Independent professionals are fast becoming a vital part of our workforce. To cope with evolving customer demands, and uncertain operating environments, organizations are opening doors to a non-traditional workforce. Deloitte in its Human Capital Trends report, notes that around 30 to 40 percent of today’s workforce is made up of alternative workers.
What is the gig economy?
The gig economy refers to an ecosystem where organizations contract temporary or contingent workers for short durations or specific projects. These gig or contingent workers include freelancers, contractors, individual professionals, and consultants.
As the gig economy gains prevalence across industries, the rise of this independent workforce is having an impact on the socio-cultural fabric of companies. Gig workers have an independent style of working that often does not comply with the norms of traditional organizations. Unlike the traditional workforce, they are not on the formal employment payroll of an organization. Contingent workers most often work for different organizations and projects, rather than confining themselves to one organization. This workforce comprises of people who are constantly looking for flexibility, inclusiveness and a non-traditional working environment.
Deloitte’s report notes that there are approximately 77 million formally identified freelancers in Europe, India and United States. In United States alone, around 40% of the total employed workforce comprises of contingent, part-time or gig workers. That’s a 36% increase across the past five odd years.
Why is it rising?
Cost reduction of labor plays a major role in the unprecedented rise of this workforce. Companies are increasingly understanding the need for cost reduction and skilled labor to achieve business objectives. Ernst & Young in an article on gig economy states that 55% of organizations see contingent workers as a mechanism to control labor costs.
The need for deep expertise in specific skills for a small duration is another key factor that has led to the rise of the gig economy. Expertise in specific skills provide an edge to gig workers. For instance, for an organization to meet its 3D animation requirements, an independent worker like a freelance professional can be hired for the duration of the project. By doing so, organizations save cost on training their in-house employees, and are also able to fulfil their requirement by hiring someone who specializes in that skill and is immediately productive.
McKinsey, in an article on independent work, notes that the number of contingent workers are growing rapidly - fueled by the usage of digital platforms which connect remote employees with employers and help erase geographical boundaries.
Challenges posed by the gig economy
While the gig economy is gaining popularity across countries and industries,there are multiple challenges which organizations encounter as they see an increased influx of gig workers.
What can companies do to meet these challenges?
In order to mitigate these challenges, organizations need to adopt policies which ensure a smooth transition for non-traditional workers. According to Deloitte, there are some immediate measures companies can take to accommodate the gig workforce.
There is no doubt that independent workers possess skills which can be leveraged to benefit the overall growth of an organization. In fact, the gig economy is expected to grow rapidly in the coming years. While organizations tap the talent of these independent workers, it is vital that they invest suitably on internal capability development. This would ensure a balance between the external and internal talent flow and could vastly improve the overall workforce stability of an organization.