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The state and waste of Dutch Design: An introduction to online freelancing

Few people know about online freelancing (i.e. outsourcing). Even less have attempted to analyse it. With this short essay I hope to lift the veil into the world of online freelancing within the global creative industry. It's a business in which many of my colleagues make their money, either by fair business, running scams or exploiting the system. By no means should this short essay be taken as an academic text. It's based on personal experiences and informal interviews with clients and freelancers. If anything this essay can be the starting point of a wider discussion.

The concept of online freelancing has been around ever since the birth of internet. One used a search engine (e.g. Google or Yahoo!) to contact independent professionals (e.g. a copywriter or "website builder") to ask them if they were willing to work freelance on a project. It was a rather laborious process. One had to contact dozens if not hundreds of professionals and weed them out until they found the freelancer that they wanted to work with. Binding the freelancer to a (legal) contract was next to impossible.

Then, in 2007, the global economic crisis presented an opportunity that radically transformed this simple concept into a thriving billion dollar global industry. Many clients (i.e. companies or individuals with a project) had little money to spend and started to look for cheap alternatives. Even more professionals lost their jobs and sooner or later became desperate to generate new sources of income. Both groups eventually landed on the rapidly developing online freelance platforms such as 'odesk' and 'elance'. These platforms act as 'the middle man' who facilitates meetings between clients and freelancers from all over the world and binds them to a framework of rules of conduct and contracts.

Nowadays these platforms dominate the world of freelancing. It's the go-to place for the unexperienced project managers who don't have the network to find the professional they require. For many other clients it's simply a way to exploit cheap "labor" or evade (inter)national laws and taxes.


The absolute basics of contemporary online freelancing
The current format [of online freelancing] can be described as a platform (e.g. upwork.com; a fusion between 'odesk' and 'elance') where registered clients and freelancers can contact each other for work. The services that most freelance platforms offer range from creative and editorial to administrative and sales & marketing (although there are also freelance platforms that specialise in other services such as carpeting). Once an agreement has been reached between a freelancer and the client a certain percentage of the freelancer's fee is paid to the [owners of] platform. After a project has been completed the client and freelancer review each other. Positive reviews give you access to better jobs or freelancers while negative reviews get you the opposite results (which is equal to a death sentence on any freelance platform).

It all sounds so simple and fair, but there are various ways online freelance platforms and their users capitalise on a lack of regulations and the desperation of people.


Exploiting loopholes
On these platforms freelancers can offer to work for fees that are far below the liveable wage (even for third world countries). They do so not only in order to compete with other freelancers that offer low fees, but also to get high ratings/reviews from clients so that they ask for a higher fee in the next project. This creates dire situations that exploit the most desperate and vulnerable of people. For example, a Dutch company can [via these platforms] legally contract a freelancer (located anywhere in the world, including the Netherlands) for as little as €0,01 per hour, for 100+ hours a week, for the next 500 years. Right now there's absolutely no law in place that can stop them from doing so.

One can argue that it's the freelancer's responsibility for accepting such a bad contract but I would like to look at it from another perspective. A lot of people (not just highly educated Western graduates) are struggling to find work these days. Many of them, regardless of what they have studied (if at all), enter markets that become increasingly oversaturated. If there are jobs, they often have to compete with dozens if not hundreds of others. Many of them turn to online freelancing in order to make ends meet.

For those living in second and third world countries online freelancing seems to offer a fair way out of poverty by providing them with the promise of higher wages then they would earn in their own country. However, the uncertainty of work (after all, freelancers get hired on a project to project basis), and the unfairly distributed earnings cause many of them to look for other opportunities elsewhere whenever the first opportunity presents itself.


Devaluating professions
Some say the main reason why professions get devalued is by clients not hiring "expensive" local freelancers but "cheap" online freelancers (usually from a second- or third world country). However, I would like to argue otherwise. Many freelancers are offering their services for extremely low fees (depending on the profession below 5 or 10 dollar an hour). The consequence is that highly skilled freelancers become demotivated and quit, leaving the "lesser" freelancers to pick up their work. Another often ignored consequence is that low fees force freelancers to work with pirated software (which has become an industry wide problem). Likewise, if freelancers deliver high quality services regardless of low fees clients will expect equally high results for the same price in the future. Both scenarios directly devalue professions as a whole.

There are who say only bad clients will pay little and expect high quality results, but the current situation in the creative industries tells otherwise. We're living and working in an ever faster-paced society in which the flows of money are changing. The online freelancers are in the forefront of this development.


Third party freelancers
Another common occurrence is that executing parties (e.g. a design company that accepted to develop a logo) use these platforms to hire freelancers to do the actual work for them. Often this is not clearly communicated to, or even hidden from the client. The reason for this is either that the client was not willing to pay the usual fee (for the service) and/or a lack of time/manpower from the executing party's part. Then again, there are also many executing parties who have made this the main component of their business model in order to rake in large cash flows for little work.


Cancelling contracts & refunds
Many online freelance platforms enable the one hiring (i.e. the client) to cancel contracts without a reason and demand a full refund for work that already has been completed or is currently in progress. Although in any civilised country a freelancer would be able to sue the client for a breach of contract this occurrence is just another risk of the trade (of having your own business) in the world of online freelancing. Besides, with the low fees involved in online freelancing it's usually not even worth taking it to court.

It should be noted that freelance platforms will generally not become involved in disputes over these kinds of topics. In stead they ask the client and freelancer to solve their differences "professionally".


Scams
Last but not least there are also freelancers who have made it their professions to exploit the system (on these freelance platforms) and scam naive clients out of their money.

A common hassle is for the scammer (i.e. freelancer) to sign a contract with the client and (act like) he is working on their project until the day of the deadline. Once the client asks for their product to be delivered to them the scammer withholds it and asks for more money in return (basically they keep the project "hostage"). Understandably most clients flat out refuse this request, cancel the contract immediately and ask for a full refund. The freelancer will then approach the client again (this time the scammer usually acts like he or she is scared for legal consequences) with the offer to give them the completed work if the client informs the platform that the work has been completed and the dispute has been resolved. That's when the trap closes on the client. From this moment they can no longer put pressure on the freelancer. The freelance platform considers the project done and has billed the client for the full amount of money. If the client does not pay the freelance platform will sue the client for the money. If the client pays they might still not receive the final product from the scammer.

There are many more ways clients can be scammed out of their money but once one of them falls for such a scam the platforms generally offer little to no support. Why would they? There are so many other disputes going on that require their attention, and even if the client decides to never use this platform again, there are dozens of new clients registering their account at this very moment...


Redemption
Now, is there also something good to be said about these online freelance platforms? Yes, for some freelancers and clients it's the right place to work from where all parties involved profit (especially the owners of the platform).

A specific example are freelance developers (professionals who do coding and/or programming) from Eastern Europe. They are highly skilled (and educated), offer their services for a somewhat lower fee than that those of their Western counterparts and deliver high quality results, often even surpassing the value proposition of their Western counter-parts. For these freelancers it's an excellent way to make large sums of money (even for Western standards), land a high paid job outside of their home country, expand their professional network and work on seriously cool projects.

Meanwhile the owners of these platforms greatly profit from these freelancers. Not only do they get a certain percentage of their fees, but once a client chooses to work with one of these freelancers on a full time basis (as in a job) they usually have to "buy" the freelancer from the platforms in order not break any no-compete clauses.


The Future
It's evident more and more professions are becoming integrated into online freelancing ("new online freelancing professions" include architects, lawyers, civil engineers). Meanwhile an increasing amount of online freelance platforms are fusing together, get sold out, or are simply run out of business by their online competitors. There are even some national governments that have taken notice on the (substantial) taxes they miss out on by having their nation's freelancers work for global platforms such as upwork.com that enable them to avoid declaring and/or paying taxes.

One thing is for sure. The rise and success of freelance platforms have changed professional freelancing for good. They enable some clients and freelancers to lift themselves from poverty and live the (American) dream, while simultaneously taking advantage of the desperation of many others. The real question that remains is whether these platforms will grow powerful enough to lobby their way into the international politics before they are shackled down by laws and regulations on a global and digital level. Only time will tell.