What opportunities lie ahead for the gig work model?

What do Flipkart’s courier boys, Ola/ Uber drivers, and a songwriter selling customized jingles to her clients have in common? They are all part of the gig economy - set to bring in a sea of opportunities for the tagged segment of so-called minorities. The gig economy is seen providing employment opportunities to designers, developers, writers, data entry operators, online sales and marketing professionals in many more areas and this employment model is expected to grow significantly in the coming years. Though there is no official definition of ‘gig economy’ but for the ease of understanding, it can be defined as ‘a labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.’ In fact, any occupation in which workers may be hired for on-demand jobs, has the potential for gig employment.

Current gig scenario

As per a recent study by Mastercard and Kaiser Associates, the global gig economy is capitalizing on a $500 Bn opportunity. Some of the trends highlighted in the research are:

• The size of the gig economy transactions is projected to grow at 17 percent CAGR with a gross volume of $455 Bn by 2023, due to factors such as evolving societal attitudes around P2P sharing and increasing digitization rates in developing countries
• The digital gig economy generated $204 Bn in gross volume from customers in 2018
• 44 percent of the global gig gross volume today comes from customers in the US
• 88 percent of the gig economy gross volume is generated from transportation-based services or asset-sharing platforms

One of the prime reasons, specific to the Indian subcontinent is related to double-digit salary inflation as against the global average of 2-3% that has a direct linkage to the cost of doing business. Due to this, organizations are gradually focusing on other non-linear models. The objective here is met with gig workers as the targeted rise in revenue does not translate into a similar increase in the number of full-time hires or the overall compensation cost. So, organizations are able to retain core teams with potential leadership talent and are using external resources in roles that require super specialization and skill sets that are niche and unviable to build internally. 

Breaking down the independent work industry

Another fresh perspective that adds to the rise of freelancers is related to the cultural shift towards embracing a “flexible” work-life environment owing to the changing perception of the working population’s expectations of a typical 9-to-5 work day. This also is quite viable if one looks from the employer’s perspective as now organizations will have the ability to deploy someone with a more specialized skill set for the duration of the project. And this model is especially relevant for women who are at times compelled to take a career break in order to raise their child. It can help keep them engaged during the phases when they are unable to return to work fully.

Moreover, the rising cost of living paired with a shrinking middle class is compelling the employed lower-to-middle class to seek additional part-time income through gig work. Let us look at the structure that has been suggested as per an extensive study done by McKinsey Global Institute (MGI) workforce survey across six countries. This highlights four individual segments which forms a part of independent workforce industry. 

• The Free agents - This segment covers those individual whose primary income is derived from such independent work. It is by choice that they want to become an independent worker and derive their majority earnings from it.
• The Reluctants - Individuals, who actually prefer traditional jobs, but have to make their primary living from independent work fall under this category. 
• The Casual earners - This group consists of independent work undertaken by choice for supplemental income.
• The Financially strapped - The name itself suggests that this group comprises of those independent workers who do supplemental independent work out of necessity.

It is quite loud and clear that the gig economy and independent workers bring along a new epoch of a more empowered, agile, flexible and autonomous work model. Any kind of organization - big, small, established or a startup; all have already begun to embrace freelancers. In fact, EY on account of the growing trend has launched GigNow - an initiative to engage contract workers. This digital platform equips contractors to directly access EY’s contract opportunities and find assignments. Much more than a technology platform, it combines the engagement process with effective selection methodology to enhance the experience for both EY and the contractors and is backed up by a dedicated GigNow recruiting team.

Gig economy is visibly growing at a rapid pace with the push from the industry and individuals seeking such roles. There is also a sizable opportunity presented by the digital freelancing platforms that constitute today’s gig economy. In fact, the gross volume is predicted to more than double over the next five years, with transportation-based services generating the greatest value of any sector. It will be interesting to see how these predictions impact the global ratio of full time employees versus gig workers in the next 5 - 7 years.