The global freelance market has exploded over the past few years. According to Absolute Reports, the freelance marketplace had a market size of USD 3.39 billion in 2020. That number is expected to reach USD 9.19 billion by 2027.
Partnering with freelancers gives businesses two major advantages: location flexibility and resource flexibility. Companies can tap into top talent anywhere in the world, without being limited by geography.
However, companies hiring freelancers across borders still need to be mindful of local labor laws and the potential for worker misclassification.
Key takeaways:
- The global freelance market gives companies greater access to specialized talent and flexible hiring options.
- Technology such as global payroll and collaboration tools simplifies the process of cross-border hiring.
- Converting long-term freelancers to employees might be necessary to maintain compliance with local labor laws.
Why the Rise of Remote Work Accelerated Cross-Border Hiring
The COVID-19 pandemic marked a turning point for remote work acceptance. In March 2020, millions of employees shifted to working from home, and companies that had never considered remote hiring discovered that distributed teams could be just as productive as those sharing an office.
Once the remote work genie was out of the bottle, many companies transitioned to remote-first or hybrid work arrangements. That included hiring employees and freelancers in different countries to access a much larger talent pool. As a result, hiring talent from anywhere has become the new normal for many companies.
How Companies Can Build a Global Freelance Strategy
There are many advantages to hiring freelancers. For instance, they can provide specialized support or short-term assistance, allowing businesses the flexibility to add help as needed without committing to full-time roles.
However, the rise of global freelancing isn’t just about filling short-term needs — it’s an opportunity to build a scalable, flexible talent model. Companies that succeed with international freelancers usually start by defining how freelancers fit into their workforce strategy, and in what roles.
Before hanging out a digital help-wanted sign, businesses should:
- Start with skill mapping: Identify which roles or projects truly require full-time employees and which can be handled by freelancers. Specialized or project-based work, such as software development, design, or content creation, often fits best in a freelance model.
- Set clear expectations: Outline deliverables, timelines, and communication channels up front. This not only helps avoid misunderstandings but also creates a better experience for freelancers, who often juggle multiple clients.
- Standardize contracts and onboarding: Use consistent templates that align with local labor laws, payment terms, and intellectual property protections. A streamlined onboarding process helps freelancers start contributing faster.
- Use technology to stay organized: Platforms that integrate contracts, payments, and compliance tracking make it easier to scale a distributed freelance workforce without administrative chaos.
The Expanding Global Freelance Workforce
Many workers are embracing the freelance lifestyle. They value the flexibility to set their own schedules and work from anywhere, with many opting for the digital nomad lifestyle.
Freelancing offers independent contractors greater control over their careers, a better work-life balance, and often a higher earning potential, especially when partnering with clients in countries with stronger currencies.
While demand for freelancers has risen across the board, a few industries in particular are driving the surge:
- Technology and software development
- Design and creative services
- Marketing and content creation
- Customer support and virtual assistance
- Workers in the gig economy, such as drivers or delivery services
With the ability to filter by skill set, project, location, pay, etc., freelance platforms like Upwork, Fiverr, Toptal, and others are making it much easier for companies and freelance professionals to connect.
These online marketplaces simplify the process of finding clients, while at the same time modern payment platforms are streamlining cross-border payments and currency exchange management.
The Future of the Freelance Economy
The freelance market is continuing to evolve. As remote work becomes more standard, the line between traditional employment and freelance work continues to blur.
AI and automation are creating new opportunities for specialized freelance work in fields like machine learning, data analytics, and content generation. Meanwhile, more companies are building blended teams that combine full-time employees with contractors to stay agile and cost-efficient.
Governments are also adapting. Many countries are introducing clearer laws and tax frameworks for classifying workers, particularly those in freelance and platform-based work. This will likely make cross-border freelancing more regulated but also more stable and transparent for both sides.
The Hidden Risk: Worker Misclassification
Hiring a freelancer offers companies more flexibility than hiring an international employee. However, it does come with risks. The biggest one: the potential for misclassification.
Misclassification occurs when a company designates a worker as an independent contractor, but local labor laws view that person as an employee.
Employment laws vary by country, but they generally follow the same principles in defining the distinction between an employee and an independent contractor. For example, a worker is usually considered an employee if the employer:
- Controls the worker’s hours
- Dictates which tools they use
- Requires the person to work exclusively for their company
In contrast, independent contractors usually have control over their work environment (including location) and the tools they use. They also have the freedom to work for multiple companies simultaneously.
If a country’s labor department finds that a company has misclassified a worker, there can be serious consequences. The company may have to pay fines or other penalties, and be liable for back taxes or social security contributions. Misclassified workers can also sue for unpaid benefits, and the publicity can lead to reputational damage.
For companies hiring remote workers from multiple countries, the risk is even higher due to the need to comply with the labor laws of different countries. Because what qualifies as freelance work in one country might be considered employment in another.
How an EOR Helps Mitigate Compliance Risks
An Employer of Record (EOR) acts as the legal employer of a company’s international staff and ensures that businesses are in full compliance with local labor laws, including worker classification, regardless of where folks are based.
For example, if a business is hiring a freelancer in Germany and a small team of employees in Brazil, companies can utilize an EOR to hire, pay, and manage both types of workers — providing consistency and compliance across countries.
EORs’ in-country experts also stay up to date on changing laws and tax requirements, so businesses can feel confident they’ll be compliant with local laws wherever they hire.
Essentially, EORs enable businesses to hire the best talent globally without getting bogged down in complex legal requirements.
When to Consider Converting a Freelancer to an Employee
There are a few instances when a company might need to change a freelancer’s status. For example, you might find a freelancer who gels well with your team and want to hire them as a permanent employee, working for your company long-term.
Or, if a freelancer starts to consistently work full-time hours, use company-provided tools, or take on long-term projects, you may be legally required to convert them to employee status to remain compliant with employment laws.
An EOR can make this transition seamless. It will draft the new employment contract, including any required probationary period and termination clauses, to ensure compliance with local laws. EORs also manage employee benefits, payroll, tax withholdings, and other HR-related tasks.
Compliantly Hire & Pay Freelancers With RemoFirst
Managing global freelancers shouldn’t be complicated. You should be able to employ global talent without worrying about cross-border payments or compliance risks. An EOR like RemoFirst makes it effortless.
RemoFirst enables companies to manage and pay contractors in 150+ countries. Our platform ensures that every worker is properly classified, hired under a compliant contract, and paid in their local currency. We can also assist you in converting contractors to employees, as well as hiring employees in over 185 countries.
Global hiring should be a strategic advantage for your company, not a compliance burden. Schedule a demo to learn how RemoFirst can help you hire and pay a global workforce of freelancers, employees, or both, around the world.
