Gig Worker vs. Pro Services Provider

• February 7, 2022
• Steve Greenblatt

In the AV/IT world, there is a need for the gig worker and pro services provider approaches, as each have their strengths and weaknesses and best serve certain types of needs and clients.

With the rise of the gig economy, along with the impact of COVID-19 on the job market and the desire to pursue a greater income, better lifestyle, or flexible schedule—the idea of “going out on your own” has become a growing choice of employment. While this can be an ideal option for some, for others it may not turn out to be all that it is cracked up to be.

Working as a freelancer provides autonomy and can be financially lucrative when the demand for a specific service or expertise is high. While many appreciate the benefits and upside potential of freelancing, those same features can turn to drawbacks when business is uncertain and the appetite for specific offerings changes. Additionally, since freelancing has the tendency to involve limited tasks or temporary roles that will come to an end, a freelancer always needs to be seeking new clients and be on the lookout for the future opportunities to avoid lengthy lapses in work.

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One characteristic of a freelancer that can be a pro and a con, depending on perspective, is the absence of commitment. Both freelancers and their clients or employers typically operate on short-term engagements. This is appealing for those who want to “try before they buy,” work only when needed, or have more autonomy over scheduling. On the flip side, short-term assignments or transient relationships are not a great option for those looking for consistency, predictability, the comfort of being part of a team, or the security of a steady income and benefits.

Unlike full-time salaried or hourly employees (also known as W-2 employees in the US), who can expect a certain income and qualify for unemployment if they lose their jobs, freelancers are not afforded the same luxury of a regular paycheck. Additionally, freelancers (also known as 1099 employees in the US) who are not full- or part-time employees are typically responsible for their paying their own taxes and other job-related expenses (e.g. tools, operating expenses, insurance).

The Gig Worker

For employers or clients, the use of freelancers can be a viable solution because of the pay-as-you-go arrangement, as opposed to the fixed cost of an employee. Despite a higher hourly rate versus that of an employee, freelancers present a lower-cost option for employers who do not need a regularly available resource. Many freelancers either charge by the hour only for time worked or provide a fixed price for a specifically defined task.

While a freelancer is one form of an outsourced independent contractor, it is not the only arrangement available. A more formalized and evolved version of a freelancer is known as a professional services provider. Similar to a freelancer, a professional services provider can be as small as a solopreneur; they can also range from several people to a very large company. While freelancers and professional services providers are similar in being outsourced contractors and may seem interchangeable to an outsider, there are distinguishing characteristics that require clarification and understanding to ensure the proper route is chosen.

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First, it is important for the contractor to define what they are, how they do business, and what clients can expect of them. If a freelance path is chosen, where schedule is very fluid, commitment level is low, and infrastructure investment is minimal—opportunities may be more transactional and inconsistent, and business relationships may be hard to build and sustain. This arrangement can be great for someone looking to earn some extra income as a student, a second job, a supplement to a full-time working partner, a semi-retirement arrangement, or a precursor to test the waters before committing to becoming a professional services provider.

The Professional Services Provider

If the professional services provider path is preferred, the commitment level becomes more serious, starting with the need to establish a formal business entity with startup and administrative costs, operational requirements, substantial time commitments, and the need to address business roles outside of core skills, including sales, marketing, billing, collections, customer service, and more. These added requirements lead to increased overhead and costs that many freelancers don’t have to consider, and, as a result, contribute to a higher billing rate than both freelancers and in-house options.

There is no knock against the validity of either the freelancer or professional services provider model. It is up to personal preference, strengths, desires, and long-term vision. There is a need for both approaches in business, as each have their strengths and weaknesses and best serve certain types of needs and clients.

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What is disconcerting is the perception of contractors in the AV industry. There have been ongoing debates as to the effectiveness of outsourcing for projects as a whole, or for specific roles or skill sets. Many who are opposed have had difficulty with inconsistent results, unreliable outcomes, and challenges with management and communication. While these situations do occur from time-to-time, they do not typify most outsourced contractors and should not taint the effectiveness of this arrangement. Just like the approach to any type of relationship, if each party is willing to take the time to learn what is important to the other, including how to work best together, the probability of a successful outcome will improve drastically. This investment in helping each other be successful will go a long way toward achieving client satisfaction. Along those lines, defining systems and processes will help to overcome challenges in information flow and avoid misunderstandings. Similar to internal employees, contractors need to be provided with clear direction, a detailed scope of work, and established expectations from the outset. Most contractors do aim to please, as their reputation is on the line with every project. Being their greatest asset and best opportunity for future business, a reputable contractor has a vested interest in satisfying their clients and maintaining a “five-star” rating. As it is said, it can take 20 years to build a great reputation and 20 minutes lose it.

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Just as it is important for those looking to pursue work arrangements to know whether they want to be a freelancer or professional services provider, it is even more important for clients to consider how the different arrangements impact the ability to have their needs satisfied. While they are similar and may appear to be interchangeable, the distinctions are important and should be considered when pursuing either arrangement or relationship. When hiring a contractor for a specific need, it is critical that the right fit be determined by a complete package of skills, reliability, stability, and commitment level—in addition to price, flexibility, availability, and an alignment of core values. Also remember that there is a reason why there is a difference between freelancers and professional services providers. Hiring a freelancer just because they are more affordable or flexible, while knowing that a professional services provider is better-suited to the project’s particular needs, is ill-advised. Conversely, hiring a professional services provider and squeezing them to compete with the pricing of a freelancer or provide undivided attention is also unfair. In the end, finding the right fit will be a differentiator in achieving a successful outcome.