British SMEs favour freelancers over full time hires to manage growth

UK SMEs remain cautious about hiring full time staff over the next 12 months despite the UK economy growing at its fastest pace in three years1, according to new research from Elance, the leading online work platform.

The research of 500 decision makers of British small and medium sized businesses (SMEs) found 92% are more cautious about adding full-time head count after the prolonged economic downturn. In fact, more than 1 in 3 (39%) SME employers are putting off hiring full-time staff in the next 12 months to keep fixed costs down.

The three main measures SMEs say they will use to keep fixed costs to a minimum include staff salary freezes (34%), hiring freelancers as a way to fill skills gaps without hiring full time headcount (33%) and offering staff more part-time work (26%).

To capitalise on market opportunities, yet manage business costs, 25% of UK SMEs say they have already used freelancers and expect to use them more often in the next 12 months.
Kjetil Olsen, Vice-President, Europe, Elance commented; “Keeping fixed costs down is critical for SMEs yet with signs of an economic recovery, SMEs can not afford to lose out on spontaneous market opportunities. SMEs are turning to skilled freelancers to enable them to scale up and down when resources are required, yet not add to their fixed cost base.”

Olsen continues; “The research shows that UK SMEs are seeing freelancers as an important part of their staff mix going forward. We are seeing more businesses adopting a hybrid workforce model where businesses turn to a global pool of online freelancers to work alongside full time employees. This approach allows businesses to buy in required skills whilst maximising business growth.”

The research supports the latest Global Online Employment Report (GOER) which tracks the hiring patterns of employers and the earnings of freelancers using The report showed that the number of UK businesses hiring freelancers online increased by 51% between June 2012 and June 2013 and number of jobs awarded to UK freelancers were up 56% over the prior year and average hourly freelance wages are 19% higher than the national average.