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How Startups And Small Businesses Signal The Future Of Work

Forbes
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August 28, 2024
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By Matthew Mottola, CEO of Human Cloud | Forbes Contributor

This past month, staffing leader Randstad acquired AI-powered digital talent marketplace platform Torc, signaling a new era of the freelance economy that promises to embed freelance into the broader talent ecosystem.

The pandemic kickstarted the recent growth that we’ve seen in the freelance economy. In the US alone, there was a 90% increase in the number of freelancers between 2020 and 2023. We are not talking about one-time gigs: some 4.6 million individuals are making a viable salary of over $100,000 as independent freelancers.

But while the number of individuals choosing to be self-employed rather than employed full-time has grown at a constant rate, corporate adoption has lagged.

The interest is there. 65% of executives in 2023 planned to increase their reliance on external workers. However, freelance talent platforms haven’t scaled adoption in line with interest, and a key reason is that companies haven’t been able to reconcile freelance hiring (seen as niche, risky, and a “rogue spend”) with a safe, compliant, and planned talent strategy. Most such strategies are formed within the existing mature external talent ecosystem of VMSs, MSPs, staffing firms, EOR, compliance, procurement, HR, and legal teams.

This is quickly changing, and a potential shortcut to normalization is consolidation. In this article we’ll discuss the recent movement and why consolidation yields a win-win opportunity for traditional talent solutions and freelance talent solutions to combine the innovation of freelance with the trusted relationships, compliance solutions, and enterprise requirements of the existing talent ecosystem.

The Talent Space is Ripe for Freelance Disruption

The need for disruption in the talent space is clear. As of June 2024, 75% of global companies (70% in the US) are struggling to fill talent needs, a shortage that’s doubled since 2015. The top skills that companies struggle to fill are IT and data, engineering, and sales and marketing – skills that are abundant on freelance talent platforms.

“The reality is that a lot of the big companies in the talent space are realizing they don’t have the opportunity to offer what their clients need,” explained Rob Biederman, Managing Partner at Asymmetric Capital Partners, which invested in Torc.

Freelancers are a proven talent solution. An estimated 30-40% of the US workforce freelances, 47% of freelancers use talent platforms, and there are over 800 freelance talent platforms that help companies find, hire, onboard, and scale this workforce. The rise of these platforms shows no signs of slowing down, as 48% of platform leaders express satisfaction with their current business performance, and experts estimate a compound annual growth rate (CAGR) of 12.7%.

However, 32% of freelance talent platforms face difficulties attracting new clients, and 79% feel that freelancing is not managed consistently in ways that make it core to a company’s workforce.

This signals a clear gap: companies have the pain, and freelance talent platforms have the solution, yet companies are struggling to adapt. This gap is specific to freelancers because talent-related changes often face inertia, causing people to prefer failing with traditional methods than attempting something new. In my last article, I explained that freelance hiring is analogous to a hot potato: people understand the concept, but there is no clear ownership; no one is getting promoted from embracing it, and it can be very risky if it doesn’t go well.

Consolidation can shortcut this gap by merging the trust and approved relationships within traditional talent solutions with the innovation of a freelance talent platform.

Biederman said about existing talent solutions: “They do have the customer’s ear – they’ve got customers locked in. This consolidation brings us the best of both worlds: serving top global customers at scale with a modern, digital platform.”

The “best of both worlds” of scale and a modern digital platform is a clear way forward for the growing freelance economy.

The Freelance Space Needs To Consolidate

Venture capitalist and internet pioneer Marc Andreessen famously said that “there are only two ways to make money in business: One is to bundle; the other is unbundle.” To add, business is a pendulum of bundling and unbundling, with increasingly smaller time intervals between the two.

In a B2B context, bundling is when industries consolidate into a few large solutions rather than hundreds of startups. Think Microsoft 365 instead of hundreds of productivity solutions. This is essential among the adoption curve as consolidation enables standards, best practices, and internal roles that incentivize the success of these solutions. Unbundling is when disruptor startups undermine the traditional solution, creating transformational benefits. However, adoption comes from individual leaders, also called innovators and early adopters, who can grasp, champion, and drive what to most looks like risk, but to a slim minority yields massive opportunity.

Freelance has been unbundling the talent ecosystem for over 20 years, with an accelerated burst in the past six years. Upwork (Nasdaq: UPWK) went public in 2018. Fiverr (NYSE: FVRR) went public in 2019. Then Covid-19 spurred the “great reckoning of work”, which introduced a new wave of individuals and companies to remote work and freelance models. The result is the now 800 freelance talent platforms globally, each with a specialized niche across skill sets, industries, and regions. For example, Social Talent specializes in freelance content creators, Dojo Talent specializes in freelance gamers, FrontHouz specializes in hospitality, The Starters specializes in freelance e-commerce marketers, Plannernet specializes in freelance meeting and event talent, and Instant Teams specializes in customer experience teams.

No one has had a closer seat to watch this unbundling than Michael Morris, CEO and Co-founder of Torc. Morris started Topcoder, a competition-based developer platform, in 2001. He bundled it into Appirio in 2013 and then Wipro in 2016. Morris told me, “What we are seeing right now is a delayed realization that things have changed.” With visibility to this change, and a clear vision for how a talent marketplace can benefit both enterprises and talent, Morris launched Torc in 2021. He quickly combined a freelance delivery model—a 27,000 developer network with a focus on LATAM, the US, and India—with enterprise innovation strategies and AI to create a superior software development solution.

What both Biederman, Morris, and Randstad identified is that the freelance economy is now in the bundling stage of industry maturity. The core reason is simple. Freelance platforms need to access large companies, and large companies can’t engage hundreds of platforms. Instead, they need security, compliance, and consolidation of singular entry points. Mina Bastawros, VP of Creative & Digital Marketing at Airbus, commented: “There are way too many platforms out there. Ideally for a corporation like ours, we want an Amazon model where talent is in the same place and uses the same payment methods, same types of conditions, and same ways of getting things to my front door.”

Randstad and Torc look to be this bundled solution that can both meet the talent shortage with remote freelance talent while ensuring a safe, seamless, and compliant enterprise experience. Sander van 't Noordende, CEO of Randstad, commented: “Digital transformation needs access to specialized talent at scale and speed globally. Torc, with its enterprise-grade AI-powered talent marketplace, will redefine the talent experience and speed of delivery and strengthen Randstad Digital’s capabilities in enabling our client’s digital transformation.”

Will this be the domino that spurs the next consolidation? If so, how can you get in on the action?

What Freelance Consolidation Looks Like

Freelance has never had a standard playbook for funding and consolidation. Of the 800 global freelance talent platforms, most are bootstrapped and profitable and have carved their niche without external capital. Consulting platform leader Catalant progressed through the venture route, raising a $35 million series F round in 2021. Accounting platform leader Paro raised a $25 million series C in 2023. Software developer leader Toptal raised $1.4 million in 2012 but never raised since.

Four major types of consolidation are currently happening.

The first is partnership. A strategic partnership is a great first step to test synergies, investigate the ROI, and can grow each others businesses. Take Wethos and Payoneer. Wethos specializes in vertical SaaS with pricing intelligence, built to help freelancers make more money and scale. Payoneer specializes in cross-border payments that enable SMBs to conduct business globally. As a partnership, their synergy can potentially grow a freelancer's income, thus increasing their payment volume, and it becomes a win-win-win all around. We’re also seeing platform-to-platform partnerships. Ollo in Brazil, Uncompany in the US, and Indie List in Ireland joined together in a global relationship with a major technology company. Khibraty and Talmix combined their skillsets and regional expertise in the Middle East. Through partnerships, platforms are growing each other's business while maintaining their separate structures.

The second is larger platforms acquiring smaller platforms, or acquiring specific platform features. Malt acquired Comatch, Upwork formed an exclusive collaboration with BTG, Fiverr acquired Stoke Talent and And Co, and Gigster acquired CodersRank.

The third is strategic investment. We Are Rosie received a growth investment from Align Capital Partners in a deal valuing the company at $110 million. MBO Partners received $100 million in growth funding.

The fourth, and most promising, is traditional firms acquiring up-and-coming talent marketplace startups like Randstad and Torc whose intent is to revolutionize talent engagement and digital enablement services.

How do you know which type of consolidation is right for your organization? I’ll discuss this in a follow up article.

The Wave Is Forming, Are You Ready?

What’s next for the freelance economy? “We’ll continue to see disruptors carve out a nice amount of market share,” Biederman said.

He continued, “Consolidation is the way the world is going. It’s reasonably inevitable since there is a limited number of startups that can move the needle for major companies.”

His warning to existing talent companies is this: “If you don’t acquire one of those companies, a competitor will.”

So, talent and freelance leaders, are you ready for consolidation?

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The Freelance Economy Is Consolidating: Here’s What You Need To Know.

Forbes
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June 26, 2024
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BOSTON – June 20, 2024 – Torc, the AI-powered talent marketplace acquired by Randstad, has been selected as “Overall Remote Tech Company of the Year” in the 5th Annual RemoteTech Breakthrough Awards conducted by RemoteTech Breakthrough, a leading independent market intelligence organization that evaluates technology companies, products and services empowering remote work and global teams.

Torc’s intelligent talent marketplace platform connects cloud-native developers with jobs and provides a next-generation talent engagement experience for companies. With more than 27,000 digital talent enrolled worldwide, and a current emphasis on LATAM, the US and India placements, Torc’s commitment to productivity and upskilling make it a critical component of digital enablement strategies. 

“Torc is obsessed with AI, productivity and the success of distributed teams, and that’s why we can deliver viable developer-to-job matches in as little as two hours,” said Michael Morris, CEO and Co-Founder of Torc. “As part of Randstad Digital, Torc continues to provide incredible career opportunities for developers, and secure intelligent talent engagement experiences for companies.” 

The RemoteTech Breakthrough Awards program is a comprehensive analysis of the world’s top companies, solutions and products in the remote technology industry. The 2024 evaluation attracted thousands of nominations across 15 countries.

“Torc elevates the capabilities of talent search teams, and alleviates manually intensive tasks and rushed decisions that increase the risks of hiring technical talent,” said Bryan Vaughn, Managing Director of the RemoteTech Breakthrough Awards. “Torc has revolutionized how the CHRO and CTO handle enterprise talent engagement, increasing productivity, collaboration, career growth, and morale.”

Companies looking for the most productive developers, and developers looking for the best jobs, are in the Torc talent marketplace. Join today https://www.torc.dev/.

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About Torc
Torc, the AI-powered talent marketplace acquired by Randstad, connects global developers with jobs and provides an intelligent talent engagement experience for companies worldwide. Torc’s emphasis on performance, productivity and upskilling make it the preferred digital enablement solution for on-demand technical talent. www.torc.dev

About RemoteTech Breakthrough
Part of Tech Breakthrough, a leading market intelligence and recognition platform for global technology innovation and leadership, the RemoteTech Breakthrough Awards program is devoted to honoring excellence in technologies, services, companies and products that empower remote work and distributed teams around the globe.

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Torc Named Remote Tech Company of the Year

Tech Breakthrough
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June 20, 2024
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BOSTON – June 18, 2024 – Torc, the AI-powered talent marketplace acquired by Randstad, has been named to Inc. Magazine’s Best Workplaces list. Torc’s commitment to fostering a productive workforce and engaged corporate culture extends to the global enterprise customers and skilled developers throughout its intelligent talent marketplace, making it a preferred talent matching platform.

“Creating a remote work environment where people advance careers and innovative technology, both internally and for organizations worldwide, has been Torc’s goal,” said Michael Morris, CEO and Co-founder of Torc. “We’re proud to have been one of Inc.’s highest scoring companies. Torc provides that same level of energy and drive for success through its talent marketplace to deliver incredible talent engagement experiences and enablement solutions for developers and customers.”

The selective Inc. winner list is the result of a comprehensive measurement process, conducted by Quantum Workplace, of companies that excel in establishing exceptional workplaces and team cultures.

Companies looking for the most productive developers, and developers looking for the best jobs, are in the Torc talent marketplace. Join today https://www.torc.dev/.

About Torc
Torc, the AI-powered talent marketplace acquired by Randstad, connects global developers with jobs and provides an intelligent talent engagement experience for companies worldwide. Torc’s emphasis on performance, productivity and upskilling make it the preferred digital enablement solution for on-demand technical talent. www.torc.dev

About Inc. Media
Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50M people monthly across a variety of channels including websites, newsletters, social media, podcasts, and print.

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Torc Earns Inc. Best Workplaces Award

Inc. Magazine
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June 18, 2024
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Randstad Digital Acquires AI-powered Digital Talent Marketplace Torc

Economic Times: HR World
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May 20, 2024
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