The gig economy
I have been watching the habits of the youngest generation very closely. My firm hires many youngsters so I have the chance to observe them. The latest paper that looks at the lives of the coming generation is from Ernst&Young.
The report is titled “The gig economy: A chance to control your costs or accelerate your growth?” Of course, maybe it is a doomsday scenario for companies who require devoted teams.
Whatever the future may hold for the gig economy, it is certainly going to affect many industries, starting with information technologies.
EY states that “The gig economy — an economy that relies on freelance or contract workers — has moved from the margins to the mainstream. Technology is enabling companies to meet resource needs in new and flexible ways while also offering workers new ways to manage and build their careers.”
That is exactly what the new generation of workers wants to do. I wrote about this phenomenon a year ago, underlining that: “It is even possible to work from different countries.
Cheap air fares, Airbnb, and shared office spaces (such as Kolektif House in Turkey), have made it possible for a person to move to a different country in a few days – at a fraction of what it used to cost 10 years ago.”
However, back then I did not really know of a viable model to solve the needs of both workers and companies.
Workers want to be flexible, able to choose who to work for and what to work on.
Companies, on the other hand, want security, reliability and a professional work ethics.
The solution came in the form of marketplace websites and specialized companies. With the marketplace websites, companies can rate the quality of the work they receive from freelancers and control their costs better. The freelancer can access many more companies than they could on their own, and choose freely among them setting their own rate.
What’s more, specialized companies like Expertera fill the gap by pinpointing the necessary skills and expertise for especially if the job requires many years of experience on the freelancer side.
These two types of solutions from companies turned freelancers into vendors rather than throwaway resources, and this is reflected in EY’s report.
EY’s survey found that in 2016, 18 percent of the workforce at mid-market companies (with turnover of $100 million to $5 billion) was contingent, a figure projected to reach 20 percent by 2020. At big companies (turnover above $5 billion), those numbers are 16 percent and 19 percent respectively.
For big companies, the number one driver (at 62 percent) is controlling labor costs.
For mid-market companies, the number one driver (at 58 percent) is fueling growth and completing projects requiring specific expertise or capability beyond the existing workforce.
The benefits of accessing skilled labor on short notice and with limited commitment are particularly valuable in the fast-growth, agile environment of scaling smaller companies.
The gig economy could also help foster robust growth for many Turkish SMEs especially on issues like logistics, IT and marketing.