Rise of the Gig Economy: The Risks May Outweigh the Rewards

There has been an abundance of discussion surrounding the freelance boom lately, to the point where it has gained its own label. Countless articles mention the ‘gig economy,’ a term that encompasses the image of tech-savvy millennials who relish the independence of being their own bosses, taking on projects for clients abroad whenever and wherever it suits them.

The freelance industry has experienced an impressive surge, and its impact cannot be understated. In the wake of a global pandemic that dismantled traditional barriers to remote work, we’re witnessing remarkable growth in the Philippines. Around 1.5 million individuals in the country have registered on international online platforms, offering their freelancing services. As a result, the Philippines is emerging as one of the fastest-growing gig markets worldwide. And the rest of the world is following suit. In fact, the gig economy is expected to grow to an astronomical $455 billion by the end of 2023.



Why is it a Risk for SMEs to Lean on the Gig Economy for Talent?

Offshoring offers numerous benefits that are hard to ignore: cost reduction, enhanced efficiency, and improved productivity. However, it’s crucial to distinguish between collaborating with an established outsourcing provider and relying on an independent freelancer. While the former ensures the presence of checks and balances akin to those expected from a professional onshore organization, the latter exposes businesses to risks that often lead to unfortunate outcomes.

Partnering with an established outsourcing provider brings a level of professionalism and reliability that instills confidence. They have established processes, quality control measures, and a team structure that can be relied upon. On the other hand, working with independent freelancers carries inherent uncertainties. While some freelancers may excel in their respective fields, the lack of organizational oversight and structure can sometimes result in unexpected setbacks and disappointments.

It’s crucial for businesses to carefully evaluate their outsourcing options and consider the potential risks and rewards. While freelancers can offer unique expertise and cost advantages, partnering with an established outsourcing provider provides a more secure and well-rounded approach. Ultimately, the choice depends on the specific needs and priorities of each business, but it’s essential to be aware of the potential pitfalls associated with relying solely on independent freelancers.

Background Checks

The gig economy is really just a trendy label for the freelance marketplace. These individuals often work from the comfort of their own computers, gaining access to client systems without the clients truly knowing their identities. When it comes to outsourcing, reliable providers go the extra mile to conduct thorough background checks. They verify qualifications, review police records, assess university results, and examine previous work experience. This rigorous process ensures that the individuals working for them are not only highly skilled but also possess a reputable track record.

Unfortunately, the same level of assurance is rarely found when dealing with freelancers. While some freelancers may possess exceptional talent and professionalism, there is an inherent risk involved. Without the oversight and due diligence provided by established outsourcing providers, businesses can be left in the dark about the true nature and reliability of freelancers.

In the outsourcing landscape, taking unnecessary risks is ill-advised. The potential consequences of partnering with unknown and unverified freelancers can be detrimental to a business’s reputation, efficiency, and overall success. It’s crucial to prioritize working with reputable outsourcing providers who prioritize background checks and uphold stringent quality standards. By doing so, businesses can mitigate risks and ensure they are entrusting their projects to qualified professionals with a proven track record of excellence.

Quality of Work

In the realm of outsourcing, the finest providers are distinguished by their clear guidelines and robust structures for their staff. They excel in seamless onboarding processes, provide on-the-ground coaching, and possess the capability to monitor and measure performance effectively. Additionally, they prioritize regular and scheduled conversations with their clients to evaluate the quality of their offshore employees. These discussions serve as a valuable platform to address any concerns and ensure alignment between the client’s expectations and the team’s performance.

Unfortunately, when businesses venture into the freelance market, these essential aspects are often lacking. Instead, the freelance market relies heavily on trust and hope in an individual rather than the established protocols and comprehensive support systems of a professional organization.

By choosing established outsourcing providers, businesses gain access to a structured framework that ensures a smooth and efficient workflow. The presence of guidelines, performance monitoring, and regular client communication fosters transparency and accountability. These elements are crucial for businesses seeking reliable and consistent outcomes from their outsourcing endeavors.

While freelancers may offer unique talents and flexibility, the absence of structured processes and formal support systems poses inherent risks. Relying solely on the individual’s trustworthiness and self-regulation can result in inconsistent results and potential setbacks.

Ultimately, businesses should consider the importance of established protocols, communication channels, and performance monitoring when making outsourcing decisions. Opting for a reputable provider with defined structures and clear guidelines can significantly mitigate risks and enhance the overall success of outsourced projects.

Data Security

Leading outsourcing firms adhere to strict ISO compliance standards, which safeguard data security and address concerns effectively. Furthermore, they have insurance coverage in place, providing an added layer of protection. Unfortunately, independent contractors are not subject to these requirements, leaving businesses exposed to potential risks.

Another crucial aspect to consider is the provision of equipment. Reputable outsourcing providers like MicroSourcing prioritize the provision of dedicated computers for their offshore staff. These computers are equipped with monitoring systems that actively track productivity and ensure a secure working environment. In contrast, many freelancers access client data using the same computer they or their family members use for various online activities such as gaming, gambling, and social media.

When evaluating the risks associated with outsourcing, it’s important to consider the potential consequences of entrusting sensitive data to individuals who may not have the same level of security measures in place. The risk of unauthorized access or data breaches increases significantly when using shared or unmonitored devices.

Considering the potential implications of compromised data security, it becomes apparent that partnering with established outsourcing firms that prioritize ISO compliance and provide dedicated workstations is a prudent choice. The peace of mind that comes with knowing your data is being handled with the utmost care and security is invaluable.

What’s the Future Outlook for Freelancing vs Outsourcing?

The global freelance community has grown exponentially, with over 1 billion freelancers now operating worldwide. It’s important to acknowledge that many of these freelancers do deliver quality work and meet the expectations placed upon them. However, it’s crucial to recognize the inherent risks that businesses face when directly engaging with freelancers instead of partnering with established outsourcing providers. By eliminating the middle layer of a trusted outsourcing provider, companies expose themselves to potential vulnerabilities. Unfortunately, all too often, businesses learn this lesson only after experiencing the damaging consequences firsthand.

While freelancers can offer unique skills and flexibility, the absence of a structured framework and professional oversight increases the risk of miscommunication, missed deadlines, or subpar deliverables. Without the guidance and quality control measures provided by reputable outsourcing providers, businesses may find themselves dealing with unreliable freelancers, resulting in wasted time, resources, and compromised outcomes.

Partnering with an outsourcing provider provides peace of mind. These providers have established systems, protocols, and experienced teams in place to ensure efficient workflows, quality outputs, and accountability. The added layer of support and expertise helps mitigate risks and allows businesses to focus on their core objectives rather than worrying about the reliability and professionalism of individual freelancers.

It’s essential for businesses to carefully consider the potential risks and rewards associated with engaging directly with freelancers. While there are undoubtedly talented and trustworthy freelancers out there, partnering with an established outsourcing provider offers a more secure and structured approach. The value of proactive risk management and the assurance that comes from working with a reputable organization cannot be overstated.