Thomas Kjeldahl Nilsson

The Friendliest Freelancer #5: "Isn't freelancing risky during recessions?" Maybe not!

Published 10 months ago • 2 min read

Hope you're having a good weekend! ☕

From the outside, working for yourself looks scary these days: we’re in a recession, and you hear stories of tech downsizing left and right. “You should try to hold on to a steady, salaried job instead.”

No, I don’t think so.

Let’s examine what happened in previous significant downturns and what that means for us as independent software developers.

I must confess that I got a bit spooked myself this year. I was a salaried programmer during the 2008 and 2001 crises, so I remember how dramatic those downturns felt. It was scary. (I have only been fired once: in a downsizing in 2002).

But I wasn’t self-employed back then. Big difference!

So: I strolled through some Reddit threads to see how freelancers and consultants have fared in previous downturns.

A few anecdotal examples:

I freelanced through the last one, occasionally taking on full time roles (when I used to think having a full time job was smart). The full time jobs kept crumbling but freelance was extremely stable and actually were the beginning days of my company today.
Started my own consultancy June 2008. Still going and busier than ever… What recession?
The most money I ever made was 2008-2009. Yeah, companies lay off everyone – but work still needs to happen. They don’t want the headcount, so they use TONS of freelancers. It was awesome.

What’s going on here?

First, the danger of being a contractor when the downturn comes: freelancers, contractors, and consultants are frequently the first out the door before the downsizing moves on to full-time employees. So yes, that is a risk if you’re in a client engagement when the storm hits.

But what happens after that?

Companies then usually mandate hiring freezes, and they become much less willing to take on full-time employees. But unless the economic slump entirely breaks the company, they still have work they need to do after the layoffs, so they eventually bring on temporary contractors instead of new hires.

That’s you and me.

Another thing that happens during recessions is that while some companies struggle and hunker down, others smell an opportunity for growth after the downturn ends. So they push the accelerator pedal, which means bringing on more people. Again, this is an opportunity for us.

“But won’t the market be flooded with newly laid-off developers who want to freelance?” Most people have yet to prepare ahead of time to go independent; they feel like it’s a scary step (as perhaps you did when you started reading this article). Most of them are looking for a new steady job instead.

Final point: as an independent developer, you are more aware that contracts end and clients come and go. That’s the name of the game, and we prepare for it by having a warm network, ways to generate leads, and (hopefully) enough runway in the bank to handle some speedbumps.

In contrast, salaried employees are more likely to be caught off guard when the layoffs hit.

Working for yourself when recessions hit looks like a net neutral-to-positive to me. Just make sure you try to grow your network and savings whenever possible.

Thomas Kjeldahl Nilsson

The Friendliest Freelancer

Software dev of 20+ years now helping other devs gain autonomy and become calm, independent contractors—new issue every other Sunday

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