The freelancer economy has grown exponentially in recent years, as more and more businesses look to maximize efficiency by hiring international contractors .
The continued popularity of remote work means it’s easier than ever for companies to recruit talent on a global scale, and freelancers can offer their services to clients from anywhere in the world.
Freelance work – though not without its challenges – offers a wealth of benefits to both businesses and workers, including increased flexibility, higher earning potential, and a much wider pool of talent to choose from.
But what does the freelance landscape look like going into 2023?
To find out, Remote surveyed 3,000 business owners, freelancers, and employees in the US and UK about the current state of the freelancer economy.
We’ve shared their insights on the benefits and challenges of freelance work (from both a business and worker perspective) and how freelance work schedules differ from those of traditional employees. We also want to look forward and analyze what to expect for freelancers and their employers in the coming years.
Nearly three in ten employees plan to do freelance work in the next five years
Our survey revealed that almost three in ten (28%) current employees in the US and UK plan to do freelance work in the next five years, and another 21% aim to do it in the next 11 months. Young people aged 25-34 are the most motivated of all, with 40% aiming to go freelance and over half (52%) saying they would consider it on a part-time basis.
Younger workers are already the most active in the freelance market; while 18% of employees we surveyed said they did freelance work during COVID-19, this figure rose to 25% for 16-24 year olds specifically, which is higher than for any other age group.
Freelance work during the pandemic was also more popular in the US than in the UK, with 23% of American employees offering freelance services during this time compared to just 14% of those in the UK.
What are employees’ main motivations for going freelance in 2023?
To find out more about the factors driving people to take the freelance route, we asked current employees which freelance benefits are most likely to motivate them to make the switch.
The table below shows the eight biggest motivations for going freelance, according to employees.
Rank
Motivation
% of employees who agree
1
In charge of when you choose to work (e.g. which days and time of day)
67%
2
In charge of your number of working hours
66%
3
In charge of your clients and type of work
64%
4
Location flexibility and opportunity to travel
63%
5
Work-life balance
62%
6
Building confidence
62%
7
Remove yourself from a toxic work environment
61%
8
No overbearing or untrustworthy manager
61%
Flexibility is the driving motivator behind freelance work for most, with over two thirds of people saying that taking full control of their working week would be their biggest motivation to become a freelancer.
This finding contains strong insight for employers looking to attract and retain top talent. If you want to avoid losing more team members to freelance work, flexible working conditions, remote work, and asynchronous work practices act as a significant incentive, as demonstrated in our Global Benefits Report .
Just under two thirds also said that being in charge of the kind of work they choose to do is a key motivator, with other top motivations including opportunities to travel (63%), work-life balance (62%) and building confidence (62%).
For current employees who are likely to have set working hours and little say over their workload or the kind of clients they take on, it’s understandable why the flexible nature of freelance work seems so tempting.
While more and more companies are offering their employees remote and asynchronous working opportunities, not many offer quite as much autonomy as the freelancer lifestyle. Those companies that do create intentional policies and benefits programs to improve and support life-work balance will find it easier to find and retain top talent that might otherwise favor consulting or freelancing.
What are the main challenges holding people back from going freelance?
Although many people understand the appeal of freelance work, most also recognize that it’s not without its own challenges. We asked employees what they consider to be the biggest challenges of going freelance.
The table below shows the top 10 biggest challenges of going freelance, according to employees.
Rank
Challenge
% of Employees who agree
1
Finding enough work
66%
2
Managing an irregular income
62%
3
Managing irregular work
60%
4
Managing expectations with clients
60%
5
Clients not paying
59%
6
Self-motivation
59%
7
Time management
58%
8
Additional costs to work for yourself
57%
9
Filing taxes
57%
10
Being your own boss
56%
It seems the flexibility of freelancing has its downsides, with two thirds of employees anxious about the struggles of finding enough work, and more than 60% worried about managing an irregular income and irregular work.
Concerns over stability and income were a major theme in our survey, which also found that over half (53%) of employees are afraid of the lack of job security when going freelance, and more than four in ten (44%) are now more hesitant to go freelance due to the current cost of living crisis.
These worries are particularly prominent among employees in the UK, with nearly half (47%) holding back due to cost of living concerns (compared to 38% in the US), and 60% scared of the lack of job security (vs 44% in the US).
Over half (54%) of UK employees are also worried that freelance clients wouldn’t pay them, whereas only 36% of US employees share this fear.
Forward-thinking hiring managers could take advantage of this finding and look to target highly-qualified freelancers who may be a valuable asset working in-house. If your company can offer the security of permanent employment, the incentive of a competitive salary, the flexibility of remote work, and the support of a strong benefits package – you may be able to attract elite freelancers to join full-time.
If you’re already working with a freelancer or consulting with specialist skills, you’ll minimize recruitment, onboarding, and training costs. The resources required will be minimal with such a targeted hire, and you’ll need minimal time to ramp-up as the freelancer already knows your team, your product, and your business.
Although both employees and freelancers work the same number of days on average, 66% of freelancers we surveyed said they have a better life-work balance now than they did as a regular employee. This may be because they can pick which five days they work and how many hours they do on those days, whereas employees tend to be restricted to the standard Monday to Friday, 9 to 5 routine.
Freelancer vs Employee: Contracted hours
When it comes to contracted hours, we found that freelancers and employees work a very similar amount on average, at 25 and 24.6 hours per week respectively. Regular employees are however more likely to work 36-40 contracted hours per week, with 30% saying they work this number of hours on average compared to only 19% of freelancers.
The table below shows how many contracted hours per week employees and freelancers work on average, in the US and UK.
Country
How many days a freelancer works on average
How many days an employee works on average
UK
5
4.9
US
5.2
5.1
Average
5.1
5
Freelancer vs Employee work schedules: Freelancers work more unpaid overtime than employees
Two thirds of employees said being in charge of their number of working hours is what attracts them most to the idea of freelancing – but how does the freelancer schedule really compare to that of a traditional employee?
To find out, we asked both employees and freelancers about what their average working week looks like, including the number of contracted and overtime hours they usually work.
Freelancer vs Employee: Average working week
Both employees and freelancers work five days a week on average according to our survey, which is what most of us consider to be a normal working week. However, we did also find that freelancers are slightly more likely to work every day of the week than employees (28% vs 23%).
The table below shows how many days a week employees and freelancers work on average, in the US and UK.
Country
How many contracted hours a freelancer works on average
How many contracted hours an employee works on average
UK
24.7
28.5
US
25.1
19.1
Average
25
24.6
UK employees appear to work more contracted hours per week than those in the US, averaging 28.5 compared to US employees’ lower average of 19.1 hours. 37% of UK employees also work 36-40 contracted hours per week, vs only 20% of American employees.
Freelancer vs Employee: Paid overtime hours
Although freelancers are less likely to work a high number of contracted hours, they are more likely to work paid overtime. Our survey revealed that while employees work an average of 8.8 paid overtime hours per week on top of their contracted hours, freelancers work an average of 13.3 – almost five hours more than employees. We also found that nearly half (45%) of employees work zero paid overtime hours, compared to only 19% of freelancers.
The table below shows how many paid overtime hours per week employees and freelancers work on average, in the US and UK.
Country
How many paid overtime hours a freelancer works on average
How many paid overtime hours an employee works on average
UK
12
7
US
14.6
11.4
Average
13.3
8.8
Both employees and freelancers in the US work more paid overtime on average than those in the UK, despite generally working similar or fewer contracted hours.
Freelancer vs Employee: Unpaid overtime hours
Freelancers also tend to work more unpaid overtime than employees, at an average of 9.7 hours per week compared to 7.4 for employees. Nearly 60% of employees said they work no unpaid overtime, whereas only 24% of freelancers reported the same.
Additionally, only half of freelancers said that they charge for all overtime work they do for clients, meaning another half are not compensated for the extra hours they put in.
The table below shows how many unpaid overtime hours per week employees and freelancers work on average, in the US and UK.
Country
How many unpaid overtime hours a freelancer works on average
How many unpaid overtime hours an employee works on average
UK
8.7
6.7
US
10.6
8.4
Average
9.7
7.4
Freelancer vs Employee: Vacation days
Although freelancers may be faced with more overtime hours than employees, they also benefit from a greater amount of vacation days. The freelancers we surveyed reported an average of 23.5 days of vacation per year on average, whereas employees reported an average of 19.6; over half (54%) of freelancers also said they take more vacation as a freelancer than they did as an employee.
The flexible nature of freelance work means freelancers can generally decide how many vacation days to take and when to take them, whereas employees are limited by how many days their company will give them. The downside for freelancers is that their vacation days are not paid, and they will likely not make any money during the time they take off from work.
The table below shows how many vacation days employees and freelancers have per year on average, in the US and UK.
Country
How many vacation days freelancers have per year
How many vacation days employees have per year
UK
26.1
25.1
US
20.9
11.7
Average
23.5
19.6
The top 10 benefits of going freelance, according to independent freelancers
For those who have taken the plunge into freelance work, we wanted to find out the biggest challenges they faced along the way and the top benefits they’ve seen as a result.
Over two thirds (68%) of freelancers we surveyed said they have had a positive experience overall as a freelancer, and another 63% said they find it more rewarding than being a regular employee – but which benefits do they enjoy the most?
The table below shows the top 10 biggest benefits of freelance work, according to freelancers.
Rank
Benefit
% of freelancers that agree
1
Being your own boss / self-management
83%
2
In charge of when you choose to work (e.g. what day and time of day)
81%
3
Building confidence
81%
4
In charge of your number of working hours
80%
5
Improved skill set + experience
79%
6
Location flexibility and opportunity to travel
78%
7
Work-life balance
78%
8
In charge of your clients/work
78%
9
Control of your salary and rates
76%
10
Connections (working with lots of different people and teams)
74%
1. Being your own boss / self-management (83%)
Over four in five freelancers agreed that being their own boss is the biggest perk of all, and over half (57%) also admitted that being their own boss is easier than they initially expected.
2. Being in charge of when you choose to work (81%)
81% said having full control over their own working schedule is the biggest benefit of freelance work for them, which aligns with the two thirds of employees who said that being in charge of their working week would be their biggest motivation to go freelance.
3. Building confidence (81%)
62% of employees listed ‘building confidence’ as a motivating factor to become a freelancer, but an even greater 81% of current freelancers said this is what they benefit from the most.
Many aspects of freelance work require a confident attitude, including the ability to manage your own workload and market yourself effectively. Freelance success comes to those who are confident in their own skills; fortunately, 69% of freelancers we spoke to said their skills have improved since going freelance.
The top 10 challenges of going freelance, according to independent freelancers
We’ve covered the advantages of freelance work, but what about the more difficult aspects?
The table below shows the top 10 biggest challenges of freelance work, according to freelancers.
Rank
Challenge
% of freelancers that agree
1
Managing an irregular income
63%
2
Finding enough work
61%
3
Managing expectations with clients
60%
4
Additional costs to work for yourself
60%
5
Time management
58%
6
Being a jack-of-all-trades
57%
7
Being briefed correctly by clients
57%
8
Managing irregular work
57%
9
Self-motivation
56%
10
Filing taxes
54%
1. Managing an irregular income (63%)
Just under two thirds of freelancers said that managing an irregular income is their biggest challenge, which was also a major concern of employees considering the freelance lifestyle.
Interestingly, despite irregular income being the top concern, only 34% of freelancers reported that they regularly worry about money. Over half (52%) also said they earn more money working freelance than they did working for an employer.
2. Finding enough work (61%)
Finding enough work is the biggest thing holding employees back from going freelance, and also ranks as the second biggest concern for current freelancers with 61% admitting they find this a challenge. Although the demand for freelance work continues to grow year on year, it can still be a very competitive industry and workers may struggle to consistently attract clients.
3. Managing expectations with clients (60%)
Managing client expectations can be difficult even for company employees, but it’s especially challenging for freelancers. 60% said this is one of the biggest problems they face, highlighting the importance of clear communication and realistic expectations from businesses when working with independent contractors.
The top 5 business benefits of hiring individual contractors and freelancers
As well as asking employees and freelancers to share their experiences and perceptions of freelance work, we also wanted to highlight the benefits and challenges of working with freelance contractors from a business perspective.
28% of employers we spoke with said they have experience working with freelancers, and this number is higher in the US (36%) than the UK (19%). But what is it about working with independent contractors that makes for such a positive experience?
The table below shows the top five biggest benefits of hiring individual contractors , according to employers.
Rank
Motivation
% of employers who agree
1
Saves time
65%
2
Cost-effective
62%
3
Fresh perspective
61%
4
No long-term commitment
60%
5
A larger pool of talent to choose from
60%
1. Saves time (65%)
Nearly two thirds of employers agree that working with individual contractors saves time for their business, making this the biggest business benefit of all. This perk is particularly attractive in the Education and IT & Telecommunications industries, with 81% of employers in these sectors highlighting time saving as a top benefit of hiring freelancers.
Nearly 20% of employers said that it can take up to 15 business days to find and hire a new employee, and another 15% said it usually takes between 26 and 35 business days. Hiring an individual contractor, on the other hand, will usually only take a few days at most, as it doesn’t require sorting through applications or multiple rounds of interviews.
2. Cost-effective (62%)
As well as saving time, working with freelancers can be the most cost-effective option for businesses looking to cut costs without sacrificing efficiency. 62% of employers noted this as a benefit, with this figure rising to 77% for those working in IT & Telecoms and Manufacturing & Utilities.
Employers most commonly said it costs them 6-10% of an employee’s salary to find and hire a replacement for them, whereas hiring a freelancer to do the same work is generally a far less expensive process.
3. Fresh perspective (61%)
For employers struggling with a stagnating business, the fresh perspective offered by freelance workers can be a huge help. 61% of employers we surveyed agreed, making this the third biggest business benefit of working with individual contractors.
The fresh perspective offered by international contractors is particularly beneficial. Remote work means companies are able to hire freelancers from anywhere in the world, drastically widening the pool of available talent and opening the door to contractors with specialized skill sets who businesses may not usually get the chance to work with.
Given that 21% of employers have already reported using international contractors in the past, it will be interesting to see how much this figure increases in the coming years as both remote and freelance work continue to grow in popularity.
The main challenges businesses face when hiring individual contractors
Working with freelancers isn’t always easy; it comes with its fair share of challenges for business owners.
The table below shows the top five biggest challenges of hiring individual contractors , according to employers.
Rank
Challenge
% of employers who agree
1
Freelancer knowledge of the company
53%
2
Communication with freelancers
52%
3
Inconsistent availability
52%
4
Inconsistent pricing
50%
5
High costs
50%
1. Freelancer knowledge of company (53%)
Over half (55%) of employers agree that the biggest challenge of working with individual contractors is their knowledge of the company – or more likely their lack of knowledge. 80% of employers in Travel & Transport and 66% in IT & Telecoms emphasized this as a challenge, making these the sectors who struggle with this issue the most.
2. Communication with freelancers (52%)
Communication troubles rank as the second most challenging aspect of working with freelancers, with over two thirds of employers in Education and 65% in IT & Telecoms agreeing this is a concern for them. Our survey already highlighted the importance of clear communication to help freelancers manage client expectations, and it seems businesses would also benefit from better communication to keep things running smoothly.
3. Inconsistent availability (52%)
While the flexibility of their schedule is a big bonus for many independent contractors, it isn’t necessarily so beneficial from a business perspective. 52% of employers said they struggle to work with freelancers due to their inconsistent availability, and this rises to 80% in the Travel & Transport industry and 66% in Manufacturing & Utilities.
Only 30% of employers are aware of employee and independent contractor misclassification risks
According to our survey, almost half (49%) of employers believe misclassification of freelancers is one of the biggest challenges when it comes to hiring international contractors.
Misclassification can occur when a worker receives the wrong designation from a business – e.g, if an employee is classed as an independent contractor. This may be an honest mistake, or it may be done deliberately by the company to try and avoid giving employees proper benefits. Penalties are generally more serious for deliberate misclassification, but businesses can still face repercussions if it happens by mistake.
Despite so many employers believing misclassification to be one of the biggest challenges when working with freelancers, only 29% confirmed that they are aware of employee and independent contractor misclassification penalties . This lack of awareness could put them in danger of mistaken misclassification.
A further 19% said that they are reluctant to use contractors for longer term work in case of misclassification risks, and 18% admitted to worrying about managing payroll tax and compliance when hiring international employees and independent contractors.
Avoiding employee misclassification
Every country has its own rules surrounding employee classification, but there are some general guidelines that employers can follow to try to avoid misclassification issues, including:
Consult with local legal experts when hiring internationally.
Use government resources.
Review all contracts with independent contractors.
Train management teams on misclassification and encourage them to be cautious when assigning work to contractors.
The best way to avoid employee misclassification is to be aware of the risks, learn the laws of the country or countries you are hiring from and develop an efficient process for managing employees and self-employed contractors.
Remote’s contractor management platform helps organizations to simplify the process of onboarding, managing, and paying contractors around the world. Our dedicated platform can be used to manage every step of the process, including creating contracts to comply with local tax and labor laws, and filing and paying invoices.
Methodology and Sources
We surveyed a total of 3,000 employers, employees, and freelancers during December 2022. All data used in this article is taken from our survey.
Note: The terms freelancer and contractor are used interchangeably throughout the study.
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