Is The Gig Economy A New Future?

As the world is all set to enter 2022 in a few days amid the scare of the new COVID-19 variant- 'Omicron’, there is high hope on the horizon for both employees and employers. According to the latest survey, the gig economy is going to be the driver for employment generation. 

The gig economy can serve up to 90 million jobs (roughly 30 per cent of India’s non-farm workforce). This can add up to 1.25 per cent to India’s GDP, according to a Boston Consulting Group (BCG) report. 

Talking about the gig economy in India, it has been a relatively late starter and currently has three million-plus gig workers. The COVID-19 pandemic has impacted businesses around the globe and has also paved the way to accelerate business thinking towards adopting the gig economy. 

"India has had a lot of daily wage earners and micro-entrepreneurs like plumbers, mechanics for a very long time. Almost every Indian city has a place called “Labour Chowk”, where many workers find jobs on a daily basis. We just never saw this as a specialized economy, what we are seeing today is the gig economy. Even 90 million jobs could be an underestimation in the true sense. Let's acknowledge that we already have a very large gig economy already," said Chirag Mittal, Co-founder and CEO, Gigforce. 

The digital India revolution in the country, post the pandemic also helped in this adoption. The other significant perspective is here the strategy system and work or labour laws. The administrators are taking the discernment of the way that individuals filling in as gig workers ought to be covered under the laws and secured. 

"The oncoming of Uber, Ola, Zomato and Swiggy has changed how the businesses are done. The successful transactions for them also highlight India’s strong consumer market presence. This consumerism is the backbone of the strong growth in the economy in the years to come. Corona has led to WFH and investment in the cloud leading to people working from home. The work is happening digitally; digital platforms disrupt the various business models, leading to better efficiency and productivity. All these gains will lead to an uptick in India’s GDP going forward," said Arun Malhotra, founding partner and portfolio manager, CapGrow Capital Advisors.

Gig economy and India: 

India’s gig sector is likely to grow to US$455 billion at a CAGR of 17 per cent by 2024. It has the potential to grow at least 2 times the pre-pandemic estimates, according to the ASSOCHAM report. 

"Formal gig economy is at a very nascent stage in India and we have just scratched the surface. COVID has accelerated the adoption and growth of this sector. Access to the internet and the penetration of smartphones has further fueled this growth. Gig force platforms like us bring in transparency, in terms of contracts, terms & conditions and payments to empower the workers to make an informed decision. With multiple opportunities the workers get the flexibility to decide whom to work for when to work and what is his/her maximum earning potential," said Mittal.

Mittal added that the key reasons for the thriving of the gig economy are that gig workers meet cost-effective talent requirements for the task-based workers and allow companies to meet talent requirements with predictable unit economics and able to align with variable demand, gig-workers are typically young, which provides a big talent pool for the businesses to choose from.

"The gig economy is thriving worldwide, led by the U.S and other developed economies. The Tesla’s and the Apples’ of the world are thriving on innovation and technology. The fast-changing pace of the way businesses is leading to leaner organisations and the need for newer skills on the part of the employees. The younger workforce is also more tuned towards multiple roles and wishes to engage at various levels. This young population is driving this gig economy, as they are constantly evaluating the multi-dimensional opportunities to grow fast in their career and are regularly upgrading their skills," Malhotra said while talking about the present state of the gig economy. 

People are more comfortable working on a freelance basis and part-time basis. This behaviour of the young workforce- to be more flexible, consume more, and live life as it comes is causing shifts in the economic mix leading to better growth prospects in the future. And the technology and use of computers facilitate all this shift from traditional to a gig economy. And lastly, mind you, these gig workers working part-time are cheaper than the full-time workforce, added Malhotra.  

India at the global stage:  

As of now, India has a pool of 15 million independent workers staffed in projects across IT, HR and planning. India's labour force is developing by 4 million individuals every year. Furthermore, as the greater part of them are youthful recent college grads, they are showing an expanding inclination for gig contracts. 

"I strongly believe that India is going to lead the race because according to a report ‘Freelancing in 2020 An Abundance of Opportunities’ by Payoneer, India is already the second-fastest-growing freelance market in the world with a 46 per cent increase in new freelancers. This is a clear indication of the rapidly increasing demand for gig workers in India. With India possessing one of the world’s youngest working populations, we are on the path to becoming the biggest economy in the world with the highest number of gig workers and volume and value of work," said Mittal. 

The greater adoption of e-commerce and online retail increased the growth of the gig sector significantly. This has set a stage for India to come out as one of the biggest markets for Flexi staffing, as per the Indian Economic Survey 2020-21. 

"We have already seen the success of Uber Ola, Zomato, and Swiggy. Anyway, India has a much younger population than the U.S, Japan, and other developed economies in Europe. The AirBnB is another example where travellers and tourists prefer these flexible places of stay as compared to the traditional brick-and-mortar hotels. The growing part-time workforce is a global phenomenon, with one-third of the workforce in the U.S working in gig capacity, and India is fast catching up. The next leg of growth for India will have a significant proportion from the gig economy," said Malhotra. 

The decent push: 

Giving a fair push to such a work economy are different metropolitan stages that are advancing freedoms for the gig workers who need to remain on the line to make a strong difference in the sector. 

"For on-demand staffing platforms that are providing solutions to the considerable employment challenge of India, it is essential for the government to collaborate with industry leaders and experts, policymakers, and workforce to devise the policies which protect the interest of the employment generators and workforce. What we need are balanced laws and policies which don't hinder growth and at the same time protect the interest of the workforce. We need to ensure that gig workers have access to the social securities, payment securities and can earn enough to live a dignified life," said Mittal. 

The government needs to provide a boost to these platforms in the form of various fiscal incentives. These platforms lack profitability in the initial few years and as the scalability comes, the road to profitability becomes clearer. "They help in generating employment and are a significant source of economic growth," said Malhotra.

The businesses get higher productivity and lower costs, the higher wage in the hands of the worker also gets consumed, leading to multiple layers of economic growth. And all these gig workers have an entrepreneurial bent of mind. A right environment with a conducive environment and government policies can lead to many more Unicorns in India going forward," added Malhotra.