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Why the Gig Economy Can Be Good for Your Enterprise

Nov 17, 2016

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The press often treats the gig economy as a new and monolithic trend, but it was the only labor economy for millennia. Large numbers of secure, full-time jobs are a recent phenomenon, brought about by the labor movement and government intervention.

Neither is the gig economy a single employment type. It comprises several distinct segments with different motivations and demographics. Statistical reports group them as consultants, freelancers, temporary workers, on-call workers, and casual labor based on the way we hire them. We see them in terms of what motivates them.

  • Low-skilled workers displaced by technology, including new entrants into the job market who do not have the skills to compete for better-paying jobs.
  • Creative and specialty workers who spurn corporate employment for more lucrative freelance work.
  • Professionals with in-demand skills who can market themselves well or can ally themselves with companies who do it for them.
  • Retirees who feel a need to supplement their retirement income and other retirees who want to stay active and launch new careers as consultants and freelancers.

This list is not all-inclusive. There is an endless variety of people seeking contract, freelance, temporary, or on-call work. Many of them can be helpful for a company looking to control its labor spend.

Displaced by Technology

In a 1970 lecture, philosopher Eric Hoffer (The True Believer, The Temper of Our Time) explained why automation would be the most significant force in the human condition. He described a future where human did the thinking and machines did their bidding, displacing millions of workers. Hoffer’s conclusion was that the responsibility for finding new roles in society for the obsolete workers rested on government and society.

But with no social solution forthcoming, entrepreneurial spirit gave us Uber, Task Rabbit, Postmates, and dozens of other platforms. The business model has been with us for a long time, but these online platforms gave it new life with instant access to both purchasers and sellers of services.

Those without the business skills to manage their one-person enterprises find that the reality doesn’t live up to the promise. Many of them end up employed by temporary staffing agencies as on-call workers. These agencies are a boon to employers who need low-skilled or on-call workers without employment hassles.

Professional and Creative Freelancers

Many of us have been professional freelancers for most of our working lives. We can attest to how this business model can help companies who need high-quality services too expensive or difficult to maintain themselves. Hiring a single data scientist can cost over $200,000 per year. By leveraging economies of scale offered by consulting companies, you can have a skilled data team for a fraction of that amount.

In much of the human capital management technology industry, consulting companies and contract workers are the best way to staff projects. You pay only for the skills you need for the time you need them. Software vendors keep records on consulting partners’ customer satisfaction and decertify those who don’t measure up.

The Engagement Myth

Some consultants and pundits say hiring contractors can be a problem because you have no way to motivate or engage them. That is a false assumption. A contractor’s business depends on a verifiable track record. They need to deliver referenceable results quickly, or their enterprises fade. Their success depends on your success and the market sorts out the good from the bad.

Stopping the Brain Drain

Much has been said about the retirement of baby boomers and the expertise that will disappear with them. We say stop worrying.

People are working longer and for many reasons. Some fear economic insecurity. Others want to work because they want to contribute. Still others want the socialization that goes with work. Many of the 55+ people we know have reinvented themselves as freelancers and consultants. They plan to work as long as they can.

Your most productive baby boomers will not likely take to idle retirement. Give them a few months to become restless and then reach out to them. You may find you can tap their experience in many ways.

Embrace the Change

As more employers become comfortable with using freelancers, we see a future where a central cadre of strategic employees works alongside a fluid mix of skills and employment types. It won’t be easy to manage, but it may be the future of growing productivity.

Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.

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