Factors contributing to the rise of Gig economy:
Firstly, most businesses started factoring cost into their competitive strategy after the Great Recession in 2007. As a result, companies combined different approaches— reducing the number of employees, improving operational efficiency, or both. They started to rationalise, among other things, antiquated workforce model and full-time employment. Progressively jobs that could be manned remotely were cut down and contracting on-demand workers gained ground.
Secondly, seasonal spikes in customer service across most businesses helped in the rise of the gig economy. A flexible workforce allows organisations to be more agile and plan for spikes and lows. It aided them to elevate business performance faster and effectively. In fact, 70 percent of employers say gig workers increase profitability and efficiency. All this led to the trend of hiring independent short-term workers, at short notice, for a short time instead of full-time employees.
Thirdly, technology played an important role in consolidating remote and mobile workforce, enabling rapid growth of the gig economy. Platforms enabling centralised communication, real-time scheduling and tracking, dashboard, video conferencing, etc. created a marketplace for gig like ecommerce did for goods.
Gig Economy in India
In India, while start-ups were the early adopters, multinational companies, consulting firms and large enterprises are embracing the concept.
Flexing It’s research indicates that over a third of the 500-plus organizations surveyed expect to rely up to 50% on flexible talent in the next five years.
The Indian market has many freelancers/non-employees ready to engage in short-term projects—but these have been focused primarily on lower-value projects. High-end skilled freelance work is on the cusp of take-off.
India is more of a talent base than a client base. It is classified as a highly competitive market with a large number of independent consultants with strong English proficiency whose skills can be utilized in other Asian markets.
This talent is available at low rates by regional standards, which makes it attractive and affordable for foreign countries.
While global and regional consulting firms clearly envision a future in India, they are cautious in their approach because of some practical challenges which include the traditional mindset, lack of networking platforms, a large variance in billing rates and a feeling of isolation.
Traditional Economy Vs Gig Economy
● Security: Traditional work system ensures Jo security but gig economy doesn’t ensure any security of job.
● Regulation: The suppliers of products and services via sharing platforms often do not have to comply with laws as their traditional competitors have to. Eg- Uber drivers do not have to obtain licences and Airbnb renters are not the subject to extensive health and safety regulations
● Ownership of Assets: Sharing economy firms are disrupting traditional industries across the globe. Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.
● Entry and Exit: Gig economy offers free entry thereby making it more attractive than the traditional work system. Airbnb facilitates entering the accommodation market and competing with hotels and hostels, and Uber facilitates entering the taxi services market
● Accountability: since gig economy is a temporary nature of work, accountability stands as a question when compared to traditional economy.
● Quality: The workforce under gig economy offers quality because only the talented workers are selected. I’m traditional system, however, there is a chance of lack of innovation in the workers.
● Risk: Gig economy involves more risk than traditional economy. Eg – There are many cases in which Uber drivers misbehave with the passengers.