The Gig Economy in India - Benefits & Challenges
Every area of human life has been gradually changing due to technology’s impact. You are hungry and need to grab a bite. Apps such as Swiggy, Zomato will ensure you can enjoy food from your favourite restaurant. You don’t own a car if you need to go somewhere quickly and affordably. Just tap open Ola or Uber or local taxi apps to get a cab in a jiffy. All these services are rendered to you in the new concept of asset-light business models made possible by the employment of the new gig-workers employment model, wherein Companies can scale without taking up high upfront fixed costs.
Gig is a slang term meaning a job for a specified period and it refers to the workers outside of the traditional employer-employee relationship including freelancers, workers who are employed on a contractual basis with their employers, project-based work and short-term work.
What is Gig-Economy
The gig economy is a free market system in which Freelancers, independent contractors, project-based workers and temporary hires are hired for temporary positions. This can be found across every industry. Gig employees could be writers, cab drivers, photographers, food delivery personnel, e-commerce delivery personnel, service provider, accountants, tutor, and artists.
Simply put it is anyone who enters into formal agreements with a company to provide services without being on the company’s payroll. Digitalization of the economy allows the workforce to be mobile, so people can select temporary jobs from around the world, and employees can find the best individuals for each job without many constraints. Our Knowledge Centre provides you with more information on this topic.
Gig-Economy Participants
There are 3 major Participants in this new economic model
Independent workers
Companies pay independent contractors to finish a job. They can work anywhere and are becoming more mobile. They have a variety of temporary jobs to choose from all over the world. Independent employees can be divided into two categories:
Labour providers
Commodities providers.
Less educated workers are the ones who provide the labour. They entered the gig economy because they had problems finding alternative employment opportunities. Included in this group of workers are drivers, delivery personnel, and handymen. The highly educated employees who frequently hold full-time employment serve as the providers of the goods. They could be designers of software or artisans
Platform Companies
The second element consists of platform businesses that directly link workers and customers. Most of them are technological platform businesses such as Ubrancompany, Ola, Uber, Zomato, Amazon, Flipkart and many upcoming e-commerce or online business. These businesses serve as a conduit between the employee and the customer. They take a certain percentage of any service they provide. From Cab drivers to SEO specialists at a computer company, job seekers can easily obtain a fast and temporary position. People can browse online profiles and reviews of both clients and employees on these platforms.
Consumers
Consumers are those who require a certain service, such as assistance with a software development project or transportation.
Current Status in India
77 Lakh Workers engaged in 2021
Expected to grow to 2.35 crores by 2030
Worker Skill set breakup
31% in Low skilled
47% in Medium skilled
225 in High Skilled
Trends indicate a reduction in Medium skill with an increase in Low and High Skill roles
Medium Skills expected to dominate till 2030
Benefits
Ease of finding short-term and free-lance opportunities
Direct Transaction opportunity between consumers and service providers
Flexible Work schedule for employees
Online Profile and service rating to assist consumers in choosing the right provider
Ability to work anywhere and anytime for employees
Market Driven Prices for skill sets (mostly in High Skill Jobs)
Demand and Supply match, allowing for the scale of services as demanded by consumers
Limited Risk for Companies as they can hire for a specific period and validate fit for the role
Access to a diverse pool of Employers
Challenges
Lack of employee benefits such as Insurance, Leave or limited working hours
Cost savings primarily due to the removal of benefits, requiring employees to find their alternatives
Limited learning opportunities for employees to skill up, limiting their opportunities to move to higher-skill roles in future unlike traditional jobs where employers assist in upskilling
Variable earning leads to challenges to access financial services from Banks and NBFCs
Most low and medium-skill roles are fueled by Incentives, leading to unsustainable economic models for Companies, which may find it hard to reduce costs in the short and medium term
Service optimization challenges for companies as they are dependent on the intent of workers to work at a specific period. Most offer incentives, leading to sustainability worries
Limited Loyalty among workers, who choose to work with those who offer the most pay. Companies are forced to engage with a larger pool of workers than required, leading to high acquisition costs and maintenance
Way Ahead
The advantages of the gig economy outweigh the drawbacks. Gig workers have the option to select tasks that best suit their interests and objectives, allowing them to make money from multiple avenues.
Even though traditional employees do not participate in the gig economy, traditional workers have benefited from it. More and more employees are requesting flexible work arrangements as the workplace continues to evolve. Employers are under pressure to give their office workers more remote work possibilities.
Businesses have benefited from the advantages of the gig economy. They have been more successful in meeting seasonal demand, reducing overhead expenses, reduced hiring costs while being competitive. However, changes abound in this space as Indian Govt has been working on providing benefits for gig workers, which is currently under development. The latest developments can be read here
Knighthood has worked with many Companies to assist them in their temporary worker requirements utilizing multiple employment models.
We at Knighthood have been working with over 100+ organizations for over 5 years. We focus on ensuring high service levels at affordable prices. You can read more about why our customers choose to work with us.