What is the gig economy?
Every crisis comes with an opportunity. COVID-19 lockdowns could help professional employees to explore their hidden passions which could be converted into opportunity to earn money and to pursue their passion. For millions of businesses, it is the right time to look at cheaper and flexible employee force. Gig economy could help both employees and employers, differently.
A gig economy is a free labour market in which temporary positions are common and organizations contract with independent workers and freelancers for short-term engagements. The term “gig” is a slang referring to “a job for a specified period of time” and used to refer musicians.
Global connectivity, remote access, work from home options, pursuing passion, work-life balance, availability of skilled workforce on project basis, sharing of assets and services have developed gig economy.
The gig economy in the US is being shaped by a shift in the attitude of employees towards a need for higher work autonomy and work-life balance. Whereas in India, the large number of workers seeking opportunities to employ their talent/ skills is empowering the gig economy. Further, India is witnessing a rise in the need for supplemental income due to high unemployment amongst the urban youth, increasing cost of living, growing aspirations of students and changing mindsets of women engaged in homemaking. This is exhibited by the existence and growth of gig platforms such as GharSeNaukri, Frapp, Internshala, Awign.
What are the trending business models in gig economy?
- Digital Marketplaces like UrbanClap, Care.com, HouseJoy and Helpr. sign up demand-driven service providers skilled in specific domains such as beauty, fitness, plumbing, electrical repairs, etc. and offers these services to consumers on a contractual basis as per requirements. This business model allows for the service providers to communicate with the end users directly through the app according to their terms and conditions.
- Service Listing Platforms like Guru, Internshala, Truelancer, Elance, Awign and 99 designs offer a platform to list the demand for various professional services which can then be matched with the services being offered. Essentially, it is a platform convening the demand and supply of services in a gig economy.
- Sharing (Asset & Service) business models like Airbnb, Uber, Ola and Swiggy that engage gig workers to offer specific services such as transportation, accommodation and delivery. It builds a shared economy for assets and services. It allows for low-cost asset sharing instead of asset ownership.
How big is the gig economy?
In 2018, the digital gig economy generated a gross volume of approximately $204 bn from worldwide customers. The size of the gig economy is expected to grow by a 17% CAGR and generate a gross volume of ~$455 bn by 2023.
India is the 5th largest country for flexi-staffing after US, China, Brazil and Japan. In India, almost 70% corporates have already used gig workers for at least one task in 2018. Haryana, Madhya Pradesh, Andhra Pradesh, Gujarat and Telangana have greater opportunities in terms of growth for the flexi-workers.
Currently the gig economy is popular amongst the blue-collar workers in India like Uber/Ola drivers, there is now huge potential for the white-collar workers as well, due to increasing demand in industries for project-specific consultants, logo/content design, web design etc. The gig economy is expanding from less skilled services like domestic chores at BookMyChotu in India, TaskRabbit in US to more skilled jobs like Flexingit and Guru in India, Upwork in US. In India the total addressable gig economy market is worth $3.4 bn.
What are the benefits for the service providers & seekers in the gig economy?
Desire towards flexible work is being driven by factors like freedom, technology upgradation, skill focus, additional income and human capital. Gig economy allows project ownership, comfort and flexibility. Based on one’s preference and passion, one can determine the number and type of projects one would like to work on, the quantum of earnings, and thus, the work-life balance. Exponential growth in smartphones and the rate of digitization is enabling gig freelancers to offer various professional services through tech-based platforms. Gig workers can sign up for projects in which they are more skilled. With the rising costs and under-employed masses, a gig economy opens doors to earning additional income through gig work. A rise in the tech-literacy level is further empowering this economy.
Service seekers are moving towards a gig economy for reasons such as cost-cutting, skilled workforce and on-time project completion. Corporates find it cheaper to employ freelancers to perform specific tasks by avoiding the traditional administrative and compliance costs associated with full-time employees. With an increase in the on-demand services for specific tasks as per business needs, it is now flexible and affordable to hire people skilled in such services.
Thus, a gig economy offers mutual benefit where both the service seeker and the service provider have equal freedom to look for options that cater to their specific needs.
What are the potential risks for the service providers & seekers in the gig economy?
While the gig economy offers flexibility and control over one’s work schedules, clients and projects, it has certain risks and uncertainties associated with it. There is an uncertainty about job security. Unpredictable and often, delayed income. No safeguards like Employees Provident Fund, health insurance, medical insurance, pension and paid leaves, which secure employees from contingent situations such as retirement, disability, illness, old age etc. There is always risk of gig worker retention. As digital gig platforms enable independent workers to perform tasks on a temporary basis, gig workers’ retention will be a challenge, which may impact sustainability of the operations. This calls for a balance between flexibility and security.
The gig economy has a disruptive model to connect sellers and buyers for almost all kinds of skills and services. While the size of the gig economy may seem marginal when compared to the traditional economy, it is recognized for its enormous potential with the desire of workers, specially millennials to have a flexible work schedule and the rise in the on-demand professional services. However, due to the inherent lack of stability in this open work environment, people need to constantly update their knowledge and skillset to remain relevant in their profession.
The gig economy offers today’s employees to become self-employed business owners, while employers can continue to cut the manpower cost. Sadly, those who don’t engage in using technological services such as the Internet will be left without the benefits of the gig economy. With the developments in technologies, artificial intelligence and machine learning, the gig business models will continue to evolve beyond asset sharing, service sharing, digital listing, and managed marketplaces and will become a significant component of the future economy.
Aren’t you yet ready for the the gig economy?