Can sites like 'freelance.com' shake up traditional professional services?

by Alex Roan on Jun 22, 2015

Can tools like freelance.com replace traditional professional services? I have been thinking about this in reference to management consultants, lawyers, tax advisors etc. Yesterday I listened to an episode of the James Altucher podcast which discussed this.

It was an interview with Matt Barrie of freelance.com. Much of this post is based on ideas from James and Matt. In a nutshell websites like freelance.com are traditionally about labour arbitrage. Technology has provided us with decent bandwidth, file sharing, video conference, remote desktop etc. which allows certain types of work to be performed on a location independent basis.

This started with technical work that could be done to a fixed specification, think web development, application programming etc. However over time it has expanded to include other less scientific work, think graphic design as an example. On the podcast I learnt that freelance.com has been expanding into a much wider set of services including professional services, engineering and science. The question for me is, will the freelance.com method of matching experts to opportunities eat into the traditional professional services pie? I think it will for certain, but the extent is hard to predict. At any rate thinking about this brings up some interesting points:

Online Reputation Will Increase In Importance

When management consulting firms bid for work they often include citations from previous clients, but these are carefully selected and worded. They often don't paint the complete picture. The consulting firm can omit mention of any work that has gone wrong. With tools like freelance.com you could allow clients to rate your work in a similar way to people rate apartments on airbnb or people rate iphone apps on the apple appstore. Prospective clients will get a more honest and visible view of your past work.

Work May Become More Compartmentalised

One pattern I often see with clients is that they will hire professional services companies to provide resources with both broad & specialised knowledge/experience for the full duration of a project. This is partly because it's hard to find good resources and on a critical project you don't want to get stuck without the right knowledge half way through. This is an expensive approach. One benefit I can see from tools like freelance.com is making it easier to quickly hire highly specialised experts for short periods of times to perform specific activities or tasks. An example - I am planning an acquisition. I may traditionally engage a major law firm to join the team throughout the project attending key meetings, providing various services, they will no doubt charge me for generalists throughout and also certain experts as and when required. With a freelance.com approach, I might be much more specific in finding one resource who specialises in creating a plan of all legal work required, then using other specialists for specific tasks; e.g. one drafting deal documents, another providing specific advice on topics like anticompetitive legislation. In this model the theory would be I use more efficient and effective experts as I need them and I cut out waste. This then crosses the boundary from just labour arbitrage savings; which may still apply, but to also include savings from a lean style approach to resource consumption. However, this will be challenging in terms consistency of the project teams approach and knowledge. There are two mitigations that can help:

• Companies get better at project management with structures that ensure the company retains the minimum experts required to manage the selection and use of these freelance resources.
• IT tools which help manage process and systems are getting better all the time, they make structuring change initiatives easier.

Professionals Will Leave Major Cities

Big cities are a major draw for professional services. I live in London just because there is a lot more consulting / contract work here. But cost of living is extortionate and commuting on the tube on a hot summer day is the worst experience. If I could do similar work, in a remote location I would move somewhere easier, but still with plenty of culture, or I would travel more frequently. Given the lower cost of living in other locations I would be happy to do what I do for a lot less given location independence. Again back to labour arbitrage.

Skills and income Will Level Across The World

This was touched on in the podcast. If work can truly be done anywhere without a loss in quality, eventually salaries will level out regardless of locations. Now consider this for professional services, imagine if tax, consulting, legal services etc. could be provided by anyone, anywhere. This would have a significant effect on the major cities of the world.

But Is Any Of This Realistic?

One thought that comes back to my mind is whether freelance.com is really any different from a job posting board for consultants or contractors? In some ways maybe not. It depends on a large part on whether you can write a spec for a specific piece of work, or you just want time from someone to help you on various things within a given domain of knowledge. To enable professional services people to work in a truly freelance way I think requires cultural change in the industry. I have a few ideas on how individuals can start to work like a real freelancer

• Start building a portfolio of work / past projects; as web designers or graphic designers do. You could build a portfolio highlighting your past projects, what value you delivered, what you did, what the output was etc.
• Solicit feedback in an online tool similar to the way eBay / Airbnb etc. manage feedback. This could be a freelance.com / elance.com type of tool.
• Compartmentalise your broad consulting skillset into specific packages that people might buy. For example a finance business transformation consultant may create some specific services such as
  • Analyse a process
  • Review and re-engineer a report
  • Provide a custom process maturity model etc.
• Start to define your skills and experience as re-sellable services. So for example if you helped design a new reporting process or helped broker a deal repackage how you did that into a method with some templates and tools that you can implement in a similar situation.
• I have a final thought on insurance. On some business critical activities clients will hire a large traditional professional services simply from the insurance that brings. Those companies have a reputation to protect and they have access to combined experience of thousands of people and thousands of past projects. How can a freelancer compete with that? Is there an opportunity for models where different freelancers can elect to partner with others on their delivery? I'm not sure what the landscape will look like in ten years, but for now I think I'm going to start thinking about my own freelance profile and what kind of services I can provide.

(The picture in this post was taken at smithfields market in London).