it works better than expected. So that hurdle for clients has really been lowered and that makes them a lot more willing to make the jump to freelancing.
Marcus Grimm:
That makes a ton of sense. It’s two different trends coming together. Now, anecdotally, we hear that some companies go on to Upwork, because they just can’t find full-time employees to fulfill their needs. There’s obviously some talk that other companies go there because they’re looking to save money. Every situation is different, every company is unique. But what type of trends does the data show? What are some of the key reasons companies are going to Upwork and similar platforms?
Dr. Adam Ozimek:
You’re absolutely right, that you know, every company is different, and there’s just a ton of diversity here because there are a variety of advantages to this way of working in it. It fits on a lot of use cases. So for example, you know, our biggest client type is small businesses. And for a lot of small business owners, this allows them to focus on their core competency, and it’s something that they, you know, it’s not their specialty. So we asked our clients like, “what would you have done if you couldn’t have hired on Upwork?” a lot of them say “I would have done the work myself”. And so the small business level, you know, that means allowing them to focus on what they’re doing. And that’s it, like they have a what I call a fractional use case: they need online marketing, they need customer service, they need accounting, they need legal help, but they don’t have enough need to justify a full-time employee. So that’s a fractional use cases, what you’re going to tend to see in smaller businesses and even some mid-sized businesses. At larger companies, the advantages tend to be issues of scaling quickly and also variable demand. So for example, if you take a large tech company that does, you know, a hardware company that does occasional major software updates, they’re going to have hugely variable needs for customer service. And it’s very costly and time-consuming to scale up full-time employment. So if once a year, you have these rollouts of a new update, and you know, you’re going to have lots of customer service needs, you know, you’re not going to hire, you know, two or three or four times your normal customer service employees in order to scale. So being able to do that via freelancing allows you to scale quickly. The other thing is, you know, it really unlocks global labor markets. So, you know, if you were to hire programmers from around the world, you wouldn’t have access to talent wherever they live this really is the best way to find those workers right now because you can actually see, you know, their experience, and what they’ve done in the sort of on platform work experience is super, super valuable when you’re talking about different countries.
Marcus Grimm:
Let’s talk about before COVID arrives, it’s been said that the crises don’t necessarily create opportunities so much as they accelerate the ones that are already ramping up. Do you think that’s fair, in this case, Upwork was doing it was doing pretty well, even before COVID hit?
Dr. Adam Ozimek:
Yeah, you know, freelancing has always been with us, it’s always been part of the economy. You know, for as long as we’ve had work, we’ve had self-employment, and so that’s nothing new. What had been changing pre-pandemic was, you know, the growth of freelancing platforms like Upwork. And people were realizing that if you’re independent, this was a great place to find clients. And if you are a client, and you want to find independent workers, this is a great place to find them. So that was really the big trend pre-pandemic is sort of people who were already looking to work this way. Businesses, you know, wanting to find those workers. This was that said, just the best place the most convenient place to find hire them. Now, I think post-pandemic we’re seeing a lot of people sort of change their thinking about this kind of working in general. And you have, you know, people who had not considered being a freelancer before, for example, are now thinking about it, because they want that flexibility that comes with it.
Marcus Grimm:
So you talked about the difficulties of jobs, and I always think that economists have a difficult job, I feel like I see you guys doing two things. You’re either tasked with explaining something to us that’s very, very difficult, or we’re asking you to predict a future. So I’m going to go right to the latter one there. This surgeon outsourcing that we’re seeing, do you believe this is, and I’ve seen some articles in the New Yorker, The New York Times, the workplace, “the workplace has forever changed”. Is that how you look at this? Or is this a COVID blip? What do you think we’re going through right now.
Dr. Adam Ozimek:
So I don’t want to get too futuristic about it in the sense of saying something like, you know, everyone’s going to be a freelancer, you know, there’s still going to be a ton of nine to five work, there’s always going to be nine to five work. I don’t like to pretend that you know, everything’s going to be topsy turvy and flipped upside down. I do think we are going to see growth in people wanting to work independently, and I do think we are seeing growth in people wanting to hire independently. You know, once you go remote, there are certain advantages to taking the next step to hiring freelancers. So I am optimistic about the growth trends there, but I never want to predict that, you know, everything’s going to be upside down.
Marcus Grimm:
Right, right. As you know, at Ascendle and you’ve alluded to this, we do custom software development, and we have a wide variety of ways that we find talent, Upwork being one of them. One of the reasons we’ve had to be on so many platforms is because technology is just more diverse than it’s ever been. Whereas 20 years ago, you might be able to take the time to upskill one of your employees to do a job that needs done. Now, it seems like, and you alluded to this a little bit earlier, companies today, speed is truly what they’re after. And it sounds like what you’re saying is the data on Upwork shows the same thing that lots of times companies just can’t wait as long as they used to.
Dr. Adam Ozimek:
Yeah, you know, that’s absolutely the case. If you need someone who is really good at something and you need them right now and you need them for you know, a project basis like this is a great example of a use case for freelancing. You, if you are, for example, you know a company who doesn’t always need to have top-shelf programmers around all the time, it wouldn’t make sense for you to try to find like someone who’s, you know, the very best at it, but if you have like a really tough challenge that you need to overcome, you know, hiring them on a, on a temporary project basis, you can get access to talent that wouldn’t be in normal times, you know, too good for your everyday use to too skilled for your everyday use sort or overqualified for your challenges day in day out. But when you have this like, really fast moving really tough, must be done really well challenge like you can get access to talent like that.
Marcus Grimm:
Outstanding, it’s a great answer. Last question for you, Adam, you’ve been immersed in this industry for a few years now. As an economist, you’ve come in knowing a lot, but you’re also aware of a lot of things that that you don’t know, what’s been your greatest surprise, something that maybe you didn’t expect to find before you became immersed in the outsourcing phenomenon?
Dr. Adam Ozimek:
Yeah, I mean, you always know how much talent there is all over the world, but it’s really, you know, it’s really experienced to see people who are truly great, skilled, high tech knowledge workers in countries all over the world. And I mean, you know, all over the world, it’s a really great thing to see firsthand to be able to see people making a lot of money for, you know, in a developed country. And they have like, great skills, and they’re competing in an international labor market. And you know, just understanding how transformative that can be for people’s lives. And, you know, spreading that opportunity across the world is really, you know, it’s really great to see. So it’s not surprising in the sense that I didn’t know that it was happening, but it’s just, it’s something that you can’t really appreciate until you actually see the people doing it.
Marcus Grimm:
Very, very well said, Adam, thank you so much for joining us today.
Dr. Adam Ozimek:
Thank you for having me.
Marcus Grimm:
Dr. Adam Ozimek is the Chief Economist of Upwork. You can find them on social media or wherever you get your news. For Ascendle, I’m Marcus Grimm, and this is Maximum Velocity, the show about speed, how to get it, and how to keep it.
