As industries continue to be disrupted by innovation and new ways of simplifying existing solutions, the focus has shifted to providing solutions through a community or the ‘crowd’ rather than a sole entity such as an organization. As such terms such as crowd sourcing, crowd funding and crowd based solutions are common within several industries in today’s dynamic marketplace. Uber can be considered a prime example that has adopted the crowd sourcing model whereby a community of self-employed contractors (uber drivers) can access available contracts (rides) and deliver solutions (drop passengers from A to B). This model has helped Uber scale up as a company fast into several markets and enable communities of contractors around the world work for themselves when they choose to and as long as they choose to. This has spread other industries and enabled people work differently giving rise to the gig economy.
Defining the Gig Economy
• This kind of economy is the economy where sellers and buyers come in contact directly without the interference of any third person.
•Individuals choose to work on a contract basis rather than on a permanent position with one or several companies at once.
•In India, The size of the workforce that participates in employment on a contractual basis is 15million (Equatex, 2017)
• One feature of the gig economy is the time scale or window during which a contracted gig or task will be required to completed for optimum results
• Ever since its advent there has been a sharp increase in the economy of London which has seen a growth of almost 72% since 2010 (HR Zone 2017).
Implications for Organizations and HR
• The gig economy gives individuals several avenues and choices to work with several employers, contracts and at a time they choose and all of these conditions pose challenges while also providing opportunities for businesses.
• This will require HR departments within organizations to develop flexible working policies, incentives to carry out projects during peak demand and loyalty rewards to work with the same company after the end of a contract.
• HR will also be required to develop contingent strategies to have a set of freelancers or access to a pool of contractors within their industry to work on their mandates when required. This would mean cutting costs of permanent positions and re-investing capital in terms of rewards and incentives for dedicated freelancers.
Major Areas for Consideration
1.Social - The social aspect of working will change in two folds
a.Freedom of where to work from – many companies these days are shifting towards flexible working and work from home policies, which continues to rise and it is estimated there will be almost 1 billion nomads across the world by 2035 who work from multiple places.
b. Who to work for – Due to the ability to choose from employers, long-term short-term contracts and benefits along with the contract, freelancers will be facing a multitude of choice and top businesses will have to create a winning proposition to gain top talent
2. Technology - Modern day technology removes the very need of having all the company’s employees meeting up in a place. With the advent of video calling and other such inventions, you can easily have conference and other sorts of meeting from across the world with multi different locations. This can provide opportunities for HR to plan growth for the organization across the globe while reducing costs and acquiring new clients as far as the business can successfully negotiate with foreign clients and manage workflow with one or multiple freelancers.
3.Innovation– With growth in the gig economy, there will also be rise in the number of freelancers which may be prove to be hard for businesses to differentiate top talent from average freelancers. The best companies will constantly evolve through innovation and seek freelancers who provide that creative edge in their work to bring innovation to the way things are done. The key factor to choose the best will come down to network association, analysis of a freelancer’s previous work contracts and the marketplace demand for a contractor. Accenture also said that customers expect something new in the market for every six months. Hence innovation is the key to gaining greater goals.
4. Sustainability – Just as the gig economy, there will be trends that disrupt existing ways of doing business and delivering solutions. HR organizations will need to be on the forefront of identifying new trends, utilizing the talents of their current contractors and gain their valuable insights from their experience to comprehend the direction of growth in the market. This should be followed by evaluation of organizational capabilities and design a plan to execute so as to evolve with the market.
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