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The Outsiders

The number of free agents has grown, but is a backlash looming?
June 1, 2001
URL: http://www.entrepreneur.com/article/40462

Last winter, Tarek Kamil, CEO and founder of Cincinnati tech company Incigna Inc., had a highly specialized project none of his 10 employees could handle. His solution? Outsource the work to a free agent. "I use them on client projects where I don't have enough resources," says 32-year-old Kamil, whose company brings in about $1 million annually. "They're a piece of the puzzle. I wouldn't be as successful without them."

Maybe so, but is an employer backlash looming against the "free agent nation"? Workplace consultant John Izzo, co-author of Values Shift: The New Work Ethic & What It Means for Business (Fairwinds Press), sees resentment of freelancers as employers fight to hang on to their full-time employees in a tight labor market. While many employers realize they need to outsource certain aspects of their businesses to be cost-effective, they now want to create loyal stakeholders in their businesses. "There's an acceptance that free agents are part of the landscape," says Izzo, "but there's [also] a trend toward wanting people who have a financial and personal stake in the company."

Certainly, employers see risks in using free agents: high cost, possibility of culture clash, loss of control over projects and confidentiality, to name a few. Mike Nikolich, founder of Arlington Heights, Illinois-based Tech Image Ltd., a 17-employee media relations firm, used free agents regularly a few years ago but has since quit because he finds them too fleeting and costly. "I'm looking for employee commitment, and free agents are only committed to themselves," says Nikolich, 43. Still, there are times when outsourcing is the inevitable answer: This winter, Nikolich paid a free agent $500 to analyze his business plan.

Going Nowhere Fast

Like Nikolich, most entrepreneurs today are forced to use free agents in some capacity. And that's helped their numbers surge. The Bureau of Labor Statistics estimates that at least 14 million Americans are working as self-employed free agents, a group that includes independent contractors, freelancers and other independent professionals. Many are skilled ex-execs. About four-fifths of the 180,000 independent professionals posting their resumes on Freeagent.com are over 35 with an average of 15 years of corporate experience, according to Wendy Reveri, senior vice president of marketing for Opus360 Corp., the sponsor of Freeagent.com.

Ron Bird, chief economist for the Employment Policy Foundation in Washington, DC, says self-employed free agents are important to employers for specialized projects. "[Free agents] are very important in terms of their impact on the economy," he says.

Entrepreneurs are learning the rules of the free agent game and are bringing their own strategies to the table. Bruce Tulgan, founder of RainmakerThinking Inc., a management consulting firm based in New Haven, Connecticut, and author of Winning the Talent Wars: How to Manage and Compete in the High-Tech, High-Speed, Knowledge-Based, Superfluid Economy (Norton), says what people might perceive as a backlash is simply employers getting better at negotiating with and hiring free agents for short-term projects.

Still, Tulgan hears employers pining for the old-fashioned loyalty of decades past. "They say, 'If only people were still loyal. I need to find myself some loyal people,' " he says. "But the terms of loyalty have changed dramatically."

Employers started a revolution with the lean-and-mean layoffs of the 1980s that made loyalty a two-way street, and now they're trying to win back the loyalty they lost, Tulgan says. He sees this quest as wishful thinking. "All employees are behaving like entrepreneurs, selling their skills in the marketplace," he says. "They aren't clinging to jobs."

Tulgan offers this advice: Give up the quest for loyalty, and start thinking of each employee as a free agent. If it would be better to outsource a project, just do it. See your outside free agents as vendors, and strive to become their best customer. Let projects flow between a core group of full-time workers and a web of outside free agents. Soon you'll create a wide talent pool where every project is a transaction. Says Tulgan, "Employers need to finish the revolution they started."