India's rising 'gig economy'

The country's "gig" economy has become prosperous as more people become freelancers, according to a recently released report by digital payments company PayPal. India has an estimated 20 million freelancers who offer their services to domestic and foreign markets through online platforms.

Today digitisation, internet marketing and information technology have transformed market dynamics with the emergence of several business models like Uber, Ola, Airbnb, OLX, Quikr, Urbanclap, Magicbricks, etc. Over the past five years, all these names have gained in popularity and generated employment for astrologers, cleaners, gardeners, drivers, house-keepers, electricians, plumbers, carpenters, beauticians, music teachers, language teachers, school tuitions, air condition technicians, besides other tradesmen.

These tradesmen charge by the hour for their services, which provides them short-term employment through contracts for limited periods. The 'employee' is now more a 'business partner' and therefore the expression "shared" economy or "infrastructure-less" economy.

It could also be called a "gig" economy where workers can avoid long-term engagements with one particular organisation. The contracts between the employee and employer are only for temporary work, so business operations do not need permanent employees. It adopts a "liquid" workforce strategy which is very similar to freelancing.

In a gig economy, businesses are able to save on resources like office space, payments to permanent employees in terms of salaries and other benefits. They are also able to save on exorbitant training and development costs.

The gig economy is a product of shifting cultures and business environments. The talent crunch drives the booming trend of gig or shared economy. Technology advancement has enabled businesses to source the best talent globally. It is perceived as a win-win situation for employers as well as employees.

Employers need not obtain long-term commitments from employees. Employees could avoid commutes to and from offices through short-term, non-permanent, yet profitable, engagements from employers. It has led to a phenomenal shift in employers' attitudes towards employees. They see each other as business partners. There is more scope for innovation and customer satisfaction here.

The gig economy is rising across the world because it is mutually beneficial to the employer and employee as it offers benefits like convenience, flexibility, freedom, control, and is economical, too. India is recognised as one of the top 10 countries across the globe where the gig economy is on the upswing. In fact, India will assimilate in this rapidly evolving work culture at the highest pace, given that 64% of its population will be in the 20-35 age group by 2021.

A study by business software-maker Intuit predicts that by 2020, 40% of American workers would be independent workers or freelancers. Presently, there are over four million registered freelancers. Technology has played a seminal role in this regard. While Ola and Uber are relatively old business concepts, the economy has witnessed an entry of several other app-based business models related to the gig economy like Urbanclap, OLX, iTokri, Airbnb, Housejoy etc.

With an explosion of e-commerce websites, businesses are able to offer customised products and services to consumers. Technology connects local vendors to consumers through internet or app-based services.

For instance, Urbanclap is an e-commerce website where one can find services relating to beauty, carpentry, teaching, event managers, insurance, interior decorators, photography, yoga trainers, repair services, etc. It gives a platform to service-takers to avail the services at a local level as the providers for these services are situated in the same locality or city. If the service provider is willing to work, then they can take up the work request, otherwise they can choose not to take up the work. As the customer and the seller reside in proximity, it is easier to transfer products and services at minimal logistics cost.

The gig economy has become all-pervasive. While there are a slew of benefits arising from it, there are also disadvantages. Inconsistency in quality of work, problems in scheduling work, lack of benefits for employees because of their non-permanent status with the employer, lack of dedication are certain challenges associated with it.

Apart from this, the new work culture also calls for reforms in the existing labour laws in terms of benefits and financial security provided to employees. There have been cases registered against Ola and Uber drivers by female riders on account of sexual harassment by the drivers.

In India, a majority of employees in the gig economy set up their work without legitimate contracts. Due to these challenges, a certain set of consumers keep them at bay. Gig platforms also differ widely in terms of the degree of specialisation that they offer to their customers, the geographical area to which they cater, handling customer complaints, providing benefits to the customers, payment mechanisms, and providing training and support to their workers.  

(The writer is Assistant Professor, Department of Commerce, Christ Deemed to be University, Bengaluru)