The so-called “gig” economy allows individual workers to freelance their skills to meet the on-demand needs of clients by using mobile technology. In 2015, the gig economy gained a significant foothold as businesses and consumers alike began to look beyond the transportation and hospitality sectors (think Uber and AirBnB) to take advantage of other apps and platforms that hook them up with on-demand services.
Here’s how the gig economy might affect your business.
- The driving force behind this new on-demand economy is the proliferation of smartphones and other hand-held technology devices that offer computing power comparable to that of desktop computers in the ’90s. By connecting with each other and to cloud computing, mobile devices give people the freedom to find effective and efficient answers to business problems that previously would have been resolved within the structure of a traditional business firm or company. Workers are able to enjoy flexible hours, a greater choice of income-generating options, and the opportunity to gain work experience and boost their incomes.
- The gig economy is no longer primarily comprised of younger people looking for supplemental income. Specialized platforms are competing with traditional providers of professional services, such as tutoring, legal services, business consulting and computer programming. Whether employers need specific professional talents for temporary situations or a few people to take on a short turn-key project, almost certainly there is an app that can identify suitable workers at competitive prices.
- There are many on-demand apps. Some, like Handy, match service jobs with independent contractors for tasks that might include house cleaning, laundry services or travel booking. Also, there are sites like Amazon’s Turk, where customers can post any task requiring human intelligence, and where workers can review opportunities listed according to task and price. Highly specialized sites like Medicast allow patients to book a house call from a doctor using an app that records both the location and symptoms of the patient, while others are devoted to providing creative directors or commercial artists to businesses in the entertainment and advertising industries.
- Though this brave new world offers great options to workers and business owners, it has not come about without creating issues for the public and private sector. Business owners face the significant challenge of managing and training an on-demand workforce in which workers may be scattered across different time zones. Quality control is another key concern. In response, on-demand platforms are adopting more extensive screening and vetting processes. Doing so requires them to pass on the costs of such research, diminishing the cost advantages that made these options attractive to their customers in the first place.
- Perhaps the biggest challenge will be for governments – including the U.S. government – to re-think how workers are protected and how pensions and health care benefits are administered. Regulatory and social systems, developed when freelancers and contract workers were in the minority, will need to change to allow individual workers to take control of their health care and retirement needs in an on-demand economy.