Is freelance economy the future economy of the world economy? Is the nature of work undergoing a fundamental shift away from traditional “stable” jobs and more towards a “plug-and-play” economic system where each worker provides his services for a project rather than a company? Well, it is hard to predict the future, but it looks like such a shift is indeed happening. I just read an interesting article on the freelance economy and its future on MSN which got me thinking more about this. It seems that the future economy can be significantly different from what we know today.

Why Small Businesses Like the Freelance Economy?

It looks like more and more small businesses are hiring freelancers as and when they need. This does make sense – small businesses need to be smart about their decisions. They will choose the best possible way out which will increase their chances of success and survival. From a small business point of view,  the freelance economy is a huge boon. Why is that?

Consider that you are a small business. In order to reach your target audience, you want a website and a blog so you can connect with your customers. How would you solve this problem? If you tap into the freelance economy, you hire the best professional web-designer for a fixed price. If you hire a full-time employer for this job, it is just going to cost so much more.

In addition, the freelance economy can provide several projects down the line. Need some articles and blog posts? Hire a freelance writer to write an article a day. Need to collect some leads online? Hire a virtual assistant. Need a new logo? Hire a graphic designer. The freelance economy gives a lot of freedom to small businesses.

Access to Specialized Skills

Many people have a very wrong concept that freelancing is about outsourcing. It is not. Even if all the jobs are within a country, it provides great flexibility. It is not that businesses profit from cheap labor. In fact, in the freelance economy, talent everywhere demands similar price. However, as a concept, the plug and play system is very powerful.

The reason is that small businesses now have access to one of the best people in an industry without ever needing to hire them at a ridiculous price. This gives them a great competitive edge as well. For example, a small business can hire a very good graphic designer for a few hundred dollars to design their company logo. Even they spend a thousand dollars for the logo, it could be well worth it in the long term. In the traditional economy, they will perhaps have to find an agency, post a contract or advertise for a temporary position. In the freelance economy, they have access to great skill directly without involving middle men.

Freedom to Expand

In the freelance economy, businesses have the power to expand beyond their core expertise. They can take on a risky idea with a high chance of failure but a highly lucrative result in case of success. Such ideas can be explored more easily because they have access to a very diverse pool of specialized talent ready at their disposal that will work on a specific project.

In the freelance economy, it is easier to take on risk and explore new options. That this comes at a lower cost is an added benefit which should help small businesses enter new areas.

Free Market Access to Talent

The freelance economy more accurately represents the future economy or rather the free economy as it can be. Freelance work for hire doesn’t come with additional baggage that usual full time jobs come with. They are not restricted by geographical boundaries – a company in the United States can hire a freelancer in Australia.

It is also free because it is a bidding process in most cases – freelancers bid on projects depending on their skill sets and small businesses choose between skills and price as it should be in a truly free economy. This bidding process is what is followed at well known freelancing sites like oDesk and Elance.

So what do you think about the future economy? Do you think the freelance economy can last and redefine the way we understand work and employment?

You can also read my posts about 5 freelancing ideas for dummies and 5 creative ways to make money as a freelance writer.