Businesses and Freelancers: A Look at the Impact of the Gig Economy on Small and Big Businesses
The gig economy is booming. Working nine to five in a structured payroll job is, nowadays, rather unfamiliar to the 53 million Americans, or 34% of the population that qualify as independent contractors or freelancers, according to the study entitled Freelancing in America: A National Survey of the New Workforce. Moreover, a report by McKinsey found that about 30% of the working-age population in Europe and the United States engage in some form of gig work. According to Intuit, by 2020, approximately 43% of the workforce in the US will be freelancing. That represents almost half of all American workers. Not to mention that other reports estimate that independent consultants and solopreneurs will represent the US workforce majority within the next decade. Other regions of the globe are expected to follow the same trajectories as well. The continuously increasing gig economy is having a significant impact, both on big and small businesses. But how does this change the workforce? Let’s take a look.
The workforce metamorphosis
Currently, Millennials comprise the largest (37%) and the fastest growing segment of the independent workforce. Furthermore, 46% (nearly half) of Generation Z workers are freelancing and the number is only expected to grow over the following years. However, it’s not only the young folks who are riding the sharing economy wave. Actually, baby boomers are not only embracing independent work, but there’s a sharp earning divergence between them and the younger cohorts. On average, senior contractors are earning about $79,000 a year, while Millennials make approximately $47,400. The reasons for this difference are, most probably, the time spent in the workforce and the decades of experience, which makes baby boomers well-versed in their field.
Another aspect that we should mention is that 64% of freelancers do the type of work they like and are happy to have found a nice balance between their career, personal life, and passions. Basically, people switch to freelancing because they realize they have a choice. And, considering the fact that for 51% no amount of money would convince them to accept a traditional job, independent work seems to be a better choice.
With the internet economy booming, businesses start seizing opportunities. As a result, 30% of the Fortune 500 companies are currently using freelancing marketplaces such as Giggrabbers, Upwork, and LinkedIn ProFinder to hire remote staff. And that’s because 64% of the talented and skilled independent contractors are finding work online.
Major effects of the gig economy
The gig economy has changed the traditional career model
Back in the day, the career ladder most people were climbing on meant working for one single company for years, if not decades, being hired as a junior and later being promoted to a supervising or managing position. Nevertheless, the online economy has changed that. As we have the possibility of enjoying multiple different income streams as well as flexible work arrangements, we’re not as eager to stick to the same employer as we once were.
For businesses, this means that, while it’s a bit more challenging to retain employees, there’s much greater access to on-demand talent comprised of short-term workers who keep up to date on the latest trends and skills. Thus, one of the essential parts of staying is tapping into an engaged and informed workforce that values mental stimulation.
Hiring talent has become more cost-efficient for businesses
The costs associated with having full-time and part-time employees have been historically expensive for businesses and although there have been attempts to carry over many of the perks available to full-time employees such as health insurance and retirement plans, hiring freelancers is generally a less expensive method of hiring talent for both small and big businesses.
Freelancers set their own rates and some platforms even offer recruiting services that are cheaper than having a full-time recruiter. Giggrabbers enterprise solutions provide businesses with bundled freelance services that are far more cost-appealing compared to traditional costs of talent for the same work or services. Upwork’s enterprise packages include efforts to deliver work faster and more affordable. The gig economy has led to an increase in technology that promises tools and features to hire faster and smarter, and Google recently provided a list of places to do so.
The sharing economy has disrupted industries
Work is regarded differently today than it used to be ten years ago and this is also due to the rising number of independent contractors and freelancers. For this reason. countless industries have been disrupted. For example, taxi companies are joining ridesharing platforms like Uber and Lyft while hotels are introducing services (such as extended stay packages and mobile check-out) that are appealing to those who’re mostly using Airbnb.
A plethora of opportunities and a myriad of options
Some people do freelance work in their spare time for some extra cash, but many more make a living out of independent gigs. The ones that are greatly enjoying the opportunities offered by the online economy are those who, in the past, had to choose between career and family. These individuals can, nowadays, earn an income on their own time and their own terms. This means that companies can remotely hire talented, skilled, and experienced people who won’t commit to full-time employment, either by choice or circumstance.
Sought-after gig economy industries
The most in-demand gig economy industries are marketing, robotics, artificial intelligence, and finance. Besides these knowledge-intensive industries, creative occupations represent an equally significant and fastest-growing segment of the online economy.
As digital platforms create efficient, large-scale marketplaces that facilitate direct connections between companies and freelancers, independent work is rapidly evolving.
Thus, it’s not complicated for businesses to dip into the skilled gig worker pool. One important thing to keep in mind is that, in order to thrive, companies should learn how to embrace the sharing economy. This translates into embracing a mix of on-site and online teams, encouraging fresh thinking, and practicing it. Alternatively, having your staff working 100% remotely is an option chosen by more and more businesses.
Clearly, how we work and how we hire is changing. As more people flock to freelancing, the gig economy is strong, evolving, and multi-faceted. The technical innovations, enhanced communication ops, evolving circumstances for companies, and proliferation of gig marketplaces make outsourcing more viable. All these strands weave together and create an independent workforce fabric, which is already robust and maturing.