A growing number of UK businesses are turning to freelancers to fill skills gaps and respond to changing workforce needs, according to new research provided to HRreview.
The State of Freelance Work Report from Remote, a remote employment specialist, found that 53 percent of UK companies have increased their use of freelancers over the past three years.
The findings show changes in employment practices, with nearly half (43%) of surveyed UK businesses citing difficulty in recruiting full time and part time staff as a key reason for engaging freelance support. Companies are also turning to freelancers to access specialist skills and reduce costs, particularly in the context of rising Employer National Insurance contributions and new employment legislation.
UK businesses are increasingly recognising the value freelance professionals bring to their teams. Around 74 percent of employers believe that working with freelancers improves internal capabilities by introducing new knowledge and specialised expertise. In particular, IT, engineering, creative roles, customer support and marketing are the top areas for freelance recruitment.
The report also noted a rise in older freelancers, with 42 percent of UK firms reporting more freelancers aged 55 and over. Employers said they valued older freelancers for their experience, dependability and ability to act as mentors within teams. A total of 43 percent of respondents expressed a preference for working with older freelance professionals.
Compliance and classification issues
Despite the operational benefits, the growth in freelance hiring is bringing fresh challenges for HR departments. Nearly half (49%) of UK businesses surveyed admitted they still use basic internal tools to manage contracts and billing for freelancers. Another 32 percent rely on spreadsheets and email, which is leading to delays and mistakes.
One significant issue is late payment. According to the report, 32 percent of freelancers are not paid on time due to inefficient internal processes. The use of manual systems also increases the risk of accounting errors and missed deadlines for tax reporting and compliance.
Another area of concern is correctly classifying freelance workers. Around 36 percent of UK companies reported having misclassified contractors, a mistake that could result in legal penalties or reputational damage. Managing international freelancers adds further complexity, particularly when companies hire in regions where they have no physical presence.
Use of freelancers ‘a global phenomenon’
Globally, 37 percent of businesses said they hire freelance workers based in other countries. This often involves coordination across multiple time zones and languages, yet only a quarter of employers reported communication issues. This suggests that global freelance workers are successfully integrating into company workflows despite geographical barriers.
Pedro Barros, SVP and General Manager Contractors at Remote, said that the use of freelance staff is now a global phenomenon.
“All the evidence points to numbers increasing in the coming years especially in IT and customer support,” he said. “However, many companies do not have the structure, process, or tools to manage their freelance staff effectively. They run the risk of falling foul of regulations which can lead to fines and reputational damage.”
Freelance demand reflects digital and operational needs
The growing demand for freelance staff is also driven by digitalisation and a shift in operational strategy. The most commonly hired freelance roles include IT and engineering, cited by 37 percent of companies. This is in line with an ongoing focus on automation, artificial intelligence and optimised digital customer experiences.
Freelancers are being engaged not only to address skills shortages but also to support strategic transformation projects, especially in tech-enabled sectors. Businesses are using freelancers to access highly specialised knowledge without the long-term financial commitment of permanent hires.
With freelance work set to play an increasingly central role in workforce planning, HR professionals are being urged to review their current management processes and systems. As legal and financial risks grow alongside rising demand, investment in contractor management infrastructure may become essential.