Article: Gig economy- Challenges and opportunities

#Gig Economy

Gig economy- Challenges and opportunities

Companies will need to revisit their plans, be judicious in using the better skilled freelancers to do regular roles while keeping critical profiles in-house
Gig economy- Challenges and opportunities

I employed a driver to take care of all my crazy navigation through the jam-packed roads in Bangalore. The driver, a really dedicated professional, took care of all the driving tasks for my family. However, the agreement also bought a regular employee cost in my home P&L, something that started to pinch me, especially when the utilization was low due to vacations and outstation travels. I figured calling a cab aggregator taxi was a more efficient model for my needs — frequency, scale, comfort and cost.

That’s gig economy in a nutshell for you. According to one definition, it is ‘a labor market characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.’ In the gig economy, instead of a regular wage, workers get paid for the "gigs" they do, such as a food delivery or a car journey. A few years ago, nobody could have thought that doing a small gig in exchange for an hourly payment could become someone’s full-time job. 

A recent study by the McKinsey Global Institute “Independent work: Choice, necessity, and the gig economy”, reveals that “up to 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population engage in some form of independent work.”

Although this trend is fast catching up, there are many who vehemently oppose the scope and vision. This attitude depends on the perspective from which the matter is looked at. Those preferring to be self-employed cannot be blamed, considering the economic and political uncertainties in the world today. But, Millennials currently shape the largest proportion of the US work population (elsewhere too) and they are orientated towards satisfaction of their needs and personal interests. Gig options provide the much-wanted flexibility and sense of independence from the corporate walls.

This talent shift has happened because of the nature of millennials, fueled by new companies and services which disrupted the market. Uber, Airbnb, and Swiggy are just a few examples of companies with growing demand, which wouldn't exist without the gig economy. By growing in size and revenue, disruptive startups acquire influence in the job market, shaping particular trends and introducing new rules. 

Gig Economy & the corporate world

Let’s look at our corporate world where ‘war for talent’ is nothing new and with intense competition, most organizations tend to focus on bottom lines to increase profits. This is the sweet spot for all those freelance professionals, who sacrifice the comfort and security (or maybe not) of the corporate world, to do the work they love, and be their own master. Companies are latching onto this tribe as it helps them get an immediate workforce, reduce cost and innovate faster. It also helps them avoid the hassles of culture-clash, promotions, workforce management, infrastructure etc. allowing more focus on the work, rather than on the people.

Learning and Development, as a function of HR, has always employed freelancers and now most companies prefer to have only a couple of regulars in L&D and get the rest of the work done through external experts. This model allows companies to tap the most recent and relevant knowledge and expertise, at one-tenth of the cost. If you are hiring another graphic designer or a content developer, you may want to rethink. Technical experts like coders and testers are hired on contracts all the time, allowing companies to keep their headcounts in control, and thus have a better grip on the scale in either direction based on demand. However, we need to take each case on its merit – one size fits all solution never really fits anyone. The question is, which are the roles in your organization that can be done by a freelancer?

Challenges with the Gig Economy

Advantages aside, gig economy workforce is not without its downside. According to TIME magazine sponsored survey, freelance workers and contractors will earn 28 percent less than their regular counterparts, however, that’s only because they work fewer hours. According to the survey, more than 80 percent of companies that use independent contractors say that they do so because they can quickly adjust the size of their workforce, save money on benefits, and tailor the worker to a specific task. 

Inspired by the examples of successful entrepreneurs, many people no longer want to climb the career ladder but are drawn to the idea of creating their own future. Time, in this case, prevails over money.

In theory, and according to proponents of ‘flexible working’, these workers enjoy the freedom to work whenever they choose. And this may suit some, for example, students, older workers or parents looking after kids who could use a bit extra to supplement other sources of income.

But the reality for most ‘self-employed contractors’ is that working in the gig economy means lower pay, lack of security, and no employment rights worth speaking of.

The biggest issue here would be that the 'self-employed' gig work does not come with pensions, sick pay, holiday entitlement or parental leave. You have to be a ‘worker’ or an ‘employee’ to get these basic rights.

In my view, this is really not a deal-breaker because a self-employed professional, from doctors to shopkeepers, never had pensions, sick pay, holiday entitlement or parental leave. Gig economy is here to stay and will flourish. Companies will need to revisit their plans, be judicious in using the ‘better’ skilled freelancers to do regular roles while keeping critical profiles in-house. 

(With inputs from Sanmitra Mallick, Shruthy D, and Vanitha Poojary)

Topics: Gig Economy, Learning & Development

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