The inevitable shift to remote freelance work carries equal opportunity for all
By: Eric Kleist & Hina Riaz
This year was anything but NORMAL. Among all the chaos and uncertainty, we dove headfirst into an experiment which is demonstrating that remote work actually works. In the recent Financial Times article “The shift to remote work carries an inherent risk”, Sarah O’Connor argued that ‘Mass experiment with remote working, triggered a prickling sense of unease, for some’.
She chose to not clearly define who is included in her speculative ‘for some’ audience, but surely they are not the average readers of Financial Times. She gave her group a warning that if they don’t do anything they would end up in the ranks of ‘left behind’. Referencing Britain’s industrial decline, it became evident that it’s a patriot’s outcry to her people — warning of trends and dangers that lie ahead.
If we dig a little deeper to investigate these concerns, the facts seem to differ from Sarah’s narrative. While the shift in work is real and economies are moving more and more towards outsourcing, remote work, and freelancing. Is this really such a big bad evil thing?
The world looked up to Britain at the start of the 19th century due to its early start in the Industrial revolution. Towards the end of the 19th century, its dominance began to fade and diminish as it failed to respond and adapt to new technological and managerial realities. The only reason Britain was left behind — that we could find — was due to their reluctance to change and evolve with the trends of technology… sounds ironic!
Back in the early 2000s, the initial wave of outsourcing brought with it passionate claims that foreign workers would steal American jobs. Time has now demonstrated that much of the rhetoric was overstated. Global wages reflect productivity and American factories’ productivity is high, due to large levels of capital investment.
On the flip side, IT jobs and the gig economy are the real disruptors in the overall landscape. About 300,000 jobs get outsourced every year out of the US. This statistic is often used by skeptics of outsourcing while I view it as a driver of global economic equilibrium. A follow-up study conducted last year revealed that of 26 offshore-able occupations, 11 shrank while 15 grew during this “outsourcing heavy” period of 2007 to 2019. Additionally, the total global revenue of IT outsourcing in 2019 was $66.5 billion, and you can add in another $26 billion generated by the BPO industry. (Note: Most of the profit from this $91.5 billion still go to large corporations in developed countries!)
According to Gartner, 85% of the world’s logistics leaders say it’s no longer a matter of whether or not they should outsource… it’s about how much they should increase their outsourcing budget in 2020 and beyond.
Fearing outsiders is one of our oldest, built-in psychological tendencies. Foreigners coming and taking our jobs is the dogma that was perpetuated even further by our most recent — and still current — administration. Coming from a country filled with refugees and immigrants, does this make any sense?
But we’re human. Most of us naturally and instinctively gravitate toward beliefs that make us comfortable or fit in with society, friends, and our family. Once we invest our time and effort into a belief, then it becomes really difficult for us to fairly evaluate the evidence on that topic. The author clearly seems to be a victim of the status quo, and selection bias. She noticed the evidence that supported her beliefs and comfortably ignored the facts and stats that contradict it. While she warned her people of the threat of being left behind, she conveniently neglects to mention how her people drained a total of nearly $45 trillion from India during the period 1765 to 1938.
She hastily bunches together London (Great Britain), Brooklyn (USA), and Canberra (Australia) on one side. On the “other side” is Bulgaria, India, and the Philippines. Us vs Them, Rich vs Poor, Developed vs Underdeveloped. Her intended audience is shaken by the same fear-based tactics that they are used to absorbing daily through mainstream media.
Let’s discuss this further. Selection bias is quite common in mass media which has historically aimed to put immigrants, foreigners, and black people in a bad light. Stories like freelancers stealing jobs further establish the status quo and that is what the majority of people want to see (I truly hope majority is an overstatement), so more of it gets published, and revenue and readership continue to increase. Any news that highlights the benefits of outsourcing: how it helps an organization build a better future, or how working from home reduces emissions, or how it is empowering a third-world economy — contradicts the status quo and so mainstream publications neglect to mention it… leaving the mass population blind.
This behavior and erroneous thinking patterns explain why you have likely never read anything positive about the gig economy or business process outsourcing in your daily newspaper!
It’s safe to say that the future of work is heavily dependent on outsourcing and remote work — whether we like it or not, this pandemic has only accelerated the inevitable. For developed countries, it is an opportunity to become global thought leaders, pioneers! It is our road to redemption, of creating an ecosystem of equal opportunity and prosperity for everyone regardless of the country where they were born!
While traditional outsourcing comes with its inherent risks, like power and network outages, political crisis, and climate catastrophes, the Online Gig Economy provides a relatively reliable alternative. Platforms like Fiverr and Upwork provide easy access to the pool of global talent. The rise of the just-in-time workforce. In a world — as Dr. Martin Luther King Jr. envisioned — where all men and women are created equal… freelancing and remote work is the ultimate equalizer. It levels the playing field and finally provides an atmosphere where people are paid on the basis of their human talents, irrespective of nationality, religion, or color(s).
There are many factors influencing the growth of the gig economy. The major forces behind this offshore movement can be articulated along technological and economic dimensions. On the technological front, when communication networks like the Internet are ubiquitous, reliable, and operating at almost zero latency, it makes little difference if IT services are provided down the hallway or halfway across the globe. With the assistance of project management techniques and collaboration tools, companies can now outsource various projects either locally or globally. Profit motivation has also driven firms to offshore outsourcing. Generally, offshore vendors cost three times less than domestic vendors and in-house operations.
As offshore vendors gain experience, their service quality improves, and they learn radically new ways to meet customer requirements. In fact, it is perceived that offshore outsourcing vendors can add significant value to their clients’ supply chains. This results in creating a win-win-win situation for developing countries, developed countries, and the human talent contained in all countries.
Gig Economy and Remote Outsourcing — The Present and the Future
More and more, Americans are realizing this reality and culture shift and becoming relative early adopters of an eventual inevitable mode of employment. More than one-third of the American workforce freelance amid the Covid-19 pandemic, contributing $1.2 trillion to the U.S. economy, a study by Upwork revealed in September. This was a 22% increase since 2019.
Freelancing’s direct impact on the economy is close to $1 trillion, which at nearly 5% of U.S. GDP is comparable to that of a major industry such as the information sector.
The flexibility of the freelance lifestyle means that its value goes beyond its economic footprint. For example, 46% of freelancers say they could not have a traditional job due to personal circumstances (such as health, caregiving duties, or a multitude of other reasons). Upwork recently released data which showed that 36% of the U.S. Workforce started freelancing amid the COVID-19 Pandemic.
Jeff Bezos has stated in public speeches, the key statistic that led him to leave his comfortable job at D.E. Shaw in favor of starting Amazon.com was the internet’s 2,300 percent annual growth rate in 1994. Compare this to today with Facebook spending about $860M every year on improving internet infrastructure around the world. Globally, Internet traffic will grow 3.2-fold from 2016 to 2021, a compound annual growth rate of 26%. Of the world’s population of 7.6 billion people, 4.2 billion people do not have any kind of internet access that would allow for the performance of online work (World Bank Group, 2016). If only one-eighth of these people enter the workforce through online opportunities, the total global labor market would increase by 15 percent.
Even with a speculative calculation, you can get the gist of this new reality of Modern Economics staring at us so innocently. The new normal has arrived. Now it’s up to us to embrace it, improve its deficiencies, and define the future… or continue to cry a narrative of “foreigners stealing our jobs” which will only leave us as the ones who are left behind.
So, is it all rosy in the world of freelancing and remote work? The short answer is: NO!
Upwork and other leading platforms are facilitators and torchbearers of this revolutionary boom, yet their policies are also shackling its growth. For those of you who are familiar with Upwork, they have changed their policies, and seem to want to continue this cycle of economic disparity. The recent change in policy under the stewardship of Hayden Brown as CEO has demonstrated their desire to cater even more towards onboarding big enterprises. This will help corporate behemoths in the long run as they get to tap into global talent, but for the freelancers and small business owners, this policy has wide-ranging impacts.
Side note: Hayden, if you remember the days of Elance and oDesk, who was it that put you in the position you find yourself in now?
For freelancers, they lose the right to work on the premium remote working platform and have to wait for weeks or months for Upwork to approve their profiles. Standing out, paying for connects (Upwork’s currency), and writing effective proposals is a whole different story. A small business owner, who simply cannot afford in-house operations loses out on top talent as that gets siphoned off to large corporations and the startup and small business owner simply doesn’t have the financial muscle to compete.
Freelancer’s Dilemma
Imagine a freshly graduated engineer in Pakistan (4th biggest and Asia’s fastest-growing freelance market) who wants to kickstart his freelancing journey with Upwork. If by watching Youtube tutorials, and figuring out how to stand out in a big enough way to get their profile approved on Upwork, they will start with a balance of 20 connects. Just submitting a single proposal costs 2 to 6 connects and for a new freelancer who is just starting out and doesn’t know how to market themselves, they will blow through these connects in a matter of 4–5 unsuccessful proposals. Top clients rarely hire a newbie and the marketplace is highly competitive making it very difficult to get started — — this applies for freelancers from every country… finally, we’ve found something that is truly fair for all. 🤔
There is a 95% chance that he/she won’t be able to win a job with their initial balance of 20 connects. And that’s only where the trouble begins.
The situation gets worse for freelancers in certain countries. Let’s continue to look at Pakistan. A PK Freelancer will likely not have their own bank account. Why? As per local laws, to open a bank account they have to submit proof of income which they won’t have at this stage and even if they are seasoned freelancers, most banks don’t classify freelancing as a profession!
Payment solutions like Paypal and Stripe do not exist in many developing countries. Leaving many freelancers likely to resort to alternative Payment methods like Payoneer, which are prone to insolvency and provide no insurance or fund protection at all to freelancers. Upwork tacks on a 4–5% exchange rate fee, Payoneer charges an additional 2% to facilitate the transaction — — which is an additional 6+% tacked on to the 20% Upwork charges every freelancer as a service fee.
Pakistan is a country that is home to 9% of freelancers in the world with 76.38 million internet users and 35% internet penetration rate so imagine the situation for countries in Africa where internet and financial infrastructure is worse.
As a case study of online freelancing in the creative economy, Upwork represents an aggressive extension of Harvey’s (1989) flexible accumulation; the marketplace appears to benefit the few, the skilled, and the experienced. Despite the ease of sign-up, few find work and few earn a lot.
50% of freelancers see a lack of stable income as the largest barrier to freelancing, and for 47% it is finding work. At the same time, more than two-thirds freelance to supplement their income (Edelman Berland, 2014a).
Upwork clients also contribute to this instability. Almost half of the clients on Upwork are between 18–35 and 50% are running startups. Startups are risky enterprises and failure is always the first step to success as you learn the process, improve your skills, and the next time you start with the added value of perspective, and experience.
So what does the future hold?
Remote work culture and the gig economy is indeed bringing people closer. This is even more important now, in this continuous age of political and religious divide. Some countries are ahead of the curve in embracing this new work culture. And they are standing and gearing up to be the prime beneficiaries in this huge transition of work and human talent.
Forward-thinking countries are creating a truly global economy by opening their borders and inviting freelancers, remote workers, and digital nomads from all over the world. Countries like Portugal, Spain, Cayman Islands, and most recently Estonia have started offering a 1-year Digital Nomad Visa at very favorable terms.
It’s a genius move in terms of the economic boost these countries will likely experience, and the flow of top rated, highly skilled digital talent that are already streaming in, and will be flocking there in the very near future. They are inviting the future workers of the world to come experience what their country has to offer. These host countries will be the direct beneficiary of an economic and local talent boom… this thought process really reminds me of Silicon Valley when Yahoo! had a huge lighted billboard for everyone to see while driving out of San Francisco.
For a freelancer living in Nigeria, Bangladesh, or Kenya — they will be getting access to a work-friendly environment that is conducive to learning and growth. Do you think Mindvalley University holds events in Estonia by a random roll of the dice?
Developing nation freelancers who migrate will receive an instant raise as they are able to leverage payment platforms like Stripe Atlas, Paypal, and many other methods of payment that are forbidden in certain countries. The World wins as the host country earns from the remote worker, who sends money to his homeland and creates more employment opportunities… everywhere.
For a freelancer living in a developed nation — they will be getting access to a global talent pool of Top Rated freelancers to network and collaborate with. They also will possibly get to say goodbye to developed country tax policies that favor corporations by incentivizing human talent to stay as mere workers… so the corporation always benefits, and the human stays shackled, dependent, and financially constrained.
Freelancing is the ultimate equalizer in terms of making it fair and just for every citizen of the global community. Imagine a world where your pay is entirely based on your human talent — the skills you develop, and the things you learn during your time on this earth — instead of where you were born, what you look like, or the accent that brings a unique flair to your speech.
An economic system, that values you for the skill you bring to the table regardless of your position on the globe. Freelancing and remote work is the opportunity of a lifetime, and finally, we can now export the American Dream and offshore equality to every corner of the globe. Finally, all people can be created equal.
As citizens of developed nations, we are supposed to be flag bearers of equal opportunity for everyone. Regardless of their gender, religion, geography, and race. Just because somebody is born in an underdeveloped country, that shouldn’t mean they don’t get a fair shot at career and employment opportunities . Do we really think exporting corn, Cheetos, soda, and dollar bills is more valuable than exporting the opportunity to become financially independent?
I truly want to believe that we all want a fair economic system that tolerates no discrimination for any human privileged enough to live on this earth.
While discussing the future of work, Tiago Forte argues that the sources of value have shifted over time. He describes the first era of value as the space era in which whoever controlled the land, railroads, and mining resources were the most valuable players of the day. Economically speaking, this was the idea of mercantilism which continued throughout the 20th century until there were no more islands and spaces to takeover.
The second era of value creation was the era of time. This era is where we saw the rise of the middle class, and the term time is money was duly coined. This class had more disposable income and time. And the innovations of the day quickly become hallmarks in every home: television, news, and the rise of the advertisement. Economically speaking this was the rise of the middle class worker, and this period existed until all the time was occupied.
Out of the time era, the creative class has risen. And they have ushered us into the Era of Attention. Now, capturing and keeping attention is the ultimate resource to be acquired. The advancements of this era are the internet, smartphone, and you know, all the tech stuff. Facebook, Twitter, and TikTok have taken the world by storm — and we originally assumed they were free and paid for by ads. But now, we see we’ve been paying all along… with our attention. Eventually, we will run out of attention, and so what’s next?
Forte speculates that we’re now entering the era of Perspective. In this era, job security is created, not given. And to create job security you must become a Market Of One — which is a concept introduced to me by Marisa Murgatroyd. Essentially, a freelancer or remote worker (or even a company) is a one person enterprise where soft skills like leadership, communication, and human-ness are the only way to gain a competitive advantage. The question posed is, how can you or anyone get an advantage if everyone has access to the same knowledge pool of information — i.e. the internet?
The answer lies in leveraging perspective as a service (PaaS?). These days, just doing the tasks assigned is not enough, the customer or client will expect and count on the unique wisdom that only you can provide. The perspective that you provide will be your competitive advantage. And if you stay in the old days of providing Outdated skills as a service (OsaaS?) — you will quickly become a financial dinosaur.
The beauty of all this is that perspective provides the diversity we need to accelerate the growth of our global economy.
A remote freelance worker that has been raised in a developing nation has the inside advantage of seeing capitalism spread and flourish within their own country. This is a perspective that working age individuals in developed nations did not get the opportunity to personally experience. Take for example Gen X who grew up alongside and with the advancements in technology and the internet — arguably a very valuable experience which equates to an extremely valuable perspective.
A remote freelancer worker that has been raised in a developed nation has the inside advantage of first access and financial superiority. This allows them to experiment and stay on top of the latest advancements in real time. Take for example Gen Z who grew up playing video games on tablets and mobile phones — arguably a very valuable experience that equates to an extremely valuable perspective.
In brief, we are shifting from Know-how and Know-what… to Know-why!
But more importantly…
Perspective is something that no one can steal from you.
So the big question is, what perspective will be more valuable?
Or…
… is the day that Dr. Martin Luther King Jr. dreamed about finally upon us?
The day, in which, all humans are created equal.
