Freelancing and employer of record (EOR) platforms are becoming increasingly popular among HR heads, CTOs and business leaders in general who find themselves in a hurry to hire AI talent.
EOR firm Deel recently reported a Y-o-Y 60% increase in the volume of AI, Software Engineering and Data Science roles paid through its platform as of Q3 of 2023. There was also a 59% jump in the number of organizations hiring for such roles, according to Deel’s data.
The jump in hires by itself speaks of a very much expected increase in the demand for engineers and developers with AI skills, but the use of Deel’s platform to acquire those talents shows an urgency which has pushed headhunters to explore beyond traditional hiring channels, such as online job boards, internal job postings and their own social media.
These sorts of platforms tend to have a healthy mix of full-time positions and contractual, project-based work. Nevertheless, given how coveted (and scarce) AI engineers are at the moment, businesses are opting for a third option which falls right in the middle: hiring contractors for short-term projects which are, effectively, test runs for a potential full-time job.
“Even if they’re hiring them [AI engineers] as contractors, their goal is to eventually convert them to full-time hires,” commented Dylan Serota, Co-Founder and CSO of San Francisco-based Terminal, a global talent platform which provides service mainly to startups.
“What they [startups] want to do is have more flexibility because they are seed stage companies with limited funding, so they want to make sure that they make it to that next round of funding before hiring full time,” he added. “I think that for all companies, especially for AI talent, when they find it, they’ll hold on to it as long as they can because it is a very niche specialization right now.”
Serota stated that there has been an important increase in the demand for AI talent in Terminal. The company recently opened space in its platform to hire AI/ML engineers specifically. As of today, between 15% to 20% of all open positions in the platform are AI-related, and Terminal’s leadership expects the volume to grow even further in the coming six to twelve months.
“We’re definitely seeing a rise in the demand for AI talent,” Serota shared. “We actually launched the ability to hire AI engineers and ML engineers through our platform only a few months ago, and we’re already seeing a significant lift of new customers as well as existing customers who are opening new positions with us just over the last four or five months.”
HR platforms aren’t the only ones seeing an increase in user appetite for AI engineers. The same phenomenon is being reported in freelancer marketplaces. Upwork, Toptal, Tecla and similar services are receiving more attention from businesses coveting AI developers.
“Recently, our company outsourced a few AI projects to freelancers through Upwork,” said Farhan Siraj, Co-Founder and CEO of online training platform OSHA Outreach. “These projects varied in complexity, ranging from less intricate to more challenging.”
“Even if they’re hiring them [AI engineers] as contractors, their goal is to eventually convert them to full-time hires”—Dylan Serota, Co-Founder and CSO at Terminal
Siraj’s company needed engineers to design an LMS (learning management system) chatbot for trainees in its platform. He hired a bot developer through Upwork, which would eventually be offered a full-time contract “with above-market salaries”.
“My objective with using a platform like Upwork was to test the skills of these professionals first hand. I don’t believe hiring someone through a third-party firm provides me that opportunity,” Siraj explained.
“While I would never use Upwork to find a project manager, it is a great avenue to find developers, data scientists and engineers,” he added. “Upwork allows me to evaluate candidates based on their past projects, reviews and specific skill sets. I believe doing this is easier through freelance platforms than through traditional hiring methods.”
Deel’s report states the strongest demand for AI talents in its platform is coming from the US, with Canada, the UK and Germany following closely. Though Deel’s report does not specify where the largest volumes of engineers are being sourced from, it does mention that “US companies are increasingly hiring AI talent in Brazil, Canada and Argentina”.
The mention of Brazil and Argentina matches with comments received by NSAM on the growing interest in the Latin American tech workforce, a phenomenon that Deel has also made public and that the mainstream press seems to be catching up to.
Serota confirmed that Latin American IT talent overall has been receiving more attention at Terminal. When it comes to AI engineers specifically, though, he pointed out that businesses are sticking to an “agnostic” approach. That is, they’ll source them from wherever they can find them, even if issues such as time zone differences have to be sorted out as the work relationship develops.
The increased attention received by AI engineers in some Latin American countries has translated into what Deel described as a “modest but steady growth” within its platform in yearly salaries for AI developers in the region: from US$71,000 in Q3-2022 to US$74,000 in Q3-2023, according to its data.
AI salaries in North America fell from US$148,000 to US$143,000 during that same period. In the EMEA (Europe, Middle East and Africa) region, they moved from US$99,000 to US$101,000. The largest fall was reported in the Asia-Pacific region: from US$74,000 to US$69,000.
It must be noted, while AI recruitment remains “geo-agnostic”, Asia has been identified by businesses as one of the major global hubs of top-notch AI developers, with strong concentrations of talents in China, Japan, Taiwan and South Korea.
So Many Reasons
Sources consulted by NSAM gave a variety of reasons to explain the growing trend of hiring and test-running AI engineers through EOR and freelancing platforms.
There are the obvious reasons, like access to a wider pool of talent, contractual flexibility and the pressures of increasing demand. But there are also the cost optimization benefits of building “follow-the-sun style” development models, commented Nick Shah, President and Founder of IT staff augmentation agency Peterson Technology Partners.
“My objective with using a platform like Upwork was to test the skills of these professionals first hand. I don’t believe hiring someone through a third-party firm provides me that opportunity”—Farhan Siraj, Co-Founder and CEO at OSHA Outreach
There’s also a financial incentive, at least initially, but even that might grow into a more comfortable attitude towards freelancers and hiring platforms.
“At first, it was simply a financial decision as I couldn’t afford to hire full time employees,” said Farhan Siraj. “However, as my business grew, I realized that working with freelancers gives me the opportunity to acquire the services of young talented individuals who don’t want to work a traditional nine to five job. Of course, many of them are equally talented, if not more talented, than professionals I would find on the job market.”
It will be a while –if ever– before the market can speak of an abundance of AI developers. In the meantime, and while the hype around the technology dies down, the mad scramble for talent will continue.
The global marketplace is giving signs of true competitiveness, however, with wages slipping in geos where demand is strong but in which businesses have the option to launch offshore or nearshore headhunting expeditions. An alternative made much easier by talent platforms which attract a mass of global users who are hungry and increasingly aware of their worth.