A Clear View on Gig Economy- The Rise

The world freelance economy or gig economy as freelancers like to call it stands at a whopping 400 billion USD that is forecasted to reach 450 billion USD in 2023. The so-called third-world economies are giving the developed nations a run for their money in terms of revenue contributions to the global gig economy. Freelancers are proving to be game changers with many businesses relying on their expertise to roll out cost-cutting measures and manage their finances thanks to the slump they suffered due to Covid-19. The time is ripe for first-time entrepreneurs and those not yet on board to consider using the world’s freelance workforce more seriously.

What is Gig Economy and is it Restricted to Freelancing?

The gig is slang for small-time engagements or endeavours that last for a generally short specified period of time. Prior to being used by freelancers as a substitute for the work they bid for, this was a common terminology for musicians to specify a jam session or an event. The gig is a much broader concept that is inclusive of part-time hires, project-based contracts and independent contractors in addition to freelancing. Unlike mainstream employment opportunities, the gig economy is highly dependent on technology and digital assets to run. Workers and clients use various applications and websites to connect, interact and work together. Work mostly happens on a pay-as-you-go module where workers are paid periodically after completion of the current contract post which tasks are assigned again. There is greater transparency at play here with both clients and workers having more flexibility in the way they operate.

The Emergence of the Gig Economy

There is a consensus that the pandemic is responsible for the growth of the gig economy but contrary to popular belief, Covid-19 just accelerated the car that was already in motion. Business continuity protocols at medium and big businesses somewhat forced the management to turn to freelancers to get the job done at various levels causing a paradigm shift in the gig economy. Even as businesses are coming back to their usual mode of operation, the leadership is finding it hard to bring back employees to dingy cabins and workstations from the comfort of their homes.

Meagre yearly increments are a pain that every employee needs to deal with and hence about 40 per cent of people working at offices have side gigs. A 15-20 per cent yearly increment does not help when inflation rates, even in developed economies touch 10 per cent. Side gigs help office goers manage increasing costs and improve their expertise at the same time. A striking data about Google reveals that it has about 120,000 freelancers/contractual workers on its payroll. Permanent employees contributed to just over 45 per cent of its workforce.

In many countries with a huge population, companies congregate in the biggest cities with multiple offices and campuses instead of spreading across locations. There is a huge supply of labour in comparison to the work available and hence the extreme disparity in salaries offered which in turn results in small-town aspirants resorting to freelancing to supplement their incomes. Additionally, this gives rise to unhealthy work environments where expectations are unreasonable and fulfilling them severely affects the work-life balance of employees.

This is supported by the fact that countries like India, Pakistan, Bangladesh, Ukraine and the Philippines are amongst the top 10 countries in terms of fastest-growing freelance markets. India for example has the largest workforce after the US engaged in the gig economy and these numbers are more likely to grow as more people look for self-employment opportunities rather than relocating and working for companies and agencies at meagre salaries.

Why is the Gig Economy Thriving?

The perks of freelancing are just too good to let go of both from freelancers’ and employers’ points of view. For freelancers, it is to work as hard as you want and keep all that you earn. Organizations take a huge cut from the revenue generated by every employee that they cannot be blamed for but the gig economy encourages workers to keep all their earnings. There is ample scope for freelancers to choose what they want to do with no forcing mechanism at play. They do not need to follow office protocols in addition to the complexities of the actual job they are working on. The numbers paint a good picture regarding this with the number of engaged freelancers at different platforms expected to reach 500 million before 2030.

From an employer’s point of view, they would be saving a lot of money and resources on benefits and neither have to rent huge office spaces and equipment. Businesses can hire experts on short-term contracts and on a project basis that is otherwise too expensive when on direct payroll.

Conclusion

The trends look promising for the gig economy and in the next part of this three-article series on the gig economy, we will be a bit data-centric with our take on this sector.