The way you collaborate is changing, and it’s going to look very different in the office of the future

It’s been a tough year for teams. Many saw colleagues disappear overnight when scores of companies laid off thousands of workers, in part because of pandemic-related over-hiring. What if businesses could reduce the need for perennial purges while boosting results and flexibility? Numerous companies are testing the approach of temporary teams.

Microsoft, Walmart, Airbnb, Nasdaq, AstraZeneca, Saks Fifth Avenue, and McGraw Hill are among those hiring so-called fractional talent to achieve business goals. According to McKinsey’s 2022 American Opportunity Survey released last August, 36% of employed respondents, or about 58 million Americans, identified as independent workers, up from 27% in 2016. By 2027, that number is projected to grow to 86.5 million people in the U.S. alone—roughly half of the total U.S. workforce. Many of these are older workers, some of whom do contract work for their former employers as a means of maintaining financial health into retirement, according to the National Bureau of Economic Research.

Alongside this trend, a host of companies are seeking to fill these workers’ needs. Among them, Upwork and A.Team are taking advantage of a talent pool whose members are increasingly seeking the independence and flexibility that traditional models of corporate employment don’t offer.

Upwork, which launched in 1999 as Elance, gained prominence as an early online marketplace for freelancers. It has increased and enhanced its enterprise services for larger companies in recent years, such as working closely with Microsoft to provide tools and services to freelancers, and recently announced a partnership with OpenAI to provide pre-vetted AI experts to businesses.

A.Team launched in 2020 with a specific mission of assembling high-quality teams with a focus on engineering and AI to tackle major projects for clients. Today there are some 9,000 A.Teamers, and the company attracted high-profile investors such as Adam Grant, the organizational psychologist at the Wharton School of the University of Pennsylvania and best-selling author, as well as rapper and entrepreneur Jay-Z.

We’re at the threshold of the next iteration of the gig economy. Post-COVID-19 return-to-office mandates and layoffs, as well as generational differences in how and when people want to work, are eroding trust among employees and leaders. Given recent layoffs, knowledge workers are increasingly reluctant to commit to any one company. Meanwhile, generative AI is threatening business models and forcing companies to transform quickly. It’s all making fractional talent an attractive alternative to the time and cost of recruiting full-time employees.

“This is the trifecta of change that will define our generation and the one that’s coming,” says Raphael Ouzan, founder and CEO of A.Team. “Companies now face an existential problem. There is no more appetite and ability to invest too far ahead of revenue,” Ouzan observes. “People know their hiring models are broken, and they aren’t going to change them overnight.”

Broadly speaking, teams are a group of people working together to achieve a common goal. “In the business world, they often define a team as a group of people who report to the same boss,” says David Burkus, an organizational psychologist and best-selling author of five books including Best Team Ever: The Surprising Science of High-Performing Teams. “It’s an outdated model,” Burkus notes. “The best teams are temporary, a mix of old and new connections.”

There are certainly strong arguments for temporary teams. Companies can tap talent more readily without the cost of conducting a search, providing benefits such as healthcare and 401(k), or training and developing a person over the span of a career.

They can move more quickly to adopt new technologies without needing to overcome cultural or institutional barriers and can shift fractional resources to other work once a project is complete.

Patty McCord, who advises companies on their talent approach and authored Powerful: Building a Culture of Freedom and Responsibility, refined her own focus on transitional talent while chief talent officer at Netflix from 1998 to 2012. She says the question managers need to ask themselves is, “If you look six months out and your team is amazing, what is occurring that isn’t occurring now? If it’s a six-month, start-to-finish project, that’s a contractor or consultant.” McCord regularly advises CEOs and her clients to tap the growing talent of people who have deep expertise but want the flexibility that comes from being independent.

According to Upwork’s 2022 Future Workforce Report surveying 1,000 U.S. hiring managers, 85% said working with independent professionals let them access talent with specialized skills or expertise, and 79% said that doing so made their companies more innovative.

Is this a moment or a movement? “The moment we are experiencing now will create a movement amongst leaders and hiring managers that will have a long-lasting impact,” says Tim Sanders, vice president of client strategy at Upwork, where he focuses on helping companies access fractional talent.

While companies have laid off workers and frozen hiring, they haven’t reduced expectations for results, leaving leaders to seek alternative talent pools. “What we’ve seen this year is leaders, maybe younger leaders, immediately understanding where to go, and it’s places like Upwork,” Sanders says.

In fact, according to a 2023 generational analysis by Upwork, 61% of Gen Zers recognize freelancers as part of a full talent strategy, compared with 47% of millennials, 35% of Gen Xers, and 37% of boomers. While younger managers may be embracing the trend more fully, such statistics suggest support across all generations currently in the workforce.

Companies have long hired contractors, consultants, or so-called temps to fill a variety of needs, whether short or longer term. What’s different today are the enterprise-wide platforms that vet and aggregate talent for highly skilled roles, provide back-office support such as compliance and payment, and generally streamline the process for businesses. “The shift is going from a commoditized workforce of hourly workers to a specialized workforce,” A.Team’s Ouzan says. “These platforms have solved the uncertainty and unlocked more confidence.”

According to A.Team’s 2022 Tech Work Report that surveyed 581 tech founders and executives in the U.S., 73% of companies have integrated teams of freelancers and full-time employees, and 71% said the addition of independent workers gives their business greater agility during times of economic uncertainty.

That said, some leaders have a harder time managing and integrating external resources outside of traditional command-and-control organizational structures. But the pressure to meet goals faster amid a challenging hiring environment is opening minds.

That’s especially true when a business doesn’t have the skills in-house to quickly and successfully launch a new product. That was the case when A.Team began working with McGraw Hill, the 130-year-old textbook publisher. Reflecting the changing needs in how students want to learn, McGraw Hill wanted to create its first direct-to-student app.

At the Collision 2023 conference, Justin Singh, McGraw Hill’s chief transformation and strategy officer, noted the challenges of taking the traditional corporate approaches of setting up an in-house team or outsourcing the work completely. With the in-house team, he said, “We realized there is a big cost in terms of time and distraction, and a lot of the apps were very similar to what we had.” Meanwhile, third parties working alone “weren’t leveraging what made us great,” he added.

By combining in-house education experts with A.Team, the cohort grew from 3 to 27 builders including software architects, product managers, mobile developers, and growth marketers. They were able to test a prototype with students in three months and launch the new app four months later in October 2022. At the June conference, Singh noted that the mobile study app named Sharpen has hundreds of thousands of users and more than a million activities completed.

Employing more independent contractors and having fewer people working for bigger companies would be a seismic shift for society. Living outside of major cities with more free time and flexible hours would profoundly impact individuals, businesses, and governments alike. While much has been made of the negative impact hybrid work has had on big cities like New York and Washington, D.C., less discussed are the positives in suburbs and smaller towns.

According to a June survey released by IWG and Arup, which manages Regus and other flexible workspaces globally, the economic impact of this migration could amount to an extra $1.3 billion of consumer spending annually in the U.S. and 327 million pounds per year in the U.K.

Federal and state regulations also would need to adapt. Today a majority of Americans are employed by companies with more than 100 people, receiving healthcare and other benefits from employers. Small-business regulations and reporting requirements can be quite onerous for individual contractors and small businesses, depending on where they’re located. For example, here in Connecticut where I live, there are multiple quarterly and annual reports that require timely filing to avoid penalties.

There’s also continuing debate and confusion about the legal definition of an employee. For example, the IRS website says, “Anyone who performs services for you is your employee if you can control what will be done and how it will be done.” Immigration laws also may need to be reviewed so that people who aren’t full-time employees can enter or stay in the country with a work visa.

“We accepted work as a place instead of work as an outcome,” Sanders of Upwork observes. “Years and years from now,” he predicts, “we won’t worry about corporate structure, and we’ll think about these mega trends that shattered the way we see the world.”

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Anne Marie Squeo, the founder and CEO of Proof Point Communications,?a boutique marketing and communications firm,?is a Pulitzer Prize-winning business journalist.