There has been a dramatic shift over the past 5 to 10 years in the way work is performed in the U.S. and Europe as more and more workers join the gig economy. By definition, a gig economy is an environment where temporary positions are common and organizations contract with independent workers for short-term engagements. In other words, people are increasingly taking on freelance work.
According to the US Bureau of Labor Statistics, 53 million Americans are currently working as freelancers. By 2020, 50% of the American workforce will be engaged in freelance activity. Furthermore, a study published by the Freelancers Union and Elance O-Desk indicates that freelance work contributes $750 billion annually to the US economy.
The gig economy has played a significant role within the Field Service Industry. It is driven by the trend of many companies to implement variable workforce (VWF) models. This is a business model in which a field service organization (FSO) relies on a contingent workforce to manage peaks and valleys in labor demand. Earlier this year, Blumberg Advisory conducted an extensive research study to examine the impact of VWF models on the Field Service Industry. The study, sponsored by Field Nation, revealed that 8 out of 10 FSOs have implemented VWF models to manage over one-half (53%) of their workforces.
One of the ways that FSOs implement the VWF model is through a Freelancer Management System (FMS). This is an integrated software platform that includes functionality for Vendor Management System (VMS), Human Capital Management System (HCMS), Service Ticketing System, on-line recruitment tools, and reporting & analytics. Approximately two-thirds of survey respondents use this type of solution to manage their contingent labor pool of field technicians.
The single biggest benefit of using an FMS, as reported by 70% of survey respondents, is scalability. In other words, the ability to scale the workforce up or down based on service demands. A majority of respondents also perceive access to a vibrant marketplace of freelance technicians (61%), the flexibility that an FMS has in managing W2 and 1099 employees (56%), and lower cost of overhead (54%) that results from using an FMS, among the top benefits. Just under half of the respondents (46%) viewed lower direct labor cost as a benefit of using an FMS platform.
In addition to these benefits, FMS platforms have a measurable impact on field service financial and operating performance. Indeed, companies that use FMS platforms report having observed a 6% or more improvement in field service key performance indicators (KPIs) such as field service productivity (i.e., # of visits per day), labor utilization rates, SLA compliance, recurring revenue, and gross margins.
Obviously, the gig economy has had a positive impact on FSOs who rely on the VWF model and FMS platforms. However, many opponents of the gig economy believe that freelancing models take advantage of workers and therefore are bad for individuals. The facts point to the contrary. In 2015, Field Nation, a leading FMS platform provider to the field service industry, conducted a survey among freelance workers to understand their attitudes and perceptions of freelance work. An overwhelming majority indicated that the freelance lifestyle is both a personnel choice (88%) and their primary source of income (73%). Almost all the respondents were satisfied with the work they do (97%) and the career choice they had made (95%).
These findings suggest that the nature of work within the Field Service Industry has changed for good. The days of individual commitment to a single employer and vice versa are long gone. Freelancing is not a passing fad within Field Service . Furthermore, Freelancer Management System (FMS) platforms make it possible for FSOs to achieve positive, measurable results from implementing a Variable Workforce Model. Clearly, the gig economy is here to stay.