Wednesday, April 15, 2009

The Freelance Society

The current downturn has exercised many minds and there is an almost universal acceptance that the world will not be the same as before. Finance will become staid and boring, bankers will not make huge bonuses, smart people will turn to the real economy, people will live within their means and so on. I do not know if any of this will come to pass. Much of this is a reflex to what was before, and if we are in trouble now, then what was before was bad, and as what will be after will need to be good, it will be the opposite of what was before. Perhaps.

But there is one way that the world is changing. It has been doing so for a long time, and this change may be hastened by the recession. I believe that we are moving to what I will call a Freelance Society, that is a society where everyone will have work but no one will have a job. In this essay, I will first discuss what this society is and why I believe we are moving towards it. Then, I will examine how the freelance society will change the cities, suburbs, and the countryside we live in.

Since I graduated from college 15 years ago, I have had 10 different jobs. Admittedly, some of this was part time employment during graduate school, but at least half of these jobs were in full time employment. My experience is not unique in my generation, my wife and many of my friends and acquaintances also have had multiple jobs in their short careers. In fact, some of us have also changed careers. My brother was an electronics engineer, then he became a software engineer, and how he is on his way to becoming a full-fledged economist with a doctorate. All this may seem unremarkable, but if we just look back a generation ago, we will see that there has been a big shift. My father worked for the Indian Army till he retired, and before that my grandfather worked for the state electricity board till he retired. It is quite usual, even in the developed world, for people in previous generations to have had one or at most two jobs in their careers, and rarely more than one career, if at all.

Before we get carried away and pat our backs on our versatility or worry ourselves sick about the uncertainty of our experience, we must realize that this change did not in fact begin with us. In fact, our fathers and grandfathers experienced, in some ways, even more revolutionary change - the one wrought by the industrial revolution. They did not, in most cases, do what their fathers and grandfathers did, they took up different vocations, partly because the vocations changed, and partly because they had more choice. However, before them going back for centuries, occupations remained the same across generations - farmers' sons became farmers, soldiers' sons soldiers, artisans' sons artisans, and kings' sons' princes and kings. Rather unfortunately in most cases, until recently, this story has been about fathers and sons, at least in occupations outside the home. But the point can broadly hold for grandmothers, mothers and daughters too - they were all home makers (I know this is a generalization, lots of women worked in farms in many places, and even became generals and queens in some cases).

Therefore, this change from the same profession across many generations to one profession and one employer in a lifetime to several employers and even professions in a lifetime has been underway for quite some time. And I believe that we are now entering a fourth phase of change, where the connection between employer and employee will break completely, in effect, there will be no employers or employees.

There will be no jobs. But there will be work.

Each person has time and skills. They will sell their time and skills to different companies, organizations or individuals, for short or long periods of time, part time or full time. One could be doing desktop internet research for different companies, or one could do desktop research for one company, and powerpoint production for another. Individuals will come together for short periods of time on specific tasks, and once that is accomplished they will move on, together or separately to other tasks. There may even be no physical office to go to, individuals performing a task or working on a project could work from homes or even from coffee shops. They may talk or even meet through skype or other internet or telephone based communication media. They will do everything that needs doing today in an office, but the office will not be in one location, it will be spread across a city, nation wide or even the world. And no one will be an employee but everyone will work.

I know that this is an extreme characterization, the reality will be somewhere in between. Even today, there are many workers who have lifetime employment with one employer, especially in the government and the military. And in the freelance society, there will still be some companies that work traditionally, and other companies may still need a core of "permanent" employees who manage the different workers on contracts.

In a way, this is similar to the changes taking place in the world of computing. Computing is increasingly moving away from doing the computing work on PCs and laptops to doing the work on clouds of computers. Each computing task may be performed on many different remote machines, and the next task may be performed on another set of machines, some of which may or may not be the same as the ones that did the previous task. There will be a diffuse and constantly changing link between the user (and the outputs she wants) and the computers that do the work for her. She may in effect be paying (indirectly) many different providers of computing power for the work she is getting done.

Similarly, companies and organizations (and individuals) may be able to draw upon a global pool of individuals with time and different skills in a flexible, diffuse and ever changing manner to get the work done.

Why is this change happening now? The big part of the answer is technological change. Just as the early industrial revolution broke the connection between work and ancestry, the later faster-paced technological change (and globalization) led people to have more jobs and careers, today's communications revolution is the harbinger of this move to a freelance society. In 1937, Ronald Coase set out his theory of the firm, which basically said that firms arise to internalize some functions to avoid the transactions costs of operating on a purely market based system. The communications technology revolution taking place is reducing these transactions costs and therefore eroding the raison d'etre of a firm. No wonder then that the world of firms is changing into a society of freelance workers.

This change has already started happening. Eden McCallum, a pioneering company started by McKinsey alumni delivers management consulting advice to its clients through a network of hundreds of independent consultants. There is a central core team focused on business development, administration, and provision of needed central resource support, but almost all the project work is done by teams of independent consultants drawn from Eden McCallum's network. These consultants can work part-time, full-time, for a few weeks or for months at a stretch. They can take time off with their families for months and come back later to work on a project. They also work in ever changing teams and with ever changing clients. Essentially, Eden McCallum is flexibly matching the needs of clients with the needs and skills of its independent consultants, providing satisfaction to both groups.

This is not an isolated model, many other consultants use this approach, but few have taken it as far as Eden McCallum. This move to freelance work is not restricted to the professional services sector, it may even have commenced elsewhere - plumbers, other tradespeople, bartenders, waiters, journalists, shift workers, unskilled jobsmen, etc. People work without having jobs.

This move to a freelance society is being reinforced by large companies such as AT&T in the US who are changing their workplaces in ways that might bring about the freelance model even to established companies. To cut costs in the current downturn, they are saving office costs by having people work from home. Most of the work is done on computers and on the phone, so this can be done any place with a computer and a phone. And modern technology also allows limited video conferencing. Given this, more of the employees at such large companies are being encouraged to work from home. It will not be long before these employees realize that they can do the same for more than one company or they can do different things for different companies from home or a combination of home, Starbucks and office. And firms may then tranform themselves to a shell or core and farm out most of the work to an evershifting diffuse body of individuals (or groups of individuals) spread around the world (or on cyberspace). In a way, this will be outsourcing and offshoring taken to its limit.

So how will this shift change the places we live in? And how can cities become more competitive in this new freelance society? For answers, see for my next blog.
To be continued

© Raja Shankar: This essay may be copied or referred to freely, as long as it is sourced to the author


  1. Check this out.

  2. Sorry, I didn't realize that you already had the link to the paper. Actually, Gene Grossman was here in Australia in 2006 and he presented this paper which is now published.