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The advantages and challenges of the gig economy for workers

The gig economy has evolved. No longer a side hustle, for many it has become an enviable source of income. With Millennials leading the charge, we take a look at the anticipated growth, potential and challenges of this alternative world of work.

When Jonas Espvall, Mitch Brown and Rob Older co-founded Playe in 2021, it came in response to the growing need for businesses to innovate the way they engage creative talent. Inspired by the rising trend of top creative talent joining the gig economy, they had a vision for a global platform for creative freelancers.

The trio followed in the footsteps of digital trailblazers such as Freelancer, Upwork and Fiverr, but chose to imbue Playe with a distinct creative twist.

“Our focus on creative industries happened due to the accelerating potential and clear need for transformation in the space,” Brown tells The CEO Magazine.

The arrival of this newcomer on the scene comes at a pivotal time for the gig, or freelance, economy. Although not a new phenomenon, today’s gig economy has evolved, thanks to digitalization and a growing uptake by big businesses. Throw in the COVID-19 pandemic for good measure, forcing us to reassess the way we work, and the result is that gig work is fast escalating in importance.

A global shift

gig economy advantages

In the world’s newly anointed most populous country, India, gig workers are expected to be pivotal in driving the country forward. At present, there are 7.7 million gig workers in the country – a tally expected to more than triple to 23.5 million by 2030, generating US$250 billion, according to a joint study by global management consultancy firm Zinnov and IT giant Microsoft.

The study also shone light on an interesting trend – pre-pandemic, nearly half of India’s gig workers were concentrated in the retail trade and transportation. But that is shifting. Now 35 percent of gig workers are employed in the IT sector. In fact, soon every third employee of an IT organization will be a gig worker, it said.

Similar movements are being seen in the United States, with Upwork’s ‘Freelance Forward 2022’ revealing that 39 percent of the United States workforce – 60 million Americans – had performed freelance work in the last year. Perhaps even more significant is that they contribute around US$1.35 trillion in annual earnings to the American economy, which is an increase of US$50 billion on the previous year.

“Safety and security may now come in the form of having a rich, diverse portfolio of clients and control over your own destiny.” – Margaret Lilani

“Coming out of the pandemic and into 2023, professionals are feeling a real sense of empowerment, recognizing they have just as much agency over the choices they make in their professional lives as they do in their personal lives, and that’s leading to more considered choices about work,” Upwork Vice President of Talent Solutions Margaret Lilani tells The CEO Magazine.

“At the same time, part of that empowerment is leading people to be less risk-averse to making bold career moves. This newfound flexibility, autonomy and control lend themselves to work arrangements with more fluidity, like freelancing and remote work.”

Once upon a time, working for one company for the duration of your career offered the ultimate in stability, but that is no longer the case.

“Safety and security may now come in the form of having a rich, diverse portfolio of clients and control over your own destiny,” Lilani says.

Online influence

gig economy advantages

Online platforms are driving the gig economy into the next era, making it easier for both freelancers and companies to interact and transact – particularly in the aftermath of the Great Resignation and with labor shortages ongoing.

Companies, increasingly responsive to new ways of working in the aftermath of the pandemic, are contemplating how to enhance their operations using the latest innovations.

“Freelancers bring fresh ideas,” explains Fiverr Chief Operating Officer Hila Klein. “Particularly on a global platform like Fiverr, where freelancers come from 160-plus countries, different cultures, time zones and languages. Working with someone outside your company can infuse new energy into your full-time workforce.”

“Working with someone outside your company can infuse new energy into your full-time workforce.” – Hila Klein

Harnessing freelancers via a fast-response digital platform can also help businesses drive efficiency by working cross time zones.

“With a global platform like Fiverr, they can hire someone experienced in SEO and digital marketing in their local time and have their project ready for review the next morning,” Klein says.

“Freelancers are also adaptable by nature, and can quickly take on new projects and get them across the finish line.”

The ability to swiftly scale a company up or down according to their skills needs or market conditions is another benefit of leveraging freelancers, a flexibility that offers both financial and operational benefits.

The tricky bits

gig economy advantages

Revolutionizing the world of work is never simple, however, and just as remote working has its pros and cons, so too does a growing reliance on a freelance workforce.

Pain points include maintaining quality and consistency from a distance, as well as managing talent across multiple locations, then the nitty gritty of handling payments in different currencies and ensuring compliance of engagements.

“In the face of these challenges, businesses have traditionally fallen back on conventional methods,” Playe’s Brown says. “However, as opportunities expand and cost efficiencies become a priority, technology is being embraced to make the gig economy more viable.”

Another threat to widespread adoption of the gig economy is companies’ inability to fully grasp that traditional notions of work have been irreversibly disrupted, particularly when it comes to when, where and how people work. Many companies, mired in their tried-and-tested methods, are also grappling with the adoption of new technologies such as adaptive AI.

“Our focus on creative industries happened due to the accelerating potential and clear need for transformation in the space.” – Mitch Brown

“It’s critical that business leaders shift their mindsets and rethink talent strategies to make the mental leap from talent acquisition to talent access,” Upwork’s Lilani says. “We need to help businesses realize that, to attract and partner with skilled professionals, they need a new way of working. Leaders who think of talent as a resource that is accessed, versus one that is acquired, generally have a more open mind to adopting flexible talent solutions.”

From the workers’ perspective, freelancers often find themselves without access to many of the benefits of full-time work such as sick leave, parental leave and benefits such as health insurance, as well as often working at reduced rates. This places businesses in something of a moral quandary, Michael Rawling, Senior Lecturer and gig economy expert at the University of Technology Sydney, explains.

“The thing that businesses need to think about is the externalization of costs, the burden on the taxpayer for things like pensions and health costs,” he says. “These are ethical concerns for a business who has a particular reputation in a field of business and so has to broadly consider whether or not those more immediate advantages are something that the business wants to capitalize on.”

Making it work

gig economy advantages

But are these challenges outweighed by the sheer volume of opportunities that can be delivered by the freelance economy? They can be, if they are carefully managed, say the experts.

“As a company of one, freelancers must remember to schedule breaks or vacations to keep their work–life balance healthy,” Fiverr’s Klein advises. “They need to remember to put aside money to save for retirement and health care, but also make sure they are pricing their services accurately based on their experience level and work.”

Digital platforms are increasingly offering a number of protections to those that use their services, ranging from establishing community standards and customer support as well as investing in users’ training and wellbeing, which offer the additional bonus of making freelance working arrangements more accessible.

But while there is a definite shift towards freelance work in particular industries and firms, and while this type of work suits some, others crave attractive work arrangements that come with an in-house role. So will freelance workers replace the core workforce? Not yet. But as business and workers iron out the kinks, the future appears to be looking increasingly freelance.

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