What’s so new about the gig economy in India

Actually, the basic concept of “gig economy” is not new in India. The majority of the informal workforce in India has been freelance in both the urban and rural workforce. In urban areas, plumbers, electricians, carpenters, housemaids, construction workers et al have always been a part of the informal workforce without full employment and benefits. Some negotiate assignments directly with the principal employer and some are employed by contractors. 

In the small and medium segment in sectors like gems and jewelry where skills are more important, migrant workforce who are not full-time employees has been engaged.

However, the issue with the organized workforce which employs 15 percent of the total workforce in the country has been the Contract Labour Act, which has discouraged many larger employers from employing contingent workforce. The biggest hindrance has been the law which states that if the contractor fails to provide the wages of the labor, the principal employer has to pay the full wages of the contract labor. This clause kept many large employers from employing contract labor, and especially if their business was seasonal, they lacked the flexibility to expand and contract their workforce with the demand of their business. Although the arrival of large temp agencies eased it somewhat but for the arrival of the true gig economy we had to wait for a decade more. 

So what are the reasons for the current rise in gig workers in India?

Flattening of the corporate pyramid: Since the dawn of liberalization in 1991, traditional, large private businesses have had to be nimble to compete with their global counterparts. This changed the psychological contract they had with their workforce. The earlier “hire till retire” policy went out of the window and people were assessed solely on performance, and if they couldn’t measure up they were asked to leave. Organizations also realized that they needed to shed layers to be closer to the customer.

Rise in project work: With the arrival of the IT services companies, a new kind of worker emerged, whose loyalty was to the skill-set he/she had built an expertise in and not to the employer. If you hired a SAP-MM consultant because you were pitching for a project that would need that skill, and it did not come through, that person would leave for an employer where the skills were wanted. In 1999, Tom Peters wrote an influential article called “Brand You” which called on employees to see themselves as CEOs of “Me, Inc” – reinforcing the message that learning and growth of oneself is one’s own ownership and shouldn’t be relied on large organizations.

Growth in other opportunities: With the rise of the Internet and falling barriers to erstwhile “elite” professions like writing, fashion design and photography, many people moved away from the traditional “engineering-medicine-government job” paradigm to venture into these new creative fields. Social media gave rise to newer and newer professions like social media influencers in various niches from technology to fashion, stand-up comedy and performance poetry. Suddenly, the only limits were one’s creativity and imagination.

The arrival of the platforms: In 2005, Amazon launched its Mechanical Turk website for people to crowdsource small jobs they needed to be done for some money. For high-end knowledge work marketplaces like GLG that connected companies who wanted insights and experts and provided it to them for a fee. From those beginnings, we have the rise of the on-demand economy today with app-based platforms that match buyers and sellers (Ola, Uber for rides, OYO and Airbnb for stay)

Traditional organizations have been caught like a deer in headlights with the sheer pace of changes in the last few years. For example, traditional taxis like Meru, Mega Cabs, and other radio cabs have been slow to react to Ola and Uber’s scorching pace. Similar is the case with traditional budget hotels and guest houses to OYO and Airbnb. 

However, not all is hunky dory with this. The gig economy, without a safety net of traditional employment benefits like medical insurance, leaves workers in a vulnerable state. While reskilling now easier with the rise of micro-learning platforms like LinkedIn Learning, Udacity, Udemy, and Coursera, workers have to recognize that the main skills they need is “adaptability” and preparedness to move across industries, and to ride the waves as and when they come.

Large employers are already sitting down and looking at what roles are needed and what can be farmed out to the gig-economy ecosystem. Many restaurants in the metros have already let go of their “delivery boys” and handed the delivery to platforms like Delhivery, Swiggy, and Zomato. Each and every industry will need to adapt and if needed, will need to support their workforces transition to the gig ecosystem.

As a talent partner with many IT firms in the US and India, contract workforce makes up about 25 percent of our firm, VBeyond. Since they are remote, what is needed is constant communication and engagement as they work on our clients’ sites, and keeping a track of what skills they are building so that we can find higher order projects for them and they keep growing in their chosen path. 

With a contingent workforce, employer branding also needs to be different than hiring for full-time employees. It needs a dedicated Talent Community Manager who keeps them engaged and leverages that community to listen to their concerns. The community is key to also getting referrals from more of such people in the future. The most important thing is to deliver a smooth seamless experience while onboarding and making their payments on time. Having a CRM system and a database that keeps track of their skills and giving them visibility to forthcoming projects is also critical for being considered as a future client they would choose to engage with.