The gig economy and India’s changing workforce

Apart from reorganising business strategies, the Covid-19 pandemic has also compelled companies and organisations to rethink the very nature of work. In the age before the pandemic, the notion of ‘work’ had certain preset definitions and parameters. These parameters defined work on the basis of its location. So you had white-collar employment, with the notion of a fixed office being at the heart of it. For blue-collar employment, the location could either be fixed or mobile. An example of a job at a fixed location could be that of workers employed at a manufacturing facility. If the location was mobile, workers could be employed in both the formal and informal sectors. In the formal sector, an instance of such a job would be a delivery personnel employed by an e-commerce company.

The pandemic has thrown these preset definitions into disarray. And one of the key terminologies that has gained currency since is the ‘gig economy’. However, it needs to be mentioned that gig work—which is basically work delivered ‘on-demand’, as and when the requirement arises, and for a fixed period of time—is not a creation of the pandemic. It has been around for a while. According to a recent report jointly published by global management consulting firm Boston Consulting Group (BCG) and non-profit organisation Michael & Susan Dell Foundation, gig work has gained momentum in recent years due to the emergence and success of platform-based firms such as Uber, Swiggy, Zomato, and Urban Company. The report says that participation in the gig economy is more in developing countries (between 5% and 12%), than in developed countries (between 1% and 4%). “And most of these jobs are in lower-income job-types such as deliveries, ridesharing, microtasks, care, and wellness,” the report says. Although India has always had a large informal sector, which is a major source of employment for casual workers, what has changed in recent years is the infusion of technology to deliver these on-demand services.

The numbers are staggering. The BCG report argues that in the next three-four years, India’s gig economy is all set to triple, and has the potential to touch up to 90 million jobs in the next eight to 10 years, in the non-agriculture sector alone. For the same time period, it could transact over $250 billion worth of work in terms of volume, and subsequently, contribute at least 1.25% to India’s gross domestic product (GDP) in the long term. The report highlights at least four sectors which are fuelling this rise in the gig economy: manufacturing, construction, retail, and transportation and logistics. “The gig economy will comprise both existing jobs that migrate to gig platforms, as well as new jobs that are created in the economy. The net new jobs will result from better market transparency (ability to match demand-supply), greater efficiencies in delivery (lower cost), and growing demand,” it says.

But what are the contributing factors that are giving an impetus to gig work, and is it only the pandemic? Tulsi Jayakumar, professor, economics, at Bhavan’s SP Jain Institute of Management and Research (SPJIMR), says that several factors are at play, and indeed, the pandemic-induced uncertainty in the business environment is one of the key reasons. “Reasons for the growth in the gig economy can be attributed to both demand and supply side factors in the wake of the pandemic-induced uncertainty,” she tells Fortune India. “On the demand side, it is firms who wish to convert such human resources into assets rather than costs. Moreover, such gig workers imply cost reductions in terms of real estate, training, and skilling etc.,” she adds. But the demand push from the organisation’s side is only half the picture. India’s young population, too, has a role to play. Jayakumar explains that on the supply side, the young demographic dividend that India boasts of has a different set of expectations with regard to work-life balance, pursuit of happiness, etc. A gig economy provides them the flexibility to decide what one wants to do (and more importantly not to do), when, for whom, and from where.

This is a point also made by a January 2021 report by the industry body Association of Indian Chambers of Commerce and Industry (Assocham). “With talent pools today becoming way more diverse in their age constitution and with millennials and Gen Z workers increasingly becoming part of the country’s workforce, many have begun preferring to become part of the gig economy,” the report says.

The Assocham report also makes the point that the rise in the gig economy is fuelled, in a large part, by companies undergoing business transformation, especially with the added inclusion of automation and artificial intelligence (A.I.). “As more and more companies undertake business transformation to make their processes more technologically driven, the number of gig workers are bound to go up. Increasing use of technology, like A.I. and automation, would also lead to the creation of new job profiles and a business’s need to look for qualified talent. In the coming years, instead of hiring outright for such positions, it’ll be possible for companies to just reach out to talent on a more project-like basis,” it says.

White-collar gig workers

Jayakumar also points out that while the overt focus when discussing the gig economy is usually on blue-collar work, white-collar jobs are also increasingly becoming gig-based. “According to several reports, the gig economy is on the rise in India. Several industry reports in the last few months attest to the reimagining of the future of work in India, with 50%-76% of the workforce in service sectors comprising of white-collar gig workers,” she says.

This is a point Srinivas Chunduru, founder of the Mumbai-based boutique business transformation organisation, VANS Skilling & Advisory, agrees with. Chunduru argues that while the blue-collar segment in the gig economy has been around for a long time, that of the white-collar segment is much more recent. He points out that largely there are three sets of companies where a white-collar gig worker is required. First are the startups, the second would be small and medium enterprises (SMEs), and the third would be legacy companies who are now revamping their business models and strategies and are aiming for a faster growth trajectory.

“For many of these companies, especially startups, the pace of growth is determined by time, so time is of the essence here. Therefore, a fast-moving startup is also seeing a frenetic pace of change. What you are doing now may not be the same as to what you would do six months later. That's why a gig worker is needed here,” Chunduru tells Fortune India. According to him, many startups are increasingly relying on short-term CXOs who come for a specified period of time, do their job, and move on. “So the factors here are fast growth, agility, and need for super-specialisation. The second reason is cost. It is not that gig workers are cheaper, but here it becomes fractional in nature. Many of these startups cannot afford a million dollar-worth CXO, but they do need someone to fill in. So you have the idea of an interim CXO,” he adds.

Does that mean that in the white-collar space, the requirement is more for C-Suite level jobs? Chunduru disagrees. He points out that a CXO-level requirement is, in fact, very niche. In reality, greater requirements exist at the project management level.

The findings from the Assocham report buttresses Chunduru’s point. “A gig economy is also cost-efficient for companies, given that they can accommodate a temporary workforce, according to the customer's requirements or business needs, leading up to saving administrative and compliance costs that they would otherwise incur if they choose to hire full-time or regular employees, especially in cases where business models do not involve the engagement of a permanent workforce. It may not be possible for companies and startups to afford skilled professionals as full-time employees. In such situations, companies may choose to enter into contracts with the professionals for a specific time period. This relationship is rather symbiotic, and both parties have equal freedom to look for options that cater to their needs,” Assocham points out.

Chunduru adds that this movement towards the gig economy would have happened despite the pandemic. The pandemic has, in fact, only accelerated the trend. “Let me give you an example. In my conversation with a startup with unicorn status, the founder argued that gig-based jobs are still not a reality in India, and that we are very far off. But, once the pandemic hit, the founder has now come around to believing that gig work is indeed a reality,” he says.