Skills shortages - a golden opportunity for freelancers and freely employed people

Companies in Germany have been complaining about shortages of skilled professionals for quite some time now. Particularly affected by this are small and medium-sized companies (SMUs) in the medical, nursing, crafts, and technical sector. By now German SMEs are facing revenue losses amounting to billions. Therefore, SMEs increasingly rely on external experts to fill their staffing gaps, thus providing excellent prospects for freelancers and freely employed people.

Reasons underlying shortages of skilled labor

There are different reasons for Germany's national shortage of skilled labor. The arguably most important one is the sociodemographic change. Declining birth rates and an aging population lead to severe bottlenecks in the labor market. The fewer professionals available, the greater the staffing gap.

Added to this is the triumphant progress of digitalization, which affects nearly all economic sectors. The digital transformation of SMUs requires, besides the necessary funds, additional expertise which the labor market does not provide currently. Due to the shrinking availability of skilled human resources, the demand for proper know-how is much greater than the supply.

Another reason, according to experts, is the lack of creativity on the part of companies. Measures such as the increasing recruitment of elderly people, women or refugees, regular training and further training courses, as well as flexible working hours and the opportunity to work from the home office, experts argue, are approaches that are exclusively related to permanent staffs and therefore leave available further potential unconsidered.

Recruiting freelancers as another strategy to fight skills shortages

In order to exploit this potential, some SMUs as well as some large companies have begun to extend its permanent staff by hiring freelancers. This approach to combating skills shortages involves some benefits for companies. To be sure, working with freelancers too entails some kind of efforts in that they may require more information and instructions than in the case of permanent employees. However, the benefits clearly outweigh the disadvantages.

Companies benefit from freelancers in four respects

Companies may benefit from freelancers in at least four respects:
First benefit: Significantly lower personnel costs
Hiring freelancers involves much lower personnel costs compared to permanent employments as freelancers are not entitled to claim paid leave and continued pay, nor are companies required to make social security payments for them. And even in the event of weak order situations, working with freelancers prevents incurrence of unnecessary costs.

Second benefit:Improved productivity
Moreover, freelancers are remunerated on a project basis, thus ensuring improved productivity and faster handling of tasks. On top of that, project-oriented work allows to bypass staffing gaps during holiday seasons. This makes it easy for companies to manage and calculate projects. Last but not least, freelancers take less time to be productively operational after recruitment than permanent employees. For, since freelancers are specialized in the project work they are hired to do, they usually require less time to familiar themselves with their work than permanent employees do. While the latter require up to three months, freelancers solely need one month on average.

Third benefit:More flexible performance management
Project-oriented remuneration also ensures that insufficient performances do not get remunerated at all or else they get remunerated only when the project has been completed successfully and satisfactorily. This way, companies ensure two things: the quality rendered by external workers, as well as a balanced cost-benefit ratio.

Fourth benefit:Reduced recruitment periods
Fourthly, the option of hiring freelancers involves reduced recruitment periods. If one considers all stages of recruitment (preparation stage, search stage, decision-making stage), an employee's recruitment period typically amounts to two to four months. The recruitment of freelancers, in contrast, is oftentimes just a matter of a few weeks.

The above benefits come in handy for start-up companies in particular, considering that search for personnel and project financing, as is generally known, rank among the major obstacles they need to be overcome. Whether or not it is reasonable and appropriate to hire freelancers generally hinges upon the nature (and sometimes the size) of the respective enterprise. Freelancers and freely employed people are sought-after, for example, in fields such as content management and text processing (e.g., as an author/a ghostwriter, a translator, an editor, a proofreader, an analyst, a text formatter, a transcriptionist, a statistician), advanced education coaching, marketing, advertising, law, as well as in the web and IT field.

IT freelancers are in particularly high demand

As a result of digitalization as well as the increased complexity of entrepreneurial challenges, today's IT specialists are sought-after across all sectors. This applies to programmers, software developers, system administrators, webmasters as well as to security officers. The benefits freelancers offer specifically in this sector result in particular from the degree of planning uncertainty that companies are faced with in the long term with regard to IT. Those rapidly changing technological innovations render it uncertain whether certain IT services (e.g., apps, cloud services, social media platforms) will keep their importance in the foreseeable future, given that they might soon be replaced and rendered obsolete by new inventions. Considering this, freelancers are just what is needed: Freelance IT specialists can be used for specific projects in a tailor-made and selective manner, for example for carrying out an SAP upgrade, or developing apps, websites etc.. The increased need for IT specialists is not least reflected in increased fees. Thus, the average hourly gross rate of IT freelancers currently amounts to EUR 87.36, which represents a rise of round about EUR 5 compared to the previous year.