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The future of work is at a cusp of disruption, triggered by the rising number of independent or freelance consultants offering high calibre skills at attractive rates in comparison to traditional big-ticket firms. In India, the vibrant start-up scene is also fuelling demand for independent contractors. The fact is that there is exceptional talent out there for companies to leverage. Businesses across the board are reassessing their talent acquisition, training and retention strategies to cultivate relationships with top-tier talent which has shifted to flexible working.
Most companies have policies in place to hire employees but lack clarity on how to engage the independent freelancer. The difficulties of managing the freelancer relationship aside (for another discussion), the first and most confounding aspect of hiring a consultant is the project budget. To help address this challenge, Flexing It launched FeeBee (which goes live this month), a smart fee benchmarking tool which will rely on data from the thousands of freelance consultants and hiring decision makers registered on our platform. FeeBee helps consultants increase earnings and demystify their value proposition. For business owners and HR managers, FeeBee helps optimize spend on world class industry experts.
According to our research at Flexing It, professionals from core functions like strategy and business development, general management, marketing, sales, research, academia, human resources and finance now account for close to 70% of the open talent economy. Professionals with mainstream business consulting skills make up one of the largest categories of elite freelancers, along with design and technology experts. Yet despite the growing trend, in mainstream corporate hiring practices, the ‘freelancer’ has remained, effectively, an unknown angel.
We recently conducted 2 surveys to assess the key issues determining compensation for independent consultants and project based budgeting. One was a survey of 300 professionals from a spectrum of industries including advertising, consulting, accounting and marketing professionals amongst others. We also surveyed HR decision makers from 30 companies. Here’s what we found:
70% of companies surveyed were willing to incur an additional cost of 25% on a consultant or contractor over a full time employee for the same project. This preference was based on projected savings on parameters like training, professional development, seat and infrastructure cost, gratuity, provident fund and LTA. Sounds promising? Yes, but underpinning this opportunity is a clear need for companies to resolve some of the other issues attached to freelance hires such as greater risk and lower utilisation. It turned out that only 20% of respondent companies actually had standard slabs and parameters to determine fee levels for independent contractors.
Benefits of Breaking-Out
While the potential benefits of tapping into what is being referred to as the ‘human cloud’ of on-demand consulting skills are clear, reaping the benefits, both for consultants and the companies who hire them, means breaking away from opaque approaches to talent management.
Amongst the companies surveyed by Flexing It, the vast majority (80%) set the project budget based on a varied set of parameters ( including a consultant’s years of experience, nature of prior experience and how their skill/role maps into the organisation among other factors) which don’t necessarily match the right person to a project in a consistent way.
On the other hand, calculating one’s fee as an independent professional or freelancer is also difficult without a well established norm, especially in the Indian market where this segment of professionals is new. According to our survey, full time freelancers expected compensation that was 50-100% higher than their existing salary or market rate as a salaried employee on an average, whereas amongst moonlighters (professionals looking to learn and earn through assignments beyond regular working hours) expectations ranged between a 20–70% increase. Expectations increase with experience levels. They also vary depending on the motivations and category of the freelance consultant ( e.g. the 15000+ professionals registered on Flexing It include corporate freelancers who have taken to working independently after a long stint in an organisation, entrepreneurial freelancers who take on assignments while getting a venture off the ground, young parents looking to balance family and career, creative freelancers who take on multiple projects to build a strong portfolio and professional moonlighters as well as SMEs).
However, when we asked professionals how they computed their fee for a particular project, we were surprised that only 10% had a fixed quote for each type of service they provide! 35% of respondents said their fee levels were customised to the project, while another 25% took the type of client into consideration before determining a number. 20% said they waited for the client to quote a budget before negotiating and 10% said they relied on sources such as bids on global freelancing sites and, very often, their colleagues.
‘Asking around’ is still what both consultants and employers resort to and its reliability as an approach is questionable. For fulltime jobs, websites like Glassdoor and Payscale act as reference points. FeeBee aims to provide a trusted platform for benchmarking compensation - and is the first of its kind for the freelance consulting industry. Professionals can find out what their peers charged for similar projects in their area of specialisation or interest and companies can reference industry benchmarks. The collected data will provide a rich foundation on which the benchmarking for consulting fees can be made and, we believe, will facilitate exponential growth in the number of freelancing engagements!
In an ongoing drive for data we are reaching out to trusted sources to ask about their current engagements including the type of services they provide, fees charged, number of hours spent, project duration, the nature of assignments and industries served. We also take into consideration experience, qualifications and location.
If you are a consultant, or looking to hire a freelance professional, visit us at http://www.flexingit.com/feebee/ to view our latest data on project based compensation and register your details too!