Is India headed towards a Gig Economy?

Last month, one of my senior executive friends lost her MNC job, had to upskill herself, and after some serious searching, accepted the new offer - albeit a little unwillingly. She was on contract this time, and she is being paid more than what she got in her earlier permanent job. Welcome to the Gig Economy. Risks are of course higher, and so are the rewards.

What is a Gig?
The gig is a slang used usually for a live musical performance, recording session, or other engagement of a musician or ensemble. It usually lasts a defined short interval.

Who is a Gig worker?
Gig workers are independent contractors, online platform workers, contract firm workers, on-call workers, and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients. They do not work as employees of the organization, rather work on a contractual agreement for a defined time interval.

Typical Example
During festive or sale seasons, it is very common for retail giants like Amazon or Flipkart to hire Gig workers to meet the sudden spurt in demand. Such workers enter into an agreement for a few weeks or months to meet the peak demand and are then rolled out. In this short burst, they earn big and then maybe left with a slack period where they can either manage through the earlier windfall or get multi-skilled to find another kind of a job.

What is a Gig Economy?
A gig economy is a free market system in which temporary positions in organizations are common. In such an economy, organizations tend to hire independent workers for short-term commitments. When most organizations work with this structure, it can be fair to call such an economy as a Gig Economy.

Current global situation
The western world has already moved rapidly towards a Gig Economy.
1/ 36% of U.S. workers join in the gig economy through either their primary or secondary jobs.
2/ It is estimated that gig worker's size, which covers independent or non-conventional workers, is 20% to 30% of the economically active population in the United States and Europe.

If you have friends working in the UK, or other European countries, there is a significant chance that they would be working on a contract for a defined term.

What is moving the economies worldwide towards Gig?
There are a number of forces behind the rise in short-term jobs. 
1/ The workforce is becoming more mobile, and work can increasingly be done remotely via digital platforms. As a result, jobs and locations are being decoupled. That means that freelancers can select among temporary jobs and projects around the world, while employers can select the best individuals for specific projects from a larger pool than what's available in any given area.
2/ Digitization has also contributed directly to a decrease in jobs as software replaces some types of work to maximize time efficiency. 
3/ Financial pressures on businesses is making them move towards a flexible workforce
4/ The entry of the millennial generation into the labor market is another reason. This generation tends to change jobs several times throughout their working lives, especially millennials, and the gig economy can be seen as an evolution of that trend.
5/ A big push to the Gig Economy has now been made by the novel Covid-19 pandemic, as people are forced to learn to work remotely.

Common gig economy jobs and industries
Gig economy jobs may include multiple positions found in common industries that hire gig workers.
For example:
- IT gigs may include freelance work for information security engineer and network Analysts jobs.
- Software development gigs can include DevOps engineers and UX
- Freelance writer gigs may include gigs for content writer and copywriter jobs.
- Accounting and finance freelance gigs can include independent consultants and mortgage representatives.
- Transportation jobs can include ride-share drivers.
- Construction gigs can include carpenters and other construction workers.
- Art and design gigs can include musicians or graphic design
- Administrative gigs can include pharmacy technician and design administrative assistant jobs.
- Media and communications gigs can include technical writers and photographers.
- Education gigs can include substitute instructors and tutors.
- Project management gigs can include project or office manager jobs.

Positives of Gig Economy
Gig Economy comes with its own set of positives:
1/ Gig workers have high levels of flexibility, autonomy, task variety and complexity.
2/ Gig workers are usually paid better than a regular employee with the same experience and skill, considering that the organization can save a lot of overhead costs since the worker is temporary.
3/ Businesses save resources in terms of benefits, office space, and training. They also have the ability to contract with experts for specific projects who might be too high-priced to maintain on staff.
4/ From the perspective of the freelancer, a gig economy can improve work-life balance over what is possible in most jobs. 

Ideally, the model is powered by independent workers selecting jobs that they're interested in, rather than one in which people are forced into a position where, unable to attain employment, they pick up whatever temporary gigs they can land.

Challenges with the Gig Economy
1/ The business model of companies situated in the gig economy has been criticised for using technology to evade worker protections such as rights to minimum wages and paid leave
2/ Employee-Employer relationships are usually not that trustworthy.
3/ There is no emotional bonding of the employee with the organization.
4/ Lack of benefits may be the biggest downside. A gig worker won't have health insurance or other benefits they would get from working as a full-time employee
5/ By labeling workers as independent contractors, a hiring organization will not need to pay those workers minimum wage, deliver benefits or pay for overtime.
6/ Work-life balance can be disrupted if the worker isn't used to making their own schedules.
7/ Because temporary employees are cheaper to hire, the gig economy may make it harder for full-time employees to develop their careers.
8/ Inconsistent income can also be an issue. Having enough work to maintain a stable income from gigs can be a continuous worry in terms of job security.
9/ Taking on too many gigs may also add to difficulties in scheduling and may lead to burnout.
10/ It will be more difficult to maintain relationships between workers, employers and clients long term.

The future of the Gig Economy
Over the last 20 years, the number of people working at gig work has been increasing.
Most importantly, gig work's appearance is not an isolated trend but is related to wide changes in the economy.
Advances in globalization and technology put pressure on companies to respond quickly to market changes.
Securing labor through nontraditional agreements such as gig work will enable companies to quickly adjust the size of their workforce. This can help companies increase their profits.
From this point of view, the unconventional gig work is a fundamental component of today's economy, and it is unlikely to disappear anytime soon.

The future of the Gig Economy in India
In India, there are about 3 million gig workers — temporary workers including independent contractors, online platform workers, contract firm workers, and on-call workers. 

The number is certainly small if one were to compare it with India’s 500 million workers. 

However, the good part is that an estimated whopping 56% of new employment is generated by the gig world alone.
Delivery boys, cleaners, consultants, bloggers, executives, and even CXOs are part of the gig economy. Uber, Ola, Zomato, etc, are all part of this labor platform. As the work is job-specific, workers have the flexibility to work for more than one contractor and choose the hours of work. This has also encouraged women in labor force participation.

Not only that, 

- ASSOCHAM predicted in January 2020 that India’s gig economy will grow at a CAGR of 17 per cent to $455 billion by 2023. 
- India has emerged as the 5th largest country for Flexi-staffing after the US, China, Brazil, and Japan.
- Haryana, Madhya Pradesh, Andhra Pradesh, Gujarat, and Telangana have the most opportunities in terms of growth for the Flexi-workers.

Growth of the gig economy in a country like India necessitates digital transformation at an unprecedented scale. The incentive for such an investment for government is in growth numbers; digital economies lead to 2.5x faster growth than legacy economies.

Summary
The gig economy is expanding from less-skilled services (For example– domestic chores at BookMyChotu in India, TaskRabbit in US) to more skilled jobs (For example– Guru in India, Upwork in US). 
COVID 19 has given businesses a new perspective. The previous impossible is now an everyday reality. For the gig economy, there are many bright future possibilities, if the present is used to lay the groundwork. It is important that the economy prepares itself now to meet the demands of a new normal, as and when it happens.

Regards

Manoj Arora
Official Website