This is a guest post by Richard Armstrong who is an early stage investor in many startups in both SE Asia and globally. Plus Richard has cofounded several companies.
Guest Author: Richard Armstrong
There is this perception that AI is replacing freelancers and so I wanted to dig into this a bit to see if this is really the case.
After all using AI is starting to become the norm and I read that ChatGPT usage rates are already above 200 million.
In recent years freelance has also been exploding with an estimated $1.2 trillion market size. Driven by the fact that more and more people are getting disillusioned with working traditional careers.
So I recently read a couple of interesting perspectives on it like this piece by Forbes.
Plus I talked to my friend, Ken, who works with lots of freelancers. And here is what i’ve learned.
AI is already potentially able to replace humans at certain tasks
For example you have things like translation, data entry, some types of design, and creating content. All of these things AI does a pretty good job at.
And many people are already using AI for their job on a regular basis.
But what typically happens is not that AI ‘replaces’ the person, rather AI ‘enhances’ the person doing the task.
Meaning that the person that was doing the task still does it but AI assists them in perhaps 30-40% of what they were doing. There is still typically another 60-70% that AI cannot replace.
For example, AI is still not good at joining a meeting with your boss, getting the instructions, opening up the social accounts and finally posting.
A human is still needed for a lot of that.
Reality seems to be more that freelancers are using AI to increase the value of their offerings
So far it seems more that AI is enhancing what freelancers do to make their value proposition stronger.
Ken gave a good example of this. He hired a lady from Pakistan recently to write some blog content for a client.
In the past he explained that there was no way he would have hired her for this job because her English was not as great as some other writers.
However give her access to ChatGPT and all of a sudden her written content passes the bar making her a suitable and cheaper option.
Ken explained that this is happening in lots of areas related to content. Basically freelancers are able to offer the service ‘only because of AI’, and would not be able to offer the service at all otherwise.
And freelancers are taking share from employees
This is another thing that Ken explained. In his view the major chunk of jobs that are being taken right now are not the freelancers, but rather employees’ jobs.
In countries like the US where labor is expensive, offshoring companies are tripping over themselves snapping up clients. Basically providing things like virtual assistants, customer service reps, sales agents, marketing assistants, etc.
Essentially operational roles that can be outsourced to places like Pakistan and Philippines where the labor cost is often 4x cheaper or more. For example an assistant in the US might cost you $50k per year whereas one in Philippines through an agency might cost you just $12k.
And these offshoring companies are tooling their staff up with AI tools to make the value proposition even stronger.
Not only are they aiming to replace the more expensive American worker, but they are gonna replace the person with someone who has been trained to do the job more efficiently via AI.
Where will things go from here
I think we are going to continue to see freelancers more benefit on the whole from AI. They will do what they do faster and cheaper, which makes choosing them more attractive to clients.
At the same time we will see labor arbitrage in the form of employees in expensive countries like the US continue to lose their jobs to offshore folks. AI will probably even speed this trend up further because of the training that the offshore folks are getting on AI.
And so I see the proportion of freelancers to employees continuing to spike up as more and more operational jobs get lost to freelancers.
Then these people who lost their jobs to freelancers will likely take the “If you can’t beat em’, then join em” mindset and become freelancers themselves.
Most likely retooling themselves with AI in the process.
And pretty soon AI-wielding freelancers will be more commonplace than people that get normal jobs.
Don’t think it’ll happen? I think you’re gonna be surprised 😉
