By Glenn Laumeister, AllWork CEO
At AllWork, our mission has always been to “build the future of flexible work” and to help companies more efficiently manage a more flexible workforce.
Until recently, this has meant helping companies manage and pay large groups of hourly workers on a part-time and flexible basis with very vertically specific workforce management software integrated with vertically specific W-2 payroll services.
Covid Accelerates the growth of The Gig Economy
As everyone knows, the freelancer workforce as a percentage of workers was increasing dramatically even before Covid. Now, the number of workers in this so-called “Gig Economy” is accelerating dramatically and totally reshaping the future of work for everyone. According to a Freelance Forward report released by Upwork some 40% of the US workforce, or 59 million people, are now participating in some kind of freelancer, gig, or consulting work. What is interesting to note is also that Covid-19 is accelerating this shift in terms of the numbers of freelancers in the workforce but also in terms of a wider distribution of job functions and industries where freelancers are being used.
What Companies Need
As a result, we are hearing from companies that they need a better way to manage and pay this growing number of freelancers. They want to take advantage of this opportunity to leverage a flexible work model, but they don’t have the technology to do it. Today, they are doing everything manually because their current HCM systems like Workday and Oracle, or Payroll and PEO providers like ADP, Paychex, Gusto, Tri-net, or JustWorks are just not designed for efficient or compliant freelancer management and payment.
Companies are telling us they want one system for all of their freelancers and not different solutions for hourly, project-based, or long-term, and short-term workers. They want one centralized platform and system of record where they can easily pay each freelancer, track their spend, manage the work being done, and ensure that they are compliant with all state and federal laws for each freelancer whether they are classified as W-2 or 1099 workers.
The Market Opportunity for Total Freelancer Management
This is the gap in the market we are filling with our new Total Freelancer Management and Payments Platform. HCM systems were designed for permanent employees. They work with payroll systems like ADP and Paychex and healthcare providers like United Healthcare for when larger companies put payroll and healthcare services together themselves. SMB’s now tend to use PEO’s like JustWorks who are designed to bundle access to healthcare benefits, payroll, and HCM software and give small companies the kind of benefits to compete with the big guys, and they do a good job of that.
But none of the above have the software and payment services designed for what people are calling the “Modern Workforce” where the number of freelancers will soon be equal to the number of permanent employees within most companies.
Company Example: Typical Freelancer Usage Across Every Department
Imagine a medium-sized tech company that has 200 employees and uses 50 freelancers. For the 200 permanent employees, they use JustWorks as their PEO who does their payroll and healthcare benefits for them.
But of the 50 freelancers, 25 are paid hourly doing a variety of functions including: content management, customer service, quality assurance, and other operational support functions. To manage these workers, they need to onboard them correctly, use time and attendance software to accurately track their hours, and pay them as W-2 workers across 12 different states while keeping compliant with all of the local labor laws.
The other 25 freelancers are project-based workers and consultants who are doing UX design, programming, outbound sales, and marketing consulting. Now for these workers, the company doesn’t need to track hourly shift-based time and attendance or include healthcare benefits. Instead, they need to have them sign consulting and confidentiality agreements, create a project for each one, manage the payments based on project milestones, and pay them as 1099 workers in three states while keeping compliant with a whole different set of local labor laws.
Does that sound just a little too complicated to manage yourself with email, spreadsheets and word documents? That is why companies are looking for a third-party solution with workforce and project management software, reporting, data analytics, compliance expertise, and payment capabilities to handle it all for them.
Adapting to The Modern Workforce
Our goal is to quickly help companies adapt to the new Modern Workforce, which means helping them organize work more flexibly and connect with all types of freelancers across their entire organization. By creating specific tools for the Modern Workforce, we also can help freelancers find the work that is the best match for their skills, reduce the time it takes companies to find and onboard freelancers for new assignments, and ultimately reduce the friction that exists today in how freelancers and companies work together.
Total Freelancer Management is a win-win for both companies and freelancers and we believe that AllWork’s platform will be a key enabler of the way work gets done over the next five to ten years.