How gig economy is becoming mainstream in India

Tarun Sinha

As the novel coronavirus forced businesses across the world to rethink their operational strategy, perhaps, in terms of impact, nothing stands out as much as the mainstreaming of the hitherto sidelined gig economy in India. The past few years, in particular, have seen a steady increase in the gig workforce and this is a change that seems to be here to stay.

Gig working has proved to be mutually beneficial for both companies and workers.  Businesses are finding that hiring gig staff saves overhead costs on office space and equipment and gives them greater recruitment flexibility. Workers, on their part, enjoy flexible hours, choice of work and ability to enhance income by doing multiple gigs.

Focus in India

 Industry experts estimate that there could be over 130 million gig economy workers in India, with many more expected to join the flexi pool as formal jobs dry up. ASSOCHAM had previously estimated the growth to $455 billion by 2024, a figure that has been reforecast at double, following the pandemic.       

 The pandemic-induced lockdown managed to dispel many reservations about the dependability and long-term viability of a gig workforce. Many businesses are beginning to appreciate the advantages of remote working on overhead costs, strained liquidity, and are seriously reconsidering their operational strategy. Small and big businesses are now opting to hire more gig talent given the opportunities it affords in the current market scenario. Gig workers too see greater freedom and flexibility in this approach, as it accords them greater choice and more avenues to exploit their talent.

Need for formalisation becomes urgent

Crippled by a pandemic, in an uncertain market, many companies were forced to trim staff and hire gig workers. According to the Indian Economic Survey 2020-21, this factor and the wider adoption of e-commerce and online retail, spurred the growth of the gig sector considerably. This has propelled India to emerge as one of the largest markets for flexi staffing.

 It is important to note that these changes are, and will continue to be, all-encompassing for jobs and roles across the spectrum. With growing use of AI, robotics and pandemic-induced flexibility, traditional full-time employment has started taking a new shape. Multitasking and multi skilling will become key for professionals as firms will likely only want to engage workers for the hours needed.

This calls for an urgent need for the formalisation of this sector. The validation of the blue-collar workforce in India could prompt a shift to outsourcing by both traditional and new-age businesses.

 Importance of social security benefits for gig workers

It is critical to note that despite the rapidly growing numbers, the gig economy is still at a very nascent stage in India and faces numerous challenges.

The workforce, thus far, had inadequate employment rights including minimum wages, health benefits, sick leaves and such dues. To bridge this gap, they have now been brought under the ambit of the Code on Social Security 2020, which provides them with social security benefits.

Employers also need to consider contributions to insurance and social obligations of the gig workforce rather than just their tax commitments.

 There is also a need to assess gaps in skill and capability and to develop a strategy to ensure upskilling and reskilling of the workforce. This becomes particularly relevant in the context of automatization. Many blue and grey collars workers will find themselves redundant as technology makes their tasks obsolete. There is, and will be, a vast pool of eager-to-learn workers who could benefit greatly from vocational training courses, opening a hitherto untapped market for L&D firms or vocational education-based startups in this space.

 As per The Future of Jobs, World Economic Forum report — 43% of businesses surveyed indicated plans to reduce their workforce due to technology integration; while 41% planned to expand use of contractors for task-specialised work.

 Changing trends in the gig economy

 Traditionally, manufacturing and infrastructure have always worked with temporary labor. However, the sector largely remained informal. 

Gig hiring trends however changed with IT, ITES, digital and e-commerce industries, turning to gig staff. Slowly, hiring flexi talent started showing an upward spike in these sectors, especially after the pandemic. Seeing the benefits, other industries, too, have started opening up to gig workers for quick turnarounds and to avoid compliance and other considerations like PF, office space and overheads.

 The pandemic has accelerated the adoption of technology by at least two decades. Employees will be expected to enhance their tech skills at the same pace. Currently, only 49.2% of India’s labour force is digitally skilled, according to the WEF report.

Covid-induced changes in the business sector have led to an increased demand for digital skills in areas such as security, data and artificial intelligence.  Alongside logistics, construction and infrastructure firms who are also exploring 3-D printing, drone deliveries and related technologies will soon need operators for these skills.

Budget 2021-22 focus on gig workforce

With the increasing focus on gig economy and its workers, in this years’ budget Finance Minister Nirmala Sitharaman proposed gig workers would now be covered by the Employees State Insurance Corporation (ESIC). Further, women will be allowed to work in all categories and also in night-shifts with adequate protection.

The budget also proposes to launch a portal that would collect relevant information on gig economy workers, including those working in building and construction, among others. This portal would help formulate relevant policies for health, housing, skill, insurance, credit and food schemes for the gig sector.

How this helps business  

 Social security benefits for gig workers will add the crucial safety net to help the sector see sustainable growth and benefit millions of workers across industry. 

 According to the labour ministry over a dozen companies and aggregators such as Swiggy, Amazon, Flipkart, Zomato, Ola, Uber and others have committed INR 500 Cr to the proposed social security fund for gig workers in India.

 Thus far in India, most large HR firms have focused on white-collar jobs and personnel, with the increase in compliance for firms to utilize gig workers, talent management and acquisition firms could grow their portfolio to include blue- and grey-collar workers.

 The highest demand for the blue- and grey-collar workforce is expected from the logistics and e-commerce sector as building an efficient delivery channel is critical for online businesses. With e-commerce penetrating into tier 2 and tier 3 cities there is a growing demand for gig workers in these locations.  This opens up a hitherto untapped market for human resource management startups, who could also help legacy businesses with flexi hiring.

All in all, the potential for the gig economy in India is massive. The new government compliance legislation will go a long way in empowering and motivating many more to take the flexi-work path. These are exciting times for the gig economy and early disruptors who begin to understand this space in this market will find unlimited possibilities for doing business.

The writer is CEO, OLX People