The job market is undergoing large scale transformation and evolution.
Workers are trying to acquire new streams of income, expanding their portfolios with additional or diversified training, and re-positioning their careers strategically.
A lot of this is done to secure a better work-life balance and enhance the fulfillment derived from their work.
On the flip side, companies are discovering they can cut significant overhead costs through short-term hiring of contractors in place of employing full-time laborers.
These factors combined have given rise to what is known as the gig economy.
If you’re planning to hop on the wagon, whichever side of the fence you are, everything you need to know about the gig economy pros and cons is covered below!
What Is A Gig Economy?
This resource management model refers to a large percentage of workers in temporary or part time positions or under freelance agreements as independent contractors.
It is a free market system that enables companies to hire specialized talent for limited periods to perform short-term jobs or projects.
“Gig” is a slang term traditionally used to define performance engagements of musicians. It has recently begun to be applied to short jobs with a predetermined time.
Almost all kinds of gig workers are available on the market. They act as independent contractors or freelancers who work as temp hires.
- Freelance writers for movie scripts
- Digital artists who redesign logos and product packaging
- Marketing professionals launching a single product for a company
- Event planners handling the celebratory parties of organizations
- Web developers hired to build corporate websites
While this short list helps illustrate how gig workers are available across all industries, they’re just the tip of the iceberg.
Gigging has become incredibly popular over the years, owing to two major factors:
- Greater mobility of workers, be it geographical or covering different sectors
- Increase in remote work opportunities due to digitization and the growth of digital platforms that facilitate efficient collaboration
The prevalence of gig work has changed the dynamics between corporations and workers in terms of their approach to their business relationships.
Who Benefits From Gig Economies?
The gig economy is popular because it is advantageous to workers and employers alike. Both parties stand to gain from flexible, remote, and temporary jobs.
Here are some ways in which gig economies can be beneficial to organizations or companies:
Organizations And Companies
Reduced Rental And Overhead Expenses
Maintaining an office space can be extremely expensive. Having gig workers who work remotely or only occasionally come into the office helps decrease costs associated with rent and workforce management expenses.
It is also possible to downsize an office without completely getting rid of a headquarters. A smaller space means lower rent, electricity bills, and equipment maintenance budget.
Minimized Training Expenditure
When candidates are scarce, organizations may hire workers even if they’re lacking in skills and experience as long as they have sufficient basic knowledge of their respective roles. In such cases, training becomes imperative.
Sometimes, companies need to provide upskilling and training programs to ensure their full-time employees are updated on current industry trends.
These initiatives can be costly, making the gig economy an attractive alternative.
Hiring gig workers allows a company to save on valuable resources as they are not responsible for their training or upskilling. On the contrary, contractors are expected to invest their own time, money, and efforts in ensuring their skills and experience remain relevant and competitive.
Access To Specialized, Well-Equipped Experts
For companies, investing in equipment for their full-time employees’ use is a given. Repairing and maintaining existing devices and tools, or purchasing new ones, are normal parts of operations. In time, these expenses can add up to a substantial amount.
Gig workers can alleviate these overhead costs as they are often highly specialized and experienced in their fields, and therefore already possess the necessary equipment for the job.
Furthermore, they are careful in the use and maintenance of their own gear, thereby also reducing the risk of damages that cause delays.
As a result, companies receive high quality output without investing in expensive tools.
Stellar Work Without Micromanagement
Organizations that thrive on an independent work culture, with leaders that don’t believe in micromanaging employees, greatly benefit from hiring gig workers.
Freelancers and independent contractors are known to deliver high caliber submissions within deadlines, once the framework of a project is laid out.
Because they’re accustomed to working on their own, they learn to create customized time management systems. This allows them to produce excellent work without interference.
With such efficient warm bodies on board, the leadership can reduce their managing responsibilities. They can then focus on more pressing matters that require their active attention and involvement.
These benefits combine to make gig workers highly appealing prospects for companies to hire.
It is also a win-win situation as workers, too, stand to gain from the arrangement. Here are just some of the rewards they can reap:
Employees, Contractors, And Freelancers
Improved Work-Life Balance
Gigs often allow service providers to work remotely, and on flexible schedules. This offers them the opportunity to get more done during their day. The biggest time-consumer they eliminate is commuting.
Generally speaking, gig workers have more freedom to set their work hours and reserve free time to focus on their personal lives. Thus, they can choose to not work on special occasions and to be with their family instead.
Shortened Work Hours
Many contractors and freelancers realize that their productivity and output peak when they perform deep work for a few hours a day. This eliminates the need to spend a third of their day performing tasks that can be achieved in less time, solely to sign in for their work hours.
On the practical side, ticking off the commute to and from an office also contributes to a clearer mind and stress-free body. The perfect combination for efficiency.
Multiple Sources Of Income
The overall flexibility offered in a gig economy gives workers the opportunity to upgrade their lifestyle through increased earnings.
Compared to full-time employees tied to their office chairs eight hours a day, independent service providers are able to take on multiple clients simultaneously.
Evidently, both workers and companies benefit from the gig economy. But is it really all roses on that side of the fence?
Gig Economy Pros And Cons: A Quick Rundown
Like any resource management model, the gig economy is also a double-edged sword with its share of advantages and disadvantages.
Pros of A Gig Economy
For Companies And Organizations
- No fixed salaries, paid sick leave and vacations, or mandatory social security and Medicare contributions
- The ability to build a reliable and skilled team across the world and to benefit from their different time zones, which ensures uninterrupted operations almost throughout the day
- Possibilities of scaling faster with the availability of gig workers whenever they are required
- Flexible, productive, and convenient work hours with high quality and timely output
- Freedom to pursue hobbies, passions, and personal commitments
- Choosing clients they wish to work with, which elevates job satisfaction
Cons of Gig Economies
For Companies And Organizations
- Difficulty in finding invested workers who can commit to future projects because every job is a temporary business relationship
- Ethical concerns regarding the practice of not providing benefits
- High levels of stress when projects become irregular and income fluctuates
- Lack of a safety net in the absence of benefits such as retirement plans and healthcare
- Classified as independent contractors, gig workers are responsible for paying their own taxes, which can be an additional hurdle
Common Challenges Of The Gig Economy
The job sector is challenging no matter how you look at it — businesses and workers both face challenges on an almost daily basis.
A gig economy is no different. It poses these unique obstacles to organizations that require the right tools to overcome:
- Lack of a stable workforce which can cause project disruptions and difficulties in the administration of an organization
- Managing payments and invoices at different periods as there may not be a specific pay day when a team consists of contractors and freelancers
- Communication and technology issues when the work is conducted remotely
- Project management problems if managers singlehandedly supervise several service providers who are not connected to each other
- Compliance with the rules and regulations of a remote worker’s location, in the case of a global workforce
Gig economies can be extremely beneficial, not to mention lucrative, for workers and businesses alike. Though there are certain challenges that both parties must face and overcome, it is not impossible to do so.
A quick glance at the gig economy pros and cons illustrates that the benefits far outweigh the concerns!
Organizations now have this alternative source of talents in critical times. They can put management contractor compliance systems in place to allow their workforce of contractors and freelancers to flourish.
Meanwhile, independent workers can be equipped to overcome the obstacles within their individual careers as well.