How SMBs are using freelancers in 2026: Skills, strategy, and what the data shows

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How SMBs are using freelancers in 2026: Skills, strategy, and what the data shows

Freelancers offer small and medium-sized businesses (SMBs) of 10-99 employees speed, specialization, and flexibility without the overhead that large organizations bear. The way SMBs are thinking about and using freelance talent in 2026 has changed. Data from The Upwork Research Institute Q1 2026 Business Leader Landscape shows that SMB leaders are approaching freelance hiring with intention. Included were 750 U.S.-based business leaders spanning five industries: business and professional services, healthcare, manufacturing, retail and consumer goods, and software and technology. The 195 SMBs within that group are choosing freelancers for strategic reasons, prioritizing specific skills, and increasingly integrating independent talent into the core of their organizations’ operations.

This article from Upwork looks at what the data says about how SMBs are engaging freelancers right now. Learn why they’re hiring them, what roles and skills they’re prioritizing, common friction points, and the impact of shifting toward AI. If you lead a small or medium-sized business and you’re thinking about how to build a more agile and responsive team in 2026, this is the research that should be shaping your thinking.

Key takeaways

Freelancer hiring is outpacing full-time hiring. Seventy-one percent of SMBs plan to increase freelancer hiring in the next three months, compared to 66% planning to increase FTE hiring. This reflects a broader shift toward flexible, integrated workforce models.
Speed and specialization are driving the decision. SMBs engage freelancers primarily for speed in hiring and project completion (28%) and access to specialized skills (27%). These motivations are nearly equal and rank far ahead of any other reason.
AI specialists are the most in-demand freelance role. Sixty-two percent of SMBs plan to hire AI specialists as freelancers in the next three months, reflecting a clear strategic bet that the value of AI investment depends on having the right human expertise to implement it.
Human skills are important, but AI skills command the premium. As AI becomes more embedded in the workplace, creative problem-solving and adaptability top the list of skills becoming most important. Yet AI tool development and digital fluency are what SMBs say they'll pay the most for, a tension worth understanding.

Freelancer hiring is on the rise and outpacing full-time hiring

The direction of freelance hiring among SMBs is clear, and the momentum is growing. Intentions to hire freelancers are now consistently running ahead of intentions to hire full-time employees; Q1 2026 data shows that trend holding firm.

71% of SMB leaders plan to increase freelancer hiring in the next three months.
That outpaces the 66% planning to increase full-time hiring.
Freelancer hiring intentions have now consistently exceeded FTE intentions since late 2025.

That five-point gap isn't a rounding error but reflects a deliberate strategic shift that The Upwork Research Institute has been tracking since late 2025. Freelancer hiring intentions now consistently exceed FTE hiring intentions for all company sizes. Across the 750 survey respondents, 70% plan to increase freelancer hiring.

For SMB leaders, the practical implication is clear. Freelance talent is no longer a supplemental workforce option; it has become a primary hiring channel. Businesses that have built efficient, reliable systems for finding, onboarding, and working with freelancers are best positioned to move quickly when needed.

Why SMBs hire freelancers: Speed first, specialization second

When SMB leaders are asked why they turn to freelancers, two motivations dominate by a wide margin. The order in which they rank them tells you something important about how smaller businesses operate differently from larger ones.

Across all 750 survey respondents, the primary reason for engaging freelancers is access to specialized skills, cited by 25%. This is followed by speed to hire and complete projects at 22%, and addressing temporary workforce gaps at 20%. For SMBs with 10 to 99 employees, the order shifts:

Speed to hire and complete projects. Cited by 28% as the primary reason
Access to specialized skills. Cited by 27%
Addressing temporary workforce gaps. Cited by 17%

Larger organizations have more infrastructure in place for talent acquisition, so when they turn to freelancers, the primary draw is often capability. It’s more likely to be about finding someone with a specific skill set they don't have in-house. SMBs feel the urgency of time more acutely because when a project needs to move, waiting weeks for a full-time hire simply isn't an option. Freelancers offer a faster path from need to execution. That speed is the primary value for businesses that operate with leaner teams and tighter timelines.

The motivation for access to skills is nearly as strong, and the two are often intertwined. The ability to bring in a specialist quickly, for exactly the scope of work that requires them, is the core proposition of freelance talent at its best.

The experience SMBs are having with freelancers

Hiring intentions tell only part of what’s happening. What matters equally is whether working with freelancers is actually delivering. On this subject, the data is broadly positive.

Among SMBs with 10 to 99 employees, 84% report having positive or very positive experiences working with freelancers. That's a strong signal that the value of flexible talent is landing in practice, not just in theory. For context, the figure across all 750 survey respondents is 88%. This suggests that as SMBs invest more in the systems and processes around freelance work, the experience gap between smaller and larger organizations will close.

Larger organizations often have dedicated procurement, vendor management, or HR infrastructure that smooths the process of engaging and working with independent contractors. SMBs typically don't, so the hiring manager is often also the onboarding manager, the project manager, and the point of contact for feedback. When friction arises, it lands directly on the people with the least bandwidth to absorb it.

Understanding where that friction comes from and addressing it proactively is one of the most practical things SMB leaders can do. It may improve their freelance experience and provide more of the value flexible talent can provide.

Where the challenges are: What SMBs struggle with most

The challenges SMBs report with freelance work can be grouped into specific areas. They cluster around a consistent set of relationship and process issues that reflect the realities of managing independent talent without a large support infrastructure.

When asked about the challenges they've faced working with freelancers, SMB leaders with 10 to 99 employees cited:

Managing communication and collaboration: 47%
Maintaining quality and consistency of work: 46%
Finding qualified talent: 42%
Ensuring freelancers meet deadlines: 41%

For the broader survey population, quality and consistency top the list at 45%, with communication and collaboration close behind at 43%. For SMBs specifically, that order reverses, and the relationship management challenge comes first. This makes sense in the context of leaner teams. When there's no dedicated project manager or vendor coordinator, keeping communication clear, expectations aligned, and work on track falls to whoever owns the project.

Most of these challenges are solvable with the right tools and processes in place. Platforms that offer integrated messaging, video meetings, and milestone tracking remove some of the coordination overhead that makes freelance management challenging for smaller teams. Establishing clear project briefs, defined check-in cadences, and structured feedback loops addresses quality and consistency challenges directly. Platforms that surface verified work history, skills assessments, and client reviews address talent discovery before the engagement begins.

The challenges SMB leaders cite aren’t inherent to freelance work itself. They're symptoms of managing freelance talent without the right infrastructure. That infrastructure doesn't require a large team; it requires the right platform and a consistent process.

Who SMBs are hiring: The roles in demand

The freelance roles SMBs are prioritizing in Q1 2026 are a direct reflection of their broader strategic investments. Technical and AI-oriented profiles dominate the list, with the numbers making clear that smaller businesses are moving with urgency.

Among companies with 10 to 99 employees, the top freelance roles for the next three months are:

AI specialists: 62%
Software developers: 44%
Data analysts: 41%
Digital marketers: 34%

AI specialists topping this list is a significant signal that aligns directly with the funding data from the broader Q1 2026 survey. The survey showed 78% of SMBs plan to increase AI technology spending, and 78% plan to increase investment for AI adoption initiatives. The intent to invest in AI tools is one thing; having the human expertise to implement, manage, and optimize those tools is another. SMBs are recognizing that and hiring accordingly.

The prominence of software developers and data analysts reinforces the same theme. These are the roles that build and maintain the technical infrastructure that makes AI and automation actually work inside a business. For SMBs, freelance access to this level of technical capability is often the most direct path to building technical depth.

Across the entire survey population of business leaders, the role rankings are consistent, with AI specialists again leading at 58%, followed by data analysts at 45% and software developers at 43%. The need for AI specialists at SMBs with 10-99 employees (62%) exceeds the demand seen among larger organizations (58%). This highlights that smaller businesses are full participants in the AI transition.

Skills SMBs are prioritizing: AI leads, but human skills remain in demand

SMB leaders are looking for more than technical execution from their freelance hires. The Q1 2026 data shows a skills priority list that's quite balanced, with human judgment and strategic thinking holding their own alongside AI and coding capability.

Among companies with 10 to 99 employees, the top skills priorities for freelance hiring are:

AI proficiency and understanding: 53%
Strategic and creative thinking: 43%
Data-driven decision-making: 43%
Technical and coding expertise: 40%

What stands out here is the near parity between technical skills and human judgment skills. For the broader survey population, technical and coding expertise ranks second at 43%, ahead of strategic and creative thinking at 42%. For SMBs with 10-99 employees, that order flips where strategic thinking and data-driven decision-making tie at 43%, both ahead of technical coding expertise at 40%.

This isn't a rejection of technical skill, because AI proficiency still leads the list by a wide margin. SMB leaders tend to work more directly alongside their freelancers than leaders at larger organizations. This places more importance on independent professionals who can think critically, communicate clearly, and contribute to strategy rather than just execute tasks.

The skills becoming most important as AI embeds itself

As AI becomes more deeply embedded in how SMBs operate, the skills conversation is shifting. The capabilities that leaders say are growing most in importance aren't purely technical, and the Q1 2026 data makes that shift concrete.

Among SMBs with 10-99 employees, the skills growing most in importance are:

Creative problem-solving: 46%
Digital fluency and AI literacy: 46%
Adaptability and learning agility: 45%
AI tool development: 40%

Creative problem-solving and adaptability top this list for SMBs, ahead of AI tool development specifically. As AI takes on more routine, process-driven tasks, the skills that become scarcer and more valuable are the ones AI can't replicate. These include the ability to frame a problem, generate an original solution, navigate ambiguity, and learn fast in the face of change.

For the broader survey population, digital fluency and AI literacy lead at 40%, followed by adaptability and learning agility at 39%, creative problem-solving at 38%, and AI tool development at 37%. The SMB cohort's stronger lean toward human skills is consistent with the pattern visible throughout the skills prioritization data.

SMB leaders who evaluate freelancers primarily on technical certifications and tool proficiency are likely leaving value on the table. The Q1 2026 data is clear that the skills becoming most critical are a blend of technical capability and human judgment, and the freelancers who bring both are increasingly what the market is looking for.

What SMBs will actually pay a premium for

A meaningful difference exists between the skills leaders say are growing in importance and the ones they're willing to pay more for. The gap between those two lists is worth paying attention to.

When asked whether they'd strongly agree to pay a premium for specific skills, SMB leaders in the survey ranked them as follows:

AI tool development: 42%
Digital fluency and AI literacy: 37%
Adaptability and learning agility: 37%
Creative problem-solving: 36%

SMBs say that creative problem-solving and adaptability are among the skills becoming most important as they embed AI. When it comes to what they'll actually pay more for, however, AI tool development and digital fluency edge ahead. The gap isn't large, and SMBs show a higher willingness to pay a premium for creative problem-solving (36%) than the broader survey population (30%). But AI and technical skills still command the clearest monetary premium across the board.

Freelancers who demonstrate strong AI capability and genuinely differentiated human judgment are consistently the most sought after and the most highly compensated in the market.

The ideal skills mix: What SMBs think each role actually needs

How SMB leaders describe the ideal balance of human and technical skills, like learning agility and creative problem-solving across different roles, reveals something important about how they're really thinking about talent in an AI-shaped world. The numbers push back against the assumption that technical skills are simply taking over.

Among SMBs, data shows the ideal skills composition for each role type is:

Senior leaders: 60% human skills, 40% technical
Managers: 56% human, 44% technical
Full-time employees: 48% human, 52% technical
Freelancers: 46% human, 54% technical

Even for freelancers, the role most commonly associated with technical task execution, SMB leaders say the ideal composition is nearly half human skills. Communication, judgment, collaboration, and problem-solving aren't optional extras. They're close to half the job, even for project-based independent professionals.

The expectation that senior leaders should be predominantly human-skills-oriented at 60% reflects a clear-eyed view of where judgment and vision actually come from in an organization. AI can inform decisions; it can't own them.

What this means for SMBs building a freelance strategy

The data that emerges from the Q1 2026 data is of an SMB market that's genuinely rethinking how it sources, evaluates, and engages freelance talent. A few themes run consistently through all of it:

Freelance hiring is a primary channel, not a backup plan. With 71% of SMBs planning to increase freelancer hiring, and that number outpacing FTE intent, building a real system for freelance talent rather than treating it as ad hoc is a baseline competitive requirement.
Technical skills matter, but so does everything else. AI proficiency leads every skill priority list, but strategic thinking, data-driven judgment, creative problem-solving, and adaptability aren't far behind.
Relationship quality is a competitive differentiator. The top challenges SMBs face with freelancers —communication, quality consistency, and finding the right talent — are all addressable with better tools and clearer processes. Businesses that invest in the infrastructure for managing freelance relationships well get more from every engagement.
Pay reflects what you value. SMBs say human skills are critically important as AI embeds itself, but they still pay a premium most readily for AI and technical capability. Rewarding the combination of technical skill and human judgment may help attract the most valuable independent professionals in the market.

The Q1 2026 data makes it clear that for SMBs, freelance talent has moved from a convenient option to a core strategic asset. Building real systems around freelance hiring may help businesses see momentum. This includes investing in the relationship infrastructure that makes independent talent perform at its best and combining technical capability with the human skills that AI can't replicate.

That combination is what's separating the SMBs building competitive advantages from the ones still figuring out their next move.

Methodology: Data cited in this article is sourced from The Upwork Research Institute Q1 2026 Business Leader Landscape survey. The survey included 750 U.S.-based business leaders at the director level and above, spanning business and professional services, healthcare and medical, manufacturing, retail and consumer goods, and software and technology. The survey was conducted in Q1 2026 and updated on March 27, 2026. Unless otherwise noted, SMB figures reference organizations with 10 to 99 employees (n=195). Broader comparisons reference the full sample (n=750) where noted.

This story was produced by Upwork and reviewed and distributed by Stacker.