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September 17, 2022updated 31 Mar 2023 5:00pm

Tech freelancers need more protection as the ‘great resignation’ continues

Companies are losing full-time staff and relying on freelance workers, who often lack sufficient employee protections.

By Afiq Fitri

The so-called “great resignation” continues to pick up pace in 2022 as workers in the tech industry re-evaluate their priorities and search for better opportunities elsewhere. The impact of this staffing revolution is highlighted in new research which shows that almost half of tech companies surveyed say they have lost a “significant” amount of top talent in recent months.

IT teams are haemorrhaging top talent. (Photo by Indypendenz/Shutterstock)

As workers continue to leave their companies in droves, businesses are beginning to adapt to the new world of work by ramping up the number of freelancers and independent workers in their teams, for reasons ranging from greater agility to the merits of bypassing lengthy recruitment processes. Some are calling for tech and IT companies to sign up to a voluntary code of conduct to protect the rights of freelancers in an emerging future of work. 

Tech’s exodus of top talent

The survey, published by the A.Team and MassChallenge on the impact of the great resignation, sheds new light on the future of work for tech and IT companies. It is based on the insights of 580 tech founders and executives, and found that 44% of those surveyed said that a “significant number” of their best staff had left their companies in recent months. 

More than two-thirds (67%) of tech executives also agreed that traditional forms of recruitment sorely needed an overhaul, with 62% stating the process for hiring product and engineering talent took approximately four months to complete. One solution for this group of tech executives is to integrate “blended teams”, made up of full-time and freelance employees. According to the survey, 73% of those polled now have these integrated teams, while 71% of the same group agreed that bringing on freelancers or independent workers has given their business greater agility during a period of economic uncertainty. 

Andrew Chamberlain, policy director at IPSE, the UK’s association for the self-employed, believes that such trends are par for the course. “Traditionally, we’ve seen over the years that there will be an increase in the use of freelancers and the self-employed when firms are not sure about the economy,” he says. “It makes them nervous about hiring permanent staff and having to let them go, so they’re making more use of freelancers.” 

But he adds that there is also some evidence the economy has not yet taken a turn for the worst, at least for the tech sector. “You can sort of get a sense for when the economy is starting to pick up again because freelancers start getting lots of work, which means firms are looking to do projects,” he says. “While they’re not looking to invest, they’re not exactly hanging on to their money – tech companies are still going out there and engaging freelancers to do some work for them.”

There are signs that the demand for tech freelancers is picking up. According to the Oxford Internet Institute’s Online Labour Index, which tracks the number of registered workers and projects from 351 freelancer platforms, the number of jobs posted on such platforms is currently increasing after a dramatic fall in April, with approximately 137 new projects being posted daily. 

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Do tech freelancers need more protection?

As tech companies navigate economic uncertainties by hiring more independent workers, how are freelancers protected in such arrangements? The precarious nature of freelance work brings about a whole host of issues, from involuntary overtime to delayed payments without any form of redress. A recently published survey found that just 42% of freelance workers get paid on time for previous work. 

But businesses that use freelancers also face their own set of problems, specifically on having in place the right kinds of contracts and documentation that properly reflects the working arrangement, says Mark Stevens, a senior associate at the law firm Veale Wasbrough Vizards who works with tech companies. “One of the big issues for contractors, self-employed people and businesses is tax and whose liability it is to pay tax on payments to the contractor under a piece of tax law called IR35,” he says. “So making sure that these arrangements are outside of IR35 is an important consideration for a lot of my clients.”

One freelance management software company called UnderPinned is trying to change the system and level the playing field for the self-employed. Earlier this year, the company released the Freelance Charter, a voluntary code of conduct for the industry and has been inviting businesses that use freelancers to sign-up to it. The Charter addresses the main issues faced by freelancers in the gig economy, by encouraging businesses to set out transparent and standardised payment times, providing transparent contract terms and clear terms around ownership of IP, as well as broader advice to train finance teams and hiring managers to support freelancers. 

Albert Azis-Clauson, CEO of UnderPinned told Tech Monitor that while it is still early days for the Freelance Charter, he believes more businesses will sign the voluntary code based on his discussions with the industry and issued a call to companies looking to capitalise on the booming freelancer market, amidst a shift towards what he called “value-based pricing” over time-based pricing. 

"If you’re not signed up to practices to help encourage the way in which freelancers would work with you and standards they would expect from best practice, you’re going to lose out on the best talent and that’s a fact," he says. "Facebook doesn’t get access to the best tech talent in Europe because Google’s working standards are better."

Azis-Clauson added: "Businesses that understand this not only get better access to talent, but they also create a simpler system for talent to move around in and therefore, find the best projects to work on which benefits businesses as much as it does for the individual."

Read more: Is this the year UK tech startups bounce back?

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