CNN, January 14
Wary of the risk of being laid off from large organizations, many highly-skilled workers are deciding to go into business for themselves. In many cases, they feel that they can deliver a better product or service to their clients as an independent contractor or consultant than as an employee of a large organization. Within America, the percentage of people who are working as independent contractors continues to grow, according to the Bureau of Labor Statistics. According to the latest numbers available, 7.4% of U.S. workers were classified as independent contractors. Amidst the backdrop of an uncertain economic environment, the article conjectures that more companies are using freelancers because their business models are becoming more project-based.
Business models are changing to reflect the new economic uncertainty. Since a business really can rarely forecast more than 12 months in advance, they are operating from business cycle to business cycle. This provides economic incentives for businesses to hire freelancers, enabling them to cut the costs of benefits and payroll taxes. Moreover, because of the bureaucracy of many companies, it’s much easier to get a freelancer approved for a project with a specific short-term time period than it is to get a new full-time position approved. Flexibility is also a key concern, since companies can scale back if they don’t meet projections by cutting the number of freelancers they use.
Freelancers are likely to be the first to find work when the recovery begins. Depending on the length and depth of the recession, companies will continue to view independent contractors as a less risky alternative to ramping up full-time hiring. Thus, it might be worth it for people who have been laid off from full-time jobs to look for some freelance opportunities. For workers deciding to become independent freelancers, the most important thing is to fully understand the tax implications of owning your own business. In addition to setting aside money for retirement and disability insurance, it’s also important to have access to a good accountant and lawyer who are very familiar with small business issues.
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Tags: Business, Contractors, Economic, Independent
This entry was posted on Thursday, January 29th, 2009 at 4:30 pm and is filed under Business, Computer Science and Engineering News, Internet Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.