Freelancers key to SME growth

More than half (52%) of small and medium-sized enterprises (SMEs) believe that freelancers are key to their stability and growth.

This is according to a survey of 2,500 SMEs, published by freelance website, which found that 93% of respondents considered freelance workers as a real alternative to employing permanent staff and 52% said that freelancers would make a significant contribution to their workforce over the next five years.

Andy Turner, founder of, said that using freelancers can allow firms to grow in a more cost-effective way.

“SMEs are changing the way they operate,” Turner explained. “Together with improved access to finance initiatives to do business with the public sector, we are seeing SMEs opt in favour of a more flexible way to do business; one that is cost-effective, scalable and flexible.”

The report also indicates optimism among SMEs for the year ahead, with 95% saying that they were ambitious to expand in 2011 and one-fifth predicting growth.

As a result of this optimism, a quarter of SMEs said that they plan to expand their workforce this year and just under two-fifths (38%) of these intend to use freelance workers.

In November 2010, the FPB warned that the “double blow” of the abolition of the default retirement age and the introduction of auto-enrolment into pension schemes could result in a drop in the number of permanent jobs being provided by small businesses and an increase in the use of temporary staff and self-employed labour.

FPB spokesman Chris Gorman argued that this may be behind the survey findings: “While the use of freelancers by SMEs is by no means an inherently bad thing, these figures appear to show that the relentless march of employment law is indeed acting as a deterrent to small business owners who would previously have employed people on full, permanent contracts.

“We’ve been warning of this for some time – it’s inevitable that the more risky, confusing and costly you make it to employ someone directly, the more businesses will look towards outside contractors. This is particularly the case with SMEs, which usually lack the HR resources and expertise to deal with employment laws confidently and efficiently.”

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