This post explains the evolution of online freelancing and the economics and potential impact of the online freelancer.
I was hooked the moment I saw what the World Wide Web was (in 1995/96) and it’s potential to change the way we lived. Those days one mostly accessed Internet at cyber-cafes. Sometime in 2000, I came across this wonderful site called elance.com. Elance.com was the first Internet-based marketplace that brought employers and freelancers together.
The name Elance was an inspiration from a 1998 article titled “Dawn of the e-Lance Economy” written by Tim Malone and Robert Laubaucher for the Harvard Business Review. After elance.com started, companies like Guru.com, A2ZMoonlighter.com and SmarterWork.com began their services. They were positioned as eBay for services who promised to change the dynamics of the global economy by enabling individuals and businesses to buy / sell services using an RFP-based model. Then came companies like iStockphoto.com and Envato marketplaces, where you could buy and sell your skills directly. (Do read more about the three different types of online freelancing markets.)
But How did Online Freelance Marketplaces Begin?
Before that let us understand the origin of the word freelancer which existed even before the Internet. Actually even before electricity was discovered!
Origin of the word “Freelancer”
A freelancer, freelance worker, or freelance is somebody who is self-employed and is not committed to a particular employer for a long term. As per Wikipedia, the word was first used by Scottish writer Sir Walter Scott (1771–1832) in a historical novel named Ivanhoe to describe a “medieval mercenary warrior” or “free-lance”. It signified that the lance (a medieval weapon) is not sworn to any lord’s services. It should not be taken that the lance is available free of charge. Only in modern times has the term morphed from a noun (a freelance) into an adjective (a freelance journalist), a verb (a journalist who freelances) and an adverb (she worked freelance), as well as into the noun “freelancer”. (Source – Wikipedia)
Freelancers deal directly with their clients. Most often, freelancers are a “one person company”. You could say freelancing is a step towards expanding the business later by adding more staff and capabilities.
Economics of Large Vs Small Business Organizations
Business organizations are designed for coordinating the activities of people, workflow, material, money etc. The forms of these business organizations (companies) depend on coordination technologies at that period of time. After the Industrial Revolution, coordination technologies like the automobile and telephone made internal transactions not only possible but also advantageous. This paved the way for the birth of business entity called the ‘Corporation’. Economists and business researchers theorize that organizations grow larger when it is economical to conduct transactions internally.
But when it is cheaper to conduct transactions with external entities in the open market (outsource), businesses will prefer to remain lean. For example, a construction company will hire freelance architect/s for designing their projects versus hiring a full-time design team if there is cost benefit. This way they stay small and focus on their core expertise.
Enter – the World Wide Web
The Internet has been a great leveler and has changed the economic equation. Today anyone with a computer, an Internet connection and skills that are in demand, can start selling their services through the vast reach of this medium. Now data can be communicated instantaneously globally at low costs. This has reduced the importance of centralized decision making and thus the role of costly bureaucracies diminishes. Furthermore, enterprising individuals who do not need such “managers” can coordinate their efforts through the Internet with other such freelancers online.
Individual entrepreneurs or freelancers being nimble and self-driven, thus triumph over bloated organizations. It’s safe to say that the Internet has resulted in the “new and improved” version of small, autonomous businesses. Improved version because, now these small entities can access the global resources of information, skills and financing that used to be available only to large companies. Today small businesses enjoy many benefits of the corporations while remaining lean, nimble and innovative.
As technologies advance, the shift to freelancer will speed up, resulting in an elastic network not unlike a project that has a finite time. We can see this working on online freelance marketplaces like Upwork and Freelancer.com. So when a project is initiated, the hirer will post the RFP and freelancers respond with a bid proposal. Sometimes, a group is formed and managed by the hirer. All done remotely! Finally when the project is complete, the freelancer / group is paid and that’s that. Working as a freelancer requires the same diligence as required in a full-time job. Do read how to be a successful freelancer.
So back in the year 2000, I registered on many of these online freelance marketplaces and over the years worked on hundreds of projects. Initially I took on easy projects like data-entry and PowerPoint presentations and later took on software and techno-business research projects. I learnt a lot in terms of business knowledge, technical skills and other soft skills. This site is a small contribution to give back to the future freelance community.
Today Elance is known as Upwork.com after merging with Odesk.com in 2015. Guru.com merged with A2ZMoonlighter.com and many others merged or simply vanished since then.
The online freelancing market has now matured with multiple variations and more robust business models.
As businesses realize the advantages of remaining ‘un-bloated’, I see opportunities for freelancers growing. Moreover, when today’s generation demand work that not only allows them to make an impact, but also allows them to live a fulfilling life, it is about time we realize the potential of this amazing phenomenon called freelancing.