The fundamental nature of work is changing. According to a report by Intuit, 40 percent of Americans could be contingent workers by 2020. The term “contingent” covers a wide range of freelance work — from a person driving a few shifts for Uber to a full time consultant working on enterprise level projects.

With this in mind, I spoke with Andrew Karpie, an analyst with Azul Partners/Spend Matters Network. In his work, Karpie focuses on technology, platforms and solutions for the contingent workforce.

A Growing Ecosystem

Andrew Karpie
Karpie breaks these solutions down into different categories, including “work intermediation platforms” such as GigWalk, Fiver, Crowdflower, freelancer.com, TaskRabbit, etc. The online freelance marketplace — as seen with Peoplehour and others — is a specific and common type of these platforms.

Crowdsourcing and micro-tasking platforms make up another category. Think Amazon’s Mechanical Turk or Clickworker for the latter and 99Designs (logos or websites), or Inocentive (innovation challenges) or TopCoder, which is now part of Appirio (software development) for the former.

Still other platforms have a back-end that can engage the virtual online contractors and a front-end can offer specific services like transcription or software testing.

Karpie estimates that the online platform market is currently an over $10 billion industry. However, if you include temporary workers that are not on one of these platforms it is closer to a $100 billion industry.

Platforms and Workers on Platforms Growth Chart
At last count there were 300 platforms worldwide created to support contingent working (or as some call it, the “gig economy”). By far, the largest platform is UpWork, an amalgamation of e-lance and O-desk, which has over $1 billion in revenues and spend.

Many of these platforms they experiencing rapid growth as the contingent workforce grows (25 percent CGAR), but growth like this can’t last. Signs of segment fragmentation into verticalization and specialization can already be seen, for example:

  • Law/Legal – a San Francisco based company called UpCounsel
  • Data Science – Boston-based company called Experfy
  • Software Testing – a company called Applause
  • Content Development – a company called Contently
  • Medical – ER or short-term Dr. fill ins, a company called Freelance Physician (which a San Diego company is making into a platform

How These Tools are Evolving

Work models are evolving as well. Fiverr, a self-described “marketplace for creative and professional services,” started as a down market model, with any task costing $5. It recently relaxed the $5 rule to allow for larger and more expensive tasks. The move up market sees the company pursuing a different strategy of creating standardized packages of work — for example, graphic design for a web site on a standard platform — and put them out to bid. People buy the offering, but don’t connect directly with the freelancer.

Moving Towards the Enterprise

Platforms are also starting to turn their focus to larger enterprises. Karpie's particular focus is on the procurement of contingent workforce and services. Large companies want control of the procurement of external contingent workforce and services. Because most of the platforms today are consumer and SMB-oriented, the volume of enterprise platforms and volume of activity is much lower. 

However, few companies strapped for talent will be able to ignore this rapidly growing segment, and both Karpie and I expect to see both the number of platforms and the volume to increase rapidly over the next few years.

We’ve already witnessed the blurring line between employees and contingent workers over the last decade. Because of this blurring distinction, enterprises need clear visibility into what they spend on contractors vs. employees so they can do analysis. This data and analysis then has to be integrated with their ERP systems.

Workforce procurement services and work platforms are starting to merge. The best example is UpWork Enterprise — an extension of the Up Work product — which allows enterprises to manage their own vetted pools of freelance talent.

What the Future Brings

Karpie believes that these platforms and services will evolve into an ecosystem filled with integrated networks and solutions for the independent workforce. Many businesses will emerge to help engage and manage this ecosystem for contingent workers. 

A spectrum of solutions are already out there, both internal, enabling the enterprise to deal with their workforce (both employees and contingent workers) and external, like Intuit’s new solution, QuickBooks Self Employed for independent workers to manage their finances for taxes. Uber and Lyft employees (and I expect others like Airbnb will follow suit) are the audience for software like this, to aid in keeping up to date on taxes and quarterly payments.

Another example of tools catering to the independent worker includes StrideHealth, which helps independent workers find health insurance, and manage the use of those plans. But these same workers will also need legal services, and even back office services.

As a member of the “contingent workforce” for the last 20 years, and pretty much all as an independent contractor, it’s nice to see so many new services available for this rapidly growing workforce.

Creative Commons Creative Commons Attribution 2.0 Generic License Title image by  cogdogblog