A gig economy, in simple words, is an environment in which organizations contract with independent workers for temporary, short-term engagements.
The gig economy currently more prevalent in US, Europe and India, is expected to bring transformational changes to traditional HR practices around the world, where gig and traditional economy will thrive together. India with the uprising gig economy has potential to become the top freelancing and crowd sourcing hub in the Asia region, even globally, says Helma Kusuma, Freelancer.com Country Manager for Indonesia, Malaysia, India, Pakistan and Bangladesh.
A dramatic workforce transformation is under way, and is changing the way companies find and deploy talent. Not long ago many were tempted to find lifelong careers that seemingly gave people satisfaction in their professional life. Today, tables have turned and growing number of people believe that an ideal job doesn’t stand in the way of being the boss of your own time / personal life goals / self-growth.
Hence heeding the monetary needs, many have started moving towards temporary and flexible positions, treating them as a journey which fits their current gratifying lifestyles. This trend has eventually evolved to the gig economy – where temporary or fixed contract options are valued more than permanent ones. Conventional recruiting methods no longer work in the ‘gig economy’ and traditional engagement strategies cut no ice with a freelance workforce.
Rise of the Gig Economy
‘Uberisation’ of the workforce is happening in India too, with more and more people opting out of the daily grind and choosing to be ‘fluid’. The number of workers being hired as freelancers or contract workers has risen from 20 per cent to 25 per cent in the contingent workforce in the past two years. This points to the rise of the Gig or Flex Economy. More are opting for a flexible style of work, one that lets them remain in control of their time and allows them to work when and how they want.
In 2015, nearly a third of workers globally consider themselves freelancers. The rising numbers now comprise 34% of the workforce in the Asia-Pacific, 31% in the US, and 27% in Europe. These freelancers are independent by choice and chose to be part of gig economy driven by the freedom and flexibility the work-style affords.
They are highly educated and skilled —70% of freelancers in the APAC region possess a professional or technical skill-set. 35% Of the total workforce comprising non-employee workers, include temps, freelancers and contractors. As a result, 95 percent of businesses now view this new workforce as a key element to developing and running a successful business, which means big changes for hiring trends in the coming years.
Startups powering the gig economy hire talent across technology, marketing, finance and HR on freelance or need-basis. IT companies are opening roles for moonlighters, freelance consultants on non-mission critical parts of projects or as part of larger development efforts on one-off basis.
The changing needs of today’s workers, the war for talent and the globalization of the workforce are just a few reasons that today’s technology is evolving so rapidly. All of these forces are driving workforce management to the top of the business agenda, especially as talent becomes a true differentiator for organizations.
The biggest sources that companies use to find this new class of talent includes online labor marketplaces, freelancer networks and social media. By understanding where this talent exists, how it can be engaged, and the general parameters of how it should be managed, companies will be able to derive additional value from the wealth of skillsets available in the on-demand talent marketplace.
The gig economy can be the answer to talent supply chain challenges faced by professional or technology sectors. While critical roles would still be in realm of regular employment, freelancers can reduce the burden on the supply chain, increase operational efficiencies and reduce project costs. Attracting and retaining top talent has been a consistent challenge for global pharma companies and this could be the answer to acute talent shortage in the pharmaceuticals sector, particularly bio-pharma.
The advantages are aplenty for the workforce too, and not just the employers, as they can pick and choose the gigs they want to work on. This means their skills will be current while retaining flexibility and autonomy, and avoiding the occupational hazards of a regular job.
In effect, freelancers can operate as entrepreneurs. More importantly, they can have a work-life balance few can dream of. However, a freelancer’s work life is fraught with uncertainties as compared to a traditional employee. So, freelancers entering the gig economy should be ready with a do-it-yourself, disruptive attitude.
Although this trend is increasing in popularity, there are also challenges with the reality of contingent workers. In the study, 48 percent cited a lack of visibility and intelligence into the ultimate ramifications of the gig economy. For example, it’s difficult to ensure these freelancers are up to speed on compliance, training and their overall impact on the business; all things you can easily teach a traditional worker.
Ultimately, companies are realizing that the gig economy affords companies access to pre-screened, pre-trained workers with niche skills, who can get to work quickly and stay on only for as long as they are needed. And, as a company’s needs change, an external workforce can be scaled up or down quickly.
Employers need to think beyond full-time employees and tap into the Open Talent Economy. The art and science of management wouldn’t be about overseeing an ever-shrinking base of internal resources; it’ll instead be about curating capability or contribution across a network of sources.
This is why Accenture Technology Vision 2016 believes a liquid workforce strategy can become a competitive advantage for companies. Within 10 years, they believe they will see a new Global 2000 company with no full-time employees outside of the C-suite.
Need For New Laws
While companies need to transform and come up with strategies to cope, even the government will need to put in place a new labor relations framework. The rise of platform models like Uber and Airbnb has given rise to anxiety. The world over, governments are trying to figure out size, scale and loopholes associated with the gig economy, particularly against the background of unionization and regular protests demanding regularization or extension of benefits akin to traditional employees.
“Unionization of workers on platforms that use on-demand talent, however, will be difficult”, says Sangeet Pal Choudary, founder and CEO, Platform Thinking Labs. Sooner or later, regulation for this shared economy is imminent.
What will be the counters of such legislation is the moot question. As key economies grapple with jobless growth, the gig economy can be a redeemer. Gig workers have flexibility but no paid sick leave, no time off, and certainly no pension. The government may need to legislate labor platforms where there is an urgent need to redefine labor laws that must not stifle innovation but certainly prevent exploitation.
In India, freelancing as an employment option has not yet penetrated the rural landscape. Regulations enabling such possibilities would be a step in the right direction. In India’s huge informal work economy, 50 per cent of self-employment is premised on self-exploitation. The larger workforce issue that needs to be addressed is workforce formalization.
3 strategies companies should use to seize the gig economy
- Overturn traditional job descriptions into skills-based categorizations: Currently, most organizations leveraging the gig economy to scale-up their business are small – to medium sized enterprises. Larger corporations, have been slow to adapt to this trend, are still figuring out how their recruitment strategy and compliance practices can accommodate short-term contractors within their existing structure, especially in terms of how gig workers can fit their corporate culture and working style.
With the rise of Robotic Process Automation (RPA), data analytics and routine tasks are often automated to achieve higher efficiency and accuracy, allowing staff to engage in skills-based, value-added tasks. Hence, instead of holding up to the traditional categorization of job descriptions, corporations can creatively divide work into skills-based tasks, so as to simplify processes of briefings, handover processes and management.
- Revamp employee policy assessments and evaluations: Corporations should evaluate existing internal policies and candidate assessment processes to cater to permanent employees. As companies look towards engaging gig workers, it is essential for talent acquisition teams to revamp their approach to assessment processes and job requirements, as well as staff benefits and policies. This is equally necessary for jobs which require gig workers to work on-site and off-site. An effective evaluation process is required to ensure consistent and quality work, where customized assessment procedures will need to be developed with active participation of the relevant line manager.
- Effectively communicate employer brand: Communicating an authentic corporate brand is needed for traditional talent acquisition processes, even more important in a gig economy, where the foundation is built upon trust. Skeptics perceive that gig economy’s impact on the workforce undermines a corporation’s dedication to fair treatment of employees; it is vital for corporations to communicate their brand in a manner that is true and personal to permanent employees, potential candidates or contractual staff. By focusing on the company culture and its people, companies will bring a positive experience to existing and potential employees alike.
To avoid disconnection, corporations must also bring brands to life, ensuring the corporation is relatable by giving it a distinct voice and personality. Many companies are already doing this on digital platforms, such as user-centric mobile-friendly career sites, mobile-enabled application and assessment tools, usage of video content and employee video blogs. Such practices enhance employer brand and communicate brand culture. All in all, a corporation will need to embrace flexibility to address the ever changing societal evolution.
The gig economy is cutting across generations, is no longer restricted to the services sector and raking in high value gigs. It has arrived and is here to stay.