How ChatGPT And Generative AI Can Impact The Freelance Economy

Date:


The freelance economy is a $5.4 trillion dollar market that McKinsey calls a “seismic shift in how Americans work”.

Yet the headlines this past month have been Open AI’s ChatGPT and Google’s Bard, with Bill Gates saying, “Artificial intelligence is as revolutionary as mobile phones and the Internet”. Rightfully so, the current applications of AI engulf practically every role and skill from content generation, to customer support, to coding to name a few.

So how will this impact the already rapidly rising freelance economy? Will freelancers be replaced? Will companies focus on existing employees and AI rather than freelancers?

Not quite. From my vantage point, artificial intelligence, workflow automation, and applications like ChatGPT will increasingly accelerate the freelance economy for four main reasons.

1. The Freelance Economy is already here

The freelance economy already has a firm foothold with no signs of slowing down.

On the demand side, in the past 12 months, amidst economic uncertainty, layoffs, and hiring freezes, Resume Builder found that 40% of companies are hiring contractors to replace laid off workers, while Mercer reported that 60% of executives say they will substantially replace full time employees with independent workers in the next 3 years.

Supply follows. McKinsey’s recent American Opportunity Survey showed “independent workers reveal a distinctive characteristic: they are far more optimistic about their own futures than the average American worker”.

Even the venture landscape is promising. While startup funding has shrank over 50% in Q3 of 2022, Gale Wilkinson, Managing Partner of Future of Work fund VITALIZE expects the freelance economy to double or triple in the next five years. In her words, “Millennials and Gen Z have a much bigger appetite for freelancing in general. Purely from generational effects, we’re going to double or triple”.

2. Historically Automation has led to more freelancers

In 2018, McKinsey released ‘Automation and the future of the workforce’. In it, they said “More work will be done by freelancers and other contractors, a shift that will boost the emerging ‘gig’ or ‘sharing’ economy”.

This was prior to Covid, a time when remote work was a leading barrier to the benefits of the freelance economy. Post Covid, the normality of remote work has amplified the benefits of the freelance economy. Take HBR’s report in 2020 that highlighted 90% of leaders are prioritizing independent workers.

It makes sense. In September, 2022, Vinod Kartha, Vice President of Strategic Initiatives at UST, said “we realized that more and more people are moving to the independent workforce. When we looked at that pool, it’s like when people talk about talent shortage, open talent was screaming what shortage? So that’s when we realized that there’s really not a talent shortage, but it’s more of a talent shift.” Likewise in November 22, 2022, Mina Bastawros, VP of Creative & Digital Marketing at Airbus, said “There are 70+ million people. We’re 130,000. Imagine having access to 70 million people as a workforce going forward”.

The fundamentals of the freelance economy are inherently technology driven, thus the more technology like AI advances, the more the freelance economy makes sense.

3. AI can level the playing field for freelance marketplaces

Freelance marketplaces are the bridge between independent freelancers and companies. While Open Assembly’s Open Talent Landscape shows over 500 global marketplaces, traditionally freelance marketplaces have been overlooked for larger and already established Managed Service Providers (MSP’s) in order to manage risk, security, compliance, and prevent cases like Microsoft’s $97 million misclassification lawsuit.

AI can level the playing field by enabling these platforms to compete and scale. According to Michael Burdick, CoFounder of Paro, “A large barrier to disruption has been the data and IP traditional incumbents have built up over decades. Large language models and AI enable us to access the internet in a structured way, supercharging foundational capabilities that accelerate the pathway to disruption.”

Take Gigster, a US software development marketplace that executes large scale software projects through a global freelance network. According to Cory Hymel, VP of Product & Research, “we’ve implemented generative AI with positive results into our staffing process and content generation process. We have further plans to integrate into our core platform which will super charge our developer network delivery capabilities.”

Or Scotland based Gigged.AI, they use OpenAI to help their clients best scope work. According to CEO Rich Wilson, “Clients can now use natural language to explain their needs, answer questions, and provide feedback, without any technical barriers. This means our clients can create better milestones, and ultimately, better results.”

Or American based creative marketplace Uncompany. They use ChatGPT to develop project teams quickly. According to CEO Maari Casey, “Before using ChatGPT we were spending about 2 hours a week on building scopes to support clients and freelancers. ChatGPT has reduced that to 30-45 min because we’ve been able to build a growing catalog of scopes and priced contracts”

Or German software developer marketplace Code Control. They use AI to generate freelancer-enticing job ads within one minute. According to Marc Clemens, Founder & CEO, “often job ads do not have the necessary quality to convince the best applicants. We believe Artificial Intelligence can help solve this problem.”

4. Generative AI exposes the need for upskilling, not more headcount

Who best adopts advanced skills and technologies, freelancers or full time employees?

In Deloitte’s Perspective on the future of shared services, they state, “The alternative workforce tends to update their skills more frequently and can typically ramp up within days rather than weeks”. According to Upwork’s Tony Buffum, “freelancers are upskilling and reskilling 50% more than traditional workers. Updating skills more frequently and ramping up more quickly are key traits of the on-demand workforce compared to the traditional workforce.”

The potential this upskilling creates is material.

Balaji Bondili, Head of Deloitte Pixel recently showed what’s possible in his article Augmented Freelancers: How freelancing marketplaces can win with Generative AI. He analyzed the difference in conducting a literature review on the pricing of software development projects, and in his words, “the estimated time savings using Generative AI for this project would be approximately 70 hours or 70% savings”. That means if you’re hiring a freelancer, they have a higher likelihood to embrace technology with this transformational change in output. Whether this means the project is 70% cheaper is up for debate, but directionally the case is clear.

Remember, Both Technologies Are Early

Both the freelance economy and Generative AI are early in their maturity. Many issues need to be carefully considered, and many questions are yet to pop up. For example in Bondili’s article, he asked, “Will the cost of generating that report proportionally reduce by 70%? And, I am paying the freelancer only 30% of the fee for his/her actual effort?”

Stay tuned!



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Popular

More like this
Related

How to double your battery life with a simple Android setting

Do you often find yourself running out...

Sales Is About Your Intent, Especially When A Deal Gets Hard

The more time we spend helping other people...

Amazon, Google and other tech giants pledge action on fraud

Companies commit to working with the government to...