Call it what you will -- the "open talent economy," "freelancing," the "gig economy," "contracting" -- working for yourself is having a moment, particularly in high tech.
Once upon a time, IT pros went freelance only when driven there by circumstances like a bad economy, a layoff or an overabundance of their particular skill set. Or they turned to consulting in the sunset of their careers, tired of cubicle farms and long commutes. Now, millennials, who this year became the largest proportion of the labor force, are leading the charge to change the tech industry's perception of self-employment.
It's common knowledge that the cohort of workers 35 and under prefer a flexible, DIY workstyle, using their personal mobile devices to communicate and work from anywhere at any time. What's not so commonly known, however, is that some millennials -- some say it's a growing number -- are eschewing traditional employment altogether to work as independents.
"A large number of millennials are choosing a different path in terms of what they want in their professional life," says Alisia Genzler, executive vice president at Randstad Technologies, a high-tech staffing and recruiting company. "We are seeing more and more of them choose freelancing and contract work over traditional jobs, more so than in previous generations."
Millennials came of age and graduated from college during the Great Recession, many saddled with debt and unable to find a job. While some eventually made their way into the corporate workforce, others stayed independent, either by choice or by circumstance. "We now have a generation of workers who never had full-time jobs," says Can Erbil, an economics professor at Boston College who studies the labor market. "That is not the exception but more the norm for them." What's more, millennials grew up in an educational environment that stressed project-oriented work, he adds, so short-term sprints are a natural cadence for them.
The recession also taught millennials that a traditional job and long-term loyalty to an employer don't necessarily mean security. "A lot of them look at their parents who had jobs with one company for a long time, only to be laid off, so [millennials] want to keep their options open," says John Reed, senior executive director at Robert Half Technology.
And benefits are increasingly becoming decoupled from employers -- with the Affordable Care Act guaranteeing individual access to health insurance, workers don't have to be on a payroll to be covered. In fact, according to an article in Money magazine, only 31% of college graduates last year received employer-provided health insurance, compared to 53% in 2000.
High tech is gig-friendly
Millennials may be blazing the path, but freelancing is an option that can work for employees at any age, proponents argue. A 2014 study found that 53 million U.S. workers were freelancing to some extent -- that's 34% of the workforce. Millennials were the largest group of survey respondents who said they were freelancing, at 38%, according to the report, which was commissioned by Freelancers Union and Elance-oDesk, the freelance marketplace platform now called Upwork. But 32% of those over 35 likewise indicated they were working independently.
Daniel Masata, senior vice president at staffing and recruitment firm Adecco Engineering & Technology, says he's seeing the trend across all age groups. Baby Boomers, for example, might freelance to keep their hand in or supplement retirement income. Gen-Xers may have been laid off during the last recession and either had difficulty getting rehired or just decided to go independent. Ten years ago, 75% of candidates for technology jobs were seeking full-time employment, Masata estimates. Today, it's only about 50%.
The high-tech industry is particularly well-suited to the gig economy. The software development cycle, for example, has become well-defined and compartmentalized, making it easier to farm out, says Andrew Liakopoulos, principal within the human capital practice at Deloitte Consulting and an expert on what Deloitte calls the "open talent economy."
In fact, IT is one of the first markets where Deloitte noticed the freelancing trend. "The millennials were the ones who, after being forced into [freelancing], actually have used what was happening in the macro environment to their advantage," says Liakopoulos. "And IT was the first occupation where we saw them doing it."
To discover what impact the gig economy might have on tech employees of any age, Computerworld sought out millennials who are working independently. Some are freelancing indefinitely, some are using freelancing as a stepping stone to a better job, and some of them say they are committed to contract work for their entire careers. Although freelancing has its downsides, specifically the risk of not finding enough good-paying work and the lack of benefits like paid time off and company-subsidized healthcare, all say their experience as independent workers offers many advantages.
Read on to hear their stories and determine whether gig work might be right for you.
Rejecting perfectly good jobs (at Microsoft!)
Erik Kennedy joined Microsoft as a program manager straight out of school after graduating in 2010 from Olin College of Engineering with a bachelor's in electrical and computer engineering. But at age 25, after three years with the company, he decided to strike out on his own.
Although Microsoft was a good employer, Kennedy says, he felt stifled by the atmosphere of a large company. He wanted to pick his own projects. "Hypothetically, my boss's boss's boss's boss's boss could make a decision that could affect what I did on a day-to-day basis," he explains. "I wanted a little more freedom and was willing to take a little more risk."
The inherent insecurity of freelancing means that it's not suitable for everyone, says Kennedy. "You kind of 'lose your job' every two to six months" as projects turn over, he says. "If you can handle that, then it's a great deal."
The area in which Kennedy specializes -- UI/UX (user interface, user experience) -- is in high demand, which lessens his risk. Based in the Seattle area, Kennedy works mostly for startups and nonprofits, with a few name-brand technology companies like Amazon in the mix for variety.
So far, two and a half years in, Kennedy's been happy with his decision. "I make money at about the same rate [as I did at Microsoft], but I've taken off more time for travel since becoming a freelancer," he says. He even got married last year, after which he and his bride travelled the world for eight months. "It's such a millennial thing to do, and we would have never been able to do that if I had a full-time job," says Kennedy.
Paying off the mortgage -- in your 30s
Steven Boyd, 33, went freelance in 2011 after working as a developer in a series of full-time jobs. At one employer he learned SketchFlow, a part of Microsoft's Visual Studio, and now specializes in it. "At first I was scared" to go independent, Boyd admits. "I felt that I needed that stability you get from a full-time permanent position." But then he realized that security was an illusion. One startup where he worked couldn't make its payroll one month. He was tired of being assigned projects, rather than choosing his own, and felt underappreciated.
Today, he picks his own projects and clients (which range from large corporations to startups and nonprofits), works when he wants to and by his estimation is financially secure. In fact, he makes much more money than he did at his previous positions, which topped out at $110,000 a year. "And I had to really negotiate hard for that." In 2013, he made close to $250,000, but "worked way too much," he says. In 2014, he scaled back to working 30 hours a week and still earned $180,000.
He's paid off the mortgage on the family home in the Denver area, bought several rental properties and started a scholarship fund at his alma mater, Colorado State University, to encourage minority students to pursue computer science. "To be able to amass that sort of money in such a short period of time would be nearly impossible as a full-time employee," he notes.
He doesn't miss the benefits; his wife works full-time and so provides health insurance for him and their four-year-old son. Nor does he miss paid vacations -- saying he never took them anyway -- but relishes having the flexibility to take big chunks of time off when life requires it. Recently, for example, Boyd took a hiatus to care for his son for three months while their babysitter recovered from surgery.
Both Kennedy and Boyd recommend working a few years at a traditional job before trying freelancing. "I couldn't see someone coming straight out of school and being successfully independent," says Boyd. "It takes a while to learn how to deal with people and different types of scenarios." By working a traditional job first, Kennedy says, he built up a good network that he could tap for business when he went solo.
Keeping skills sharp
Independent work can be as valuable to long-term career growth as a technical degree, says Katy Tynan, author of the book Free Agent: The Independent Professional's Roadmap to Self-Employment Success. That's because freelancers are typically required to pick up new skills quickly, says Tynan, who worked in IT for 15 years. Staying at a traditional IT job for years can cause employees to lose relevance, she says. "Things tend to stay the same within an organization; you don't have to rapidly learn new things."
In many enterprise shops, "You have to jump through all sorts of hoops just to learn a new technology," says Ron Pastore, 35, who made the switch to freelancing two years ago. "You end up molded into what they need you to be, and then if they don't need you anymore, you're out there in the market with limited skills," he says.
Pastore has no college degree, but excelled in programming at an early age. He worked as a software engineer in various full-time positions for 10 years, but ultimately wanted more flexibility and felt limited by traditional employment, he says.
Married with two children, the Rockland, N.Y.-based Pastore says he is more secure financially today than before, because he's not depending on one source of income. He estimates he makes 15% to 20% more today than he did at corporate jobs, "though this is not an apples-to-apples comparison," he says. "I work mainly with startups, at a reduced rate plus equity." He also works many fewer hours than he did as an employee and says he has no trouble finding clients.
Pastore hopes he'll never hold a corporate full-time job again. "Going back to traditional employment would be my worst-case scenario," he says. For his part, Kennedy says he is not averse to going back to a full-time job, but for now freelancing makes sense for him.
The job you want, not the job that's offered
Whether they stay in freelancing or not, younger programmers are showing just how confident they are in their ability to fashion the career they want, not the one that's offered by corporations. If the job doesn't suit, they have no problem walking away from it. Boyd, for example, says he recently rebuffed the advances of a recruiter for Microsoft. The job sounded attractive, "and I probably would've taken it if it wasn't so much travel," he says. "I like this flexibility of being independent."
With the proportion of millennials in the workforce continuing to grow (some forecasts say they will make up 75% within the next decade), this is likely to be a permanent change in the labor market. "As you look where this is heading, there's no turning back," says Deloitte's Liakopoulos. A substantial proportion of younger workers do not want to become part of the old economy, he says. "They don't want to be tethered to an organization. They want to continue being entrepreneurial. And they [plan] to use freelancing to create the flexibility they want in their lives."
This story, "Tech pros make the most of the 'gig economy'" was originally published by Computerworld.