What hinders organisations from using freelancers and benefiting from it?

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In a previous article titled “6 Reasons Why You Should Outsource IT Skills”, we discussed the benefits of outsourcing where it is a cost-effective way to secure niche skills in this fast-changing IT industry. According to statistics published by the Cabinet in 2019, there are between 3.06 million to 3.41 million people in Japan who work as freelancers, offering their skills as an individual without being tied to a specific organisation. In comparison, it is estimated that 56.3 million people work as freelancers in the United States, which is also one of the biggest freelance countries in the world. 

So with the benefits we’ve discussed and how common freelance work can be, what are some of the reasons Japan is not maximising freelancers? But more importantly, how can organisations start to reap some of the benefits from freelancers?


Why are some organisations reluctant to benefit from freelancing work in Japan?

Although there has been an uptake on freelancers over the years, the slow progress can be attributed to various reasons. Companies in Japan are not as proactive as they could be. According to a survey conducted by the Ministry of Economy, Trade and Industry (METI), 47.6% of companies that participated in the survey answered that they “do not currently use external human resources such as freelancers and are not considering them in the future”.  One of the top contributing factors included “Uncertainty about cost effectiveness (28.2%)”, followed by “Concerns over leakage of technology, know-how, confidential information, etc. (23.3%)”, “Anxiety about a contract with an individual (17.0%)”, and “Unable to find an appropriate freelancer / no one to consult (17.0%)”.

Below, we explore some of the concerns that hinder Japanese organisations from using freelancers, together with how they can overcome and benefit from the freelance workforce.


1. “Are freelancers cost-effective?”

As mentioned above, this is the top concern for companies when considering freelancers. If you have never actually outsourced work to freelancers before, it may be difficult to envisage the specific cost-benefit ratio. And in many cases, it can be difficult to gain internal approval. One of the reasons include the presence of traditionally employed career-track workers. With this group, the work often become quite personalised making it difficult to identify the duties and tasks to be outsourced.

However, even if you are not considering the use of freelancers, this can be a risk in managing the organisation and can be difficult to take over if the person-in-charge unexpectedly takes a leave of absence or resigns. For this reason, it is advisable to start identifying the tasks which you currently have insufficient resources so that you can calculate the cost-effectiveness of outsourcing versus hiring a permanent employee. You would also reduce the chance of being taken hostage by any employees.


2. “We are not sure how we can manage freelancers and the outsourcing process”

In addition to the difficulty of separating out specific tasks, the management system is often based on the assumption that everyone is a full-time employee, which can often be one of the challenges in using freelancers. In order to achieve great results in a gig economy where the number of side jobs are increasing and the mobility of employment becomes even higher in the future, the key will be to set up a human resource strategy that puts the right people in the right place. In this way, there will be certain skills and knowledge that will be required of full-time employees, whilst other required expertise can be secured by sourcing rom experts outside the company. In this way, you maximise the potential of your current employees whilst offering the option to access freelancers based on your specific needs.


3. “Can we trust freelancers as they are not an organisation but individuals?”

In Japan, there is a culture that places more emphasis on the organisation than the individual. And this is particularly true within the business sector. As a result, there is often a reluctance to delegate tasks to external individuals due to concerns about technology, information leaks on know-hows, trust issues and compliance.

In this respect, contracting with an established organisation can eradicate these risks in many aspects. Whether it is the screening of the freelancer’s qualifications or skills, to the actual conclusion of the contract and its subsequent management and follow-ups, you can transfer this responsibility to a recruitment agency that is well-versed in contract and freelance employment. You may contact us using the form at the bottom of this page for more information on the different types of contracts and employment in Japan.


4. “How and where can we find freelancers with the right skillsets?”

As mentioned at the beginning of this article, there are still not as many freelancers in Japan compared to the United States. As such, many freelancers get their work via introductions from acquaintances and personal networks. And as a result, it is not always easy to find the right person for the job when you have no previous experience with freelancers. In addition, when it comes to projects for foreign companies, the number of candidates in the market becomes even smaller due to the additional language requirements on top of required skills and experience.

This is the reason our clients partner up with us for contract and freelancing work. We can draw on local knowledge, networks and databases of our consultants who have both global and local access to suitable candidates to find the right person to meet your needs, in the shortest time possible. If you require a team rather than an individual, we are also able to assemble a team of highly qualified IT professionals with the skills you require in a short time frame. This is a solution that offers cost savings and speed to hire, which are both difficult to achieve by hiring permanent employees.

To find out more about how we can help you, please visit the following page or fill up the form below and a dedicated specialist will be in touch. 

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