crain's new york business article (09-2013)

Hired temporary employees in hot demand | Crain's New York Business

http://www.crainsnewyork.com/article/20130908/SMALLBIZ/309089981[9/18/2013 9:21:43 PM]

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Hired guns in hot demandCorporations farm out work to army of temps as costs and mandates rise.

BY ELAINE POFELDT SEPTEMBER 8, 2013 12:01 A.M.

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RELATED NEWS It would have been easy for Debbie Feldstein to stick with herhigh-visibility career as executive director of the New York EmmyAwards. But, after rising through the organization for 25 years,the Manhattan resident yearned for a change.

She quit and, while figuring out her next move, found herselfpoking around the Silicon Valley freelance marketplace Elance.On a whim, she bid on a gig writing a press release, work she'ddone at the Emmys. She won the job and got a rave review fromthe client. That was in late 1999. Excited by that success, shekept pursuing copywriting projects, and soon found herself with a

new full-time careeras a freelance copywriter. She's still at it, and recently helped a largeinternational food company create marketing materials to introduce its pasta to the U.S. It's the type ofwork that once might have been done internally.

Many of the clients that have hired Ms. Feldstein in the past have been small businesses, but recentlyshe has heard more from larger ones, like the pasta maker, often with offers of repeat work. "Far moreclients are looking for someone who can be a long-term partner," she said.

Ms. Feldstein's career as a freelancer has given her a front-row view of a growing trend. Big

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21,119Number of new "nonemployer"businesses, NY state, 2011

Source: U.S. Census Bureau

companiesaided by platforms like Elance, with the technology to separate experienced freelancersfrom those with fewer skillsare farming out work they once did in-house to a swelling army oftemps, contractors and freelancers to save money, reduce benefits costs, plug talent gaps and staynimble in a more global economy.

"I think we're heading into a new era of doing business, where corporations are no longer viewed aspaternal or nurturingthey're just pay sources," Ms. Feldstein said.

New York state freelancers earn more than those in other states, and local businesses top the nationin employing freelancers. Hiring on Elance rose 51% nationally in the second quarter of 2013,compared with the same quarter last year. "A sizable portion of that increase is from midmarket andenterprise companies," said Rich Pearson, Elance's chief marketing officer. Meanwhile, the averagehourly wage for U.S. freelancers on the site rose 5%, to $28, he said.

Big companies are tapping into the top tier of a growing group of workers who aren't permanently tiedto any company, though estimates of exactly how many people there are in this workforce vary.Accenture recently estimated that the percentage of the U.S. workforce that is "contingent," whichincludes freelancers, contractors and temps, may be as high as 33%, up from 6% in 1989. Anotherreport by Intuit projects that such contingent workers will make up 40% of the U.S. workforce by 2020.

Cautious approach

"Individuals want to work this way, and employers want toengage labor this way," said Jeff Wald, cofounder of WorkMarket, a cloud-based "contractor management" platform inManhattan. Work Market serves enterprise clients, includingAdecco, Lockheed Martin and NCR, and is backed byinvestors such as Union Square Ventures, Spark Capital and SoftBank. Work Market, like Elance,tests its workers' skills and know-how.

Larry Velez, founder and chief technology officer of Sinu, a 10-year-old Manhattan-based firm thatserves as an outsourced IT department for about 100 companies, has often supplemented his 25employees with freelance help he's found on Work Market. This lets him tackle projects in distantcities where he has no full-time staff. "If we can deploy someone from Wichita for two hours, versusflying someone out there, it's way more efficient," he said.

Certainly, many big companies are still taking a cautious approach. Firms that make a mistake canface steep federal and state penalties for failure to withhold the proper taxesa problem that can beespecially acute in New York, said Paul Gevertz-man, a partner at accounting firm Anchin Block &Anchin.

"In New York City, people would potentially have another layer of tax that is not getting withheldthatultimately the employer is responsible for if the worker doesn't report properly," he said.

Fluctuating teams

Elance offers its clients, which include Amazon, Cisco, CareerBuilder and Walt Disney, help inclassifying workers according to labor laws and will, on request, act as the employer of record for itsfreelancers, to reduce potential liabilities.

One sign that the trend is likely to continue is the number of fast-growth companies that are tappinginto the freelance marketplaces, which include oDesk. If they expand using contingent employees,they're more likely to maintain a workforce that includes them in the future.

Antonio Evans, an Upper West Side resident who is CEO of Friends-EAT, a seven-year-oldrestaurant directory and social network for foodies, relies on a fluctuating team of about 15contractors found through freelance marketplaces like oDesk. He said he doesn't need full-time helpat the bootstrapped companywhich has a little more than $2 million in sales and is profitableandwould have trouble occupying a traditional team. "If we have a guy just sitting there and working on a

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project that doesn't matter, and we're paying him $100,000, we could be spending that in a differentplace in the business," he said.

One factor that could loom for employers depending on contingent labor is an uptick in full-time hiring.Freelancers sometimes tire of the economic insecurity that comes with self-employment.

"I don't know anyone who doesn't want to be fully taken care of, in terms of 'Do I wish I had fullbenefits? Do I wish I had a weekly paycheck?' Of course I do," said Ms. Feldstein.

Then again, she pointed out, she has more security than many people in traditional jobsand nodesire to go back to one. "If any one income stream slows down, I have the flexibility to augmentthat," she said. Traditional workers are often at the mercy of employers, she said, and wonder, "Arethey going to keep me?"

A version of this article appears in the September 9, 2013, print issue of Crain's New York Businessas "Hired guns in hot demand".

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Lynnwrote on 09/10/13 at 11:52 AM

Truly the shift in the last four years as been from small to mid-sized businesses relying on flex work to helpgrow their businesses to large corporations using temps as a means of filling gaps & controlling costs.Certainly something the members on Hourly.com are seeing and requesting new services to better markettheir skills.REPLY

Bredwrote on 09/10/13 at 2:50 PM

Completely agree with Lynn. Employers of all sizes, as well as investors, have been using sites likeSkillbridge to access the most talented consultants to help them with their businesses.REPLY

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