Over the past decade, the size of the global gig economy has risen exponentially. In 2018, this market was valued at $204 billion in annual gross value and is expected to be reach $347 billion by the end of 2021.
A generation ago, having a permanent job, which gave a good salary, along with perks and benefits like insurance, medical benefits, etc. was nothing out of the ordinary As time moved forward, maintaining a good standard of living became more difficult. People started to seek a greater work-life balance as their jobs turned more demanding and working hours more intense. This, coupled with the skyrocketing unemployment rates post the Great Recession of 2008 gave a massive push to the ‘global gig economy’.
The need for supplemental income among the new generation and cost-cutting drives by organisations have pushed several professionals to take up short-term jobs, leading to a gradual shift in choice of employment. Additionally, the rapid technological growth aided the large scale acceptance of gig work as a way of living for many.
By common definition, a gig economy is a free market in which organisations/businesses hire independent workers for a short-term commitments.
In recent years, the gig economy has been trending due to a significant rise in workforce that is looking for jobs that allow them higher freedom in terms of selecting the kind of work they wish to do, and when they do it. In terms of types of gig workers, freelancers, independent contractors, project-based workers and temporary or part-time hires make up for the major categories.
The global gig economy
Over the past decade, the size of the global gig economy has risen exponentially. In 2018, this market's annual gross value was at $204 billion and it is expected to be reach $347 billion by the end of 2021. Of this, two-thirds is disbursed to the millions of freelancers involved in the gig Economy, while the remaining is either collected as commission by the digital platforms or distributed to third parties in the ecosystem (e.g. restaurant partners in food delivery services). Developed nations such as the US leads in gross volume contribution, accounting for 44 per cent of the current global gig economy, as the country serves as the place of origin for many leading global companies. Yet developing markets display a greater supply potential of freelancers within their existing demography of lower-skilled labor and expansive populations.
As per Payoneer’s Global Gig Index 2019, the US topped the world in terms of growth in freelance earnings with 78 per cent, followed by the U.K (59 per cent), Brazil (48 per cent), Pakistan (47 per cent), Ukraine (36 per cent), the Philippines (35 per cent), India (29 per cent), Bangladesh (27 per cent), Russia (20 per cent), and Serbia (19 per cent).
Gig economy is changing the way we do business
The rise in the gig economy has reduced fixed cost and the ability to adapt to market changes faster, while also tapping into fresh talent, and altering the way several industries conduct their business. Technology-enabled platforms made direct transactions between the parties involved easier. App-based technology platforms replaced middlemen to connect provider/producer and consumer with ease, enabling individuals to perform a variety of tasks based on real time demand without any geographical limitations.
For organisations with a global pool of clients, hiring gig workers based in different time zones has helped organizations offer better service, create global reach and improve its brand awareness in newer geographies they wish to expand into. Such a change in employment model has also helped the organisations significantly cut down costs. Switching to payment on a project-to-project basis model has cut down the overhead costs to a large extent (e.g. reducing the need for insurance, severance pays and other benefits that permanent employees are entitled to).
Impact of Covid-19 pandemic
The Covid-19 pandemic, which caused widespread disruption to businesses globally, came as a blessing in disguise for the gig economy. The pandemic accelerated the transition to digitization and the adoption of technology on a mass scale, much faster than previously forecasted. This acceleration, led by global industries, made it easier to shift to a remote working model on a scale that was never seen before. The e-commerce industry thrived in this process, with gig workers which make up for a significant portion of the delivery workforce, witnessing a considerable boost in demand. Additionally, the loss in business due to the pandemic which caused several companies to scale down and cut jobs, resorted to temporary workers based on needs. Consequently, freelance, flexible and part-time jobs to gig workers across the globe grew in demand and lent a greater momentum to the global gig economy.
The global gig economy, which is forecasted to be reach $455 billion by 2023, has been touted as the ‘economic backbone of the future’. The number of freelancers in the US, the largest market for gig workers, is expected to grow from 57 million currently to 86 million by 2027.
Moreover, growth in the coming years is expected to largely stem from developing markets as large platforms enter new countries and regional platforms pursue expansion. Nevertheless, the gig economy is likely to encounter challenges in the form of strategic planning and operations.
Leading platforms, especially among the larger sectors, are likely to face challenges to acquire potential freelancers as gig services become more widespread and thus commercialised. As a result, gig companies would need to innovate constantly to differentiate their solutions from competitors while also streamline their expansion strategies. In order to effectively navigate the road ahead, gig platforms are likely to establish strategic collaborations with external partners providing adjacent technologies that would help leverage their expertise to venture newer markets and step-up hiring freelancer population required to support their growth objectives.
News Source: Khaleej Times
