How businesses can benefit from the gig economy

Today, more than a third of workers identify as independent. And this number is poised to only increase. According to a report released by the Freelancers Union last year, the majority of American workers will be freelancing by 2027. As a result, freelancers, remote employees and gig workers have more sway than ever. They’re changing the way companies do business and a whole new sector, known as the gig economy has emerged.

According to a recent study by Buffer, 35% of companies have a workforce made up almost entirely of remote workers. This demonstrates that a number of businesses are recognizing the benefits of the gig economy and using it to their advantage.

Many companies have found remote workers are a great way to supplement their full time employees. Still there are a number of businesses barely scratching the surface of the gig economy. The Buffer research found that remote workers were less than 10% of the workforce for a quarter of the businesses they surveyed.

But those companies not utilizing gig workers are failing to maximize their potential. Since a large portion of the global workforce identifies as independent, those companies not working with freelancers are missing out on quality talent. And gig workers can be valuable to companies in a number of other ways. They give companies greater flexibility and allow them to tap into niche markets.

So then, here are three ways companies can benefit from the gig economy.

Cost savings

Earlier this year, Kelly OCG, an outsourcing and consulting group, released a report that found 57% of businesses are cutting costs by using independent workers. According to the report, 43% of those companies using gig workers are saving at least 20% in labor costs.

A large portion of the cost savings companies experience by working with freelancers is related to benefits. The amount companies pay to full time employees in the form of things like insurance and paid vacation time, amount to thousands of dollars annually. In fact, on average, benefits amount to more than 30% of an employee’s compensation. By employing gig workers, companies can cut these costs and reinvest them in their business.

Additionally, companies that work with freelancers can cut infrastructure costs. They don’t have to maintain a large office space, computer servers or fork out money for employee computers and other office essentials. And those businesses that go entirely remote can eliminate the need for an office altogether.

Easier onboarding

Any company that experiences turnover knows that the onboarding process can be costly and time consuming. According to HR Onboard, a human resources consultancy, the annual onboarding costs for a small to medium business that onboards 100 new employees each year, can reach upwards of $40,000. And according to elearning software company Panopto, half of all corporate onboarding programs take as long as a month or more.

That’s why, according to the Kelly OCG report, 36% of companies are using gig workers. The report found that working with freelancers means faster onboarding and an easier way to lock in outside resources.

Doing business with remote workers can be a great way for companies to try out prospective employees. And according to the Kelly OCG report 26% of companies use independent workers to create early relationships with talent. Instead of going through the traditional hiring process of multiple interviews and then possibly being disappointed with a new employee’s performance, companies can give assignments to freelancers to gauge whether a prospective employee is a good fit.

Seasonal help

A variety of businesses often find themselves in need of seasonal workers to fill in and pick up the slack during busy seasons. Traditionally, companies have turned to temp agencies for this kind of help. But these agencies charge their own set of fees that quickly eat up the cost savings of working with temporary workers to begin with.

On average, temp agencies charge companies an additional fee equal to 12–50% of the employee’s hourly rate. But companies can cut out the middleman and work with temporary workers directly just as easily.

According to a 2016 survey by Ernst and Young 42% of those companies using gig workers say one of the major benefits is that it helps them respond adequately to seasonal workload increases.

Freelancers hired for seasonal work know what they’re getting into and there is little expectation that the work is going to end up being long term. In fact, many freelancers prefer the flexibility and variety that comes from moving from one gig to the next.

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Overall the Ernst and Young survey found that businesses enjoy working with freelancers because they bring a fresh perspective: 56% said gig workers bring expertise that is beyond the capability of the company’s existing workforce and another 50% of companies said gig workers help them overcome resistance to change within their organization.

For companies looking to shake things up, the gig economy might be just what you need.

Photo by Avi Richards on Unsplash.

Originally published at guild.co on August 29, 2018.