Why Professional Service Firms Should Tap Into the Gig Economy

Highlights

  • Professional services companies want more agility. Service workers want more flexibility. White collar, free agent talent pools such as the Gig economy can satisfy both.
  • Professional service firms that embrace gig workers can access more talent and create a more variable-based cost model. A much larger talent pool expands workforce options during a tight economy with talent acquisition that can scale or descale resources on demand.
  • Gig workers can respond to the peaks and troughs of customer demand, seasonal fluctuations or short-term projects while professional service firms can reduce overhead and forego labor costs for training, healthcare, paid time off or retirement contributions.
Johnny Grow Revenue Growth Consulting

The Rise of the Gig Economy

The gig economy is a nontraditional labor pool of independent workers and short-term working relationships. It's made up of contingent workers, such as independent contractors, freelancers and digital nomads.

Many professional service companies don't fully recognize that gig workers are not just Uber drivers or freelance writers and include many types of consultants such as business advisors, technology consultants, accountants, architects, lawyers and more.

In fact, since PwC created the PwC Talent Exchange to expand their workforce with highly skilled gig consultants, several other management consultancies and Big Four firms have done the same. Deloitte, who refers to these workers as off-balance sheet employees, advises that this workforce channel is one of the two most powerful trends currently impacting the future of services work (the other trend is artificial intelligence.)

According to Gallup research, more than one third (36 percent), or about 57 million U.S. workers are in the gig workplace. According to Forbes, this workplace is expanding three times faster than the U.S. workforce as a whole and at the current pace, more than 50% of the U.S. workforce will be contract workers by 2027. The number of professional services consultants available for contract work grows double digits every year. This is clearly a services industry disruption.

According to Forbes, the gig economy is growing three times faster than the U.S. workforce as a whole and at the current pace, more than 50% of the U.S. workforce will be freelance workers by 2027.

Click to Tweet

The Drivers for Gig Consultants

Millennials are now the largest generational cohort in the workforce. Many are now managers. And they're different than their predecessors. Most are not motivated by titles or interested in climbing the traditional corporate ladder. Many are not going to traverse the pyramid over many years in order to make partner at a service firm.

They don't have the patience for company politics. They are more skeptical about career paths and seek a less stressful work environment. They are normally driven by some sense of personal purpose more so than money.

Whether young, experienced or seasoned gig workers, they all share a desire for control, variety of work, flexible work, meaningful work, a work-life balance and a higher purpose. They tend to share a natural curiosity and acceptance for risk.

Gig Economy

A Financial Times report identified seven types of gig workers. The first five included young stars (Millennials on the fast track), family-balance seekers, experienced classics (former partners and seasoned executives), soft landers (transitioning from full-time to part-time when heading into retirement) and specialists. This group is highly satisfied with their nontraditional work choice. The final two personas are bridgers (unemployed waiting to return to full-time employment) and strugglers who miss the full-time environment. These later two are dissatisfied with their roles.

According to a research study done by the London Business School and published in HBR, 90 percent of freelance workers said they chose to start contract consulting, while only 10 percent indicated they were forced to go independent as a result of losing their job. 90 percent advised they are satisfied with their choice and most are achieving their target earnings. They also rate their current work quality as higher than when they were employed at consulting firms.

Women workers cited greater control over their time and a better work-life balance as the top reasons to be independent. Their choice also appears to address the gender pay-gap discrepancy. The survey data revealed a 28 percent gender pay gap for those employed in a traditional firm, but this fell to a 3% percent gap for independents.

Contract work isn't for everybody. With flexibility comes risk. Those who seek financial security or incur stress due to the lack of predictability will not fare well. Other non-work factors must be considered. For example, banks and lenders can be cautious or even resistant to workers with uneven earnings or without a track record.

Inconsistent work and the lack of benefits are the most cited drawbacks from freelance workers. However, foregone benefits are typically offset by higher earnings.

The Benefits for Service Companies

The war for talent, client demand for more specialty skills and need for labor agility can cause service companies to rethink their workforce planning.

Many service firms are tapping into on-demand staffing for access to more specialized resources. Some are taking a gig-first approach, to assign the right resources, not just the resources that are available, to client projects.

Online websites and platforms are facilitating the matchmaking. Expert360, Field Nation, Gigster and HourlyNerd match independent business consultants with clients and projects. Fiverr, Freelancer.com and PeoplePerHour tap into broader freelance pools. Many of these platforms perform the recruiting, manage the timekeeping and disburse the payments.

Large scale volatility events accelerate the demand. Both the 2008 global recession and the 2020 coronavirus pandemic resulted in a decline of full-time employment. Even after these events passed, and a strong rise in contracting continued.

But integrating contingent workers is not without challenges.

Service firms need purpose-built contracts, professional services software tools and clear processes for vetting, onboarding, offboarding, performance reviews and coaching.

Gig workers require clear instruction, coaching, oversight and feedback if you expect to get an effective contribution.

To ensure you get the most out of the time and effort you invest it is essential that you clearly define project scope in specific and measurable terms, deliver your instructions in writing, carefully define work products or deliverables, provide active oversight, and closely monitor scope, time, cost and quality. Governance and program management are no less essential for freelance workers.

And like their full-time peers, they value rewards, recognition, collaboration and being part of a team or community within the company. Corporate culture is essential whether for contract workers or full-time staff. Investing in the relationships will earn dividends.