Every day, more working professionals are choosing to leave the realm of full-time employment and become freelancers.
In the United States, more than 36% of the workforce is actively engaged in this sector of the economy, and worldwide, the number of freelancers has escalated to 1.57 billion.
This is not all, though. A substantial percentage — around a third, according to McKinsey — are earning over $150,000, way more than the average annual salary in the US.
However, despite this considerable level of income, many of these freelancers still lack access to many services in comparison to conventional employees. Research by Malt found that in the European Union, 45% of freelancers are facing difficulties securing loans due to their variable income and lack of proof that confirms they are engaged in traditional employment.
In this regard, the HR tech sector is stepping in. Here are three main issues startups in the field are targeting, and that provide tools for freelancers to enhance their business and overall well-being.
1. Lack of job stability
Many companies still consider freelancers mostly as short-term contractors, and are treating them accordingly. Conversely, HR tech firms help freelancers and companies build valuable, long-term relationships — benefiting the former with added job stability.
For example, it has been found that over 60% of freelancers struggle to find clients. Beyond conventional marketplaces, specialized platforms aim to solve this issue, offering features like private company pools that create their own talent clouds.
2. Low accessibility to benefits or other services that full-time employees enjoy
HR tech companies could become the means to offer freelancers benefits and support them in day-to-day routine tasks, making their situation closely resemble that of full-time employees. If they are the ones who sign the contract with a freelancer, they can help with various organizational issues.
Furthermore, HR tech is increasingly intersecting with fintech and legal tech, addressing freelancers’ problems in related areas. For instance, HR tech solutions that provide income verification can help freelancers get access to credit — including personal loans and mortgages — so they can improve their quality of life.
3. Challenges when settling in other countries
As more people are able to work from anywhere, a growing number of countries — including Spain, Portugal, Germany, and the United Arab Emirates — are opening up digital nomad visa programs.
However, there can be significant bureaucracy involved, and the adaptation to a new country is not always easy for everyone. This makes a freelancer’s level of freedom very relative. Having said this, HR tech companies can assist freelancers in navigating their digital nomad visa processes, and help them obtain documents they will require to ensure they are fully settled in a new country.
Final thoughts
While the HR tech sector initially centered heavily around corporations, now, it is clear that freelancers have become a critical part of the job market.
As a result, some existing companies are pivoting — and new ones are sprouting — to address this growing need to ensure freelancers’ needs are met.
Also, as traditional marketplaces wane in popularity, services that allow freelancers to create websites, set up advertising, and collect applications are emerging. This is in addition to specialized marketplaces for artists, editors, designers, and other professionals, which makes it easier for freelancers to find clients.
By targeting three key issues that freelancers face — the lack of job stability, access to benefits, and supporting them with the challenges that arise when moving to a new country — HR tech sectors can carve out a very lucrative niche for themselves, and help the millions of highly-skilled professionals that are joining the freelancer revolution.
Pavel Shynkarenko, founder of HR tech company Mellow, is an experienced leader with over 20 years in financial and HR technologies. An effective delegator and innovative strategist, his interests in AI, art, and photography have led to gallery displays worldwide.
