The Rise of Gig Economy in India
It was a difficult situation for Mukesh, an HR consultant at a Big Four accountancy agency in India, when he received an email with a request for a dozen data entry operators.
It was not an unusual request save for the type of project the operators were required for. The words ‘machine learning’ and ‘artificial intelligence’ were problematic because of the lack of available resources up for hire. But, what made his work difficult was that the project team needed experienced candidates with some display of past work in the fields. There was only one solution: hire from the ever-growing pool of gig economy workers.
And this was back in 2015.
The gig economy in India has come a long way in half a decade since then, especially with shifting skill set requirements in the corporate world. The high availability of skilled workers across sectors and who are ready to be hired on a contract basis is often cited as the biggest advantage over traditional hiring. Although the West has seen this paradigm shift from traditional hiring methods to the utilization of gig economy for quite some time, with the US recording around 36% of its entire workforce working as freelance contractors, here in the Asian subcontinent, things were dormant for quite a long time. Until the shift intensified in the 2010s decade.
Here’s a look at how the gig economy has evolved in the twenty-first century and how and why India Inc. is welcoming it with open hands.
What is the Gig Economy?
A gig economy is a system of unrestricted employment market where organizations hire individuals (often called freelancers or independent contractors) for short-term assignments usually on a contract basis. The focus is typically on availing the concentrated skillset of the individuals for a short time period where traditional hiring would not make sense, or in some cases, disadvantageous.
In India, the gig economy has seen a rise because of a variety of factors, notably the following:
- Positive outlook about working on one’s own terms; liberty and avoidance of work stress
- Corporate need and willingness to utilize the free market
- Easy availability of knowledge workers or white-collar professionals
- Restricted liability to organizations (as the system does not provide contractors with benefits that are otherwise mandatory according to labour laws)
This strong wave of the utilization of the gig economy was seen in the 2010s decade as some numbers will prove in the following section.
India’s Gig Economy in Numbers
The global gig economy market is currently (2019) valued at $2-3 billion with an annual increase of 14%. While that says only little about how things are, it may be surprising to learn that upwards of 30% of that market is accounted for by Indian workers. That is an absolutely high number despite the sluggish growth in terms of hiring. Traditional hiring is still the number one method for finding employment in India. So what does this signify?
Individuals are working multiple jobs. According to Scroll, which cites a recent McKinsey report on the gig economy, the percentage of workers involved in some form of independent work in India falls between 20% of 30%. This may look optimistic when compared with the above figure for the US, but it should be noted that this number is only for evolved markets like Information Technology, Marketing, and Finance.
The flexibility provided by such part-time gigs enables skilled individuals to balance one full-time position and carry out freelance work in their free time, thereby generating a sometimes passive but secondary income. Which remains one of the key motivations for contractors, followed by the ability to rack or polish up new skills and gain work experience. According to a report on the rise of the gig economy by People Matters, India has around 15 million freelancers across industries mentioned above.
With more and more companies showing a willingness to hire from the gig economy, it is bound to come head-to-head with traditional hiring in the coming years. It is reported that up to 50% of all organizations in India will be willing to explore flexible talent to cater to their growing needs in the next five years. This is a positive forecast for both the stakeholders as it only boosts the gig economy, which has its own share of pros and cons.
The Money Shaker
As noted above, the Indian gig economy market accounts for about $1 billion of the global share with workforce strength of 15 million freelancers. This is a noteworthy figure, as reported by People Matters, because even though more individuals are going the 'freelance way’ the individual earnings are not very impressive. That way, it works best as a side income along with a primary flow that comes from traditional employment.
If one weeds out the motivational freelance stories available on the Internet on sites like Quora and Medium, it can be easily found out that the average earning of a freelance worker in the marketing sector is, at best, in the range of INR 3 lakhs to INR 5 lakhs. This figure is calculated on the basis of regular work over a period of 12 months with daily time consumption of about eight to ten hours. It is rather difficult to compute a mean range because the money movement is often unreported in the gig economy, which stands as one of its biggest challenges from the financial point of view.
Figures sourced from TapChief.
Take the case of Sukanya, a full-time freelance writer from Mumbai, who engages with media companies on writing gigs. She gets the gigs through a consulting agency, and draws a monthly figure of around INR 30,000 on a good month. Because she is employed through an agency, she does not have much say in the payments or the possibility of a raise on a project-to-project basis.
Things are slightly different for someone who works directly with companies. In such a case, the individual can make changes to the payment according to the difficulty of the project and the time consumed. It might be well to note that the average rate for a writer in the Indian gig economy sector is about 70 paise per word. The higher and lower numbers in the range are in the extremes, with the upper limit going to about one rupee per word for investigative journalism writers.
If it is any relief for aspiring freelancers, MoneyControl cites a PayPal report where the numbers are all hunky-dory. In its survey of 500 freelancers in India, the average yearly earnings of an individual was promised to be around INR 20 lakhs. Of course, this is a figure claimed by highly-skilled workers who work with top-billed clients only and without a medium or platform (like Upwork) in between.
What are Some of the Platforms Involved?
It will not be right to claim that the rise of the subsequent growth of the gig economy was dependent only on organizations willing to become flexible with their hiring. There have been certain companies that facilitated the communication between:
- an organization willing to explore freelancers for a specific job, and
- an individual with the right skills ready to explore part-time employment (either by quitting the full-time job or with the willingness to juggle jobs)
In this regard, some of the top companies that are active right now are:
- Upwork – one of the largest and most popular freelance companies in the world, Upwork is the evolved version of freelancing platforms Elance and oDesk. It took off in 2015 after the two platforms joined forces, giving rise to one of the most successful (it is even listed on NASDAQ) freelancing platform in the world where contractors earn in USD and top freelancers boast of earnings in millions yearly. Freelancers can quote their hourly price and engage in all types of work based on their skills. Over the past few years, entry into Upwork has become more competitive due to large inflow from across the globe
- Fiverr – another freelancing platform, here professionals start off with gigs at $5 per task and then go higher as and when they develop experience and skills. It is still one of the most popular freelancing platforms in the world
- People Per Hour (PPH) – a similar concern as the above two, PPH allows contractors to market and sell their skills to interested clients on a contract basis.
These platforms help freelancers find opportunities that might otherwise be unavailable to them. The only major downside of such platforms is that they charge a fee for all transactions. In the case of Upwork, it levies 20% of all earnings until one reaches a total earning of $500. This is followed by two more slabs.
Regardless of the mechanics involved in these platforms, a majority of freelancers choose to go this route as it provides them with a guarantee that they will get paid. Not getting paid on time or ever still remains one of the biggest headaches of professionals in the gig economy.
Types of Gigs in India
Although when talking about the gig economy, the first thing that comes to mind is a freelancer who engages in work over the computer. It can be email marketing, search engine optimization (SEO), content writing, or project management. However, blue-collar gigs have also taken precedence in today’s market with startups and developed organizations employing freelancers on a contractual basis to meet their workforce needs.
The biggest example in India right now is that of drivers and delivery persons. With the advent of delivery startups and cab aggregators in the country, blue-collar contract jobs have been on the rise. The ease of gaining employment has supported this rise, further with ample help from India’s startup and e-commerce boom which took flight in the 2010s decade.
The focus has also shifted from the analysis of educational qualifications to work experience and ability. Today, a tenth-grade person with the ability and proof to drive a four-wheeler can enter the gig economy.
By joining one of the cab aggregators either through an agency or directly by investing a small amount for the resources (in this case, a vehicle). How this falls under the gig economy is a tricky business because most individuals who drive an Ola cab are in it full time.
The same goes for delivery boys working with startups like Swiggy, Zomato, and UberEats. However, most of these workers are involved part-time as they find more lucrative ways to get employed.
Blue Collar Gigs – Salaries in India
According to Indeed, the global employment and salary portal, the average monthly salary a Swiggy delivery boy can expect is around INR 20,000. This involves daily work of at least 10 hours. Using reports from various sources like Livemint, here is an overview of earnings that blue-collar jobs like delivery boys and cab drivers dictate:
Earnings in these jobs have seen a low due to high commissions made by the employer. According to Quartz, commission fee for aggregator cab driving can be as high as 30%. This means if a driver earns around INR 5,000 from full-day driving, he has to pay back INR 1,500 to the aggregator. When one takes the other financials involved (EMI for the car, fuel), the final day earnings dip further.
These jobs are helpful enough for those who do not have the privilege of higher education or placements. It gives them a way to earn an active income regardless of how much money flows in.
“My cousin who is from Pen in Maharashtra came to Mumbai in search of a job. Since he knew how to ride a motorcycle, I fixed him up with Swiggy for a full-time delivery boy job. Last month he earned around 27,000 rupees. It is going good for him as he is able to take care of his single father and move on in life after a financial crisis,” says a 28-year-old MA graduate from Mumbai who further compared such gigs with his own which started with a salary of INR 24,000 at a media agency in 2015.
Same is the story of Rajesh Tarana who moved from Raipur to Pune in search of a job at a travel agency. But when he arrived in Pune in 2017, he learned about the rise of taxicab aggregators and got in touch with a consultancy which was inviting employment for drivers. Since he could start working without any form of preliminary funding, he now earns more than INR 30,000 per month after consultancy fees.
“Although the earnings are delayed some months, I am usually relieved because I am sure to get a paycheck by the end of the month. It gets food on the plate,” said Rajesh in accented Hindi.
Figure 1 - Earnings statistics for blue collar jobs (credit The New Indian Express)
Having explored the rise of such jobs, it should be noted that the gig economy is not limited to one or two types of jobs. The pool has lots of options to choose from. Here are some examples:
- Marketing and management gigs – content writing, project management, social media management
- Driving – cab driving, truck driving, logistics coordinator
- Delivery – food and package delivery (Dunzo, Flipkart)
- Consultation – insurance sales and marketing
- Handyman – working with startups like UrbanClap to provide help in household and other services like cleaning and cooking
The list is endless as the gig economy has established its presence across markets. One can name any job in any sector and there is some scope of a contractual worker getting involved in it. A professional freelance writer from Bengaluru composing articles for a website like Quartz India and a part-time worker involved in household chores for a group of families in Gurgaon are both parts of the gig economy. Only the transactions differ.
The Future of Gig Economy
With the pace that it has currently assumed, India’s gig economy system is looking at a positive outlook in the 2020s decade.
With more individuals willing to give the market a try and organizations scrambling to take more utility out of the system (where there are only so few disadvantages), it may not be wrong to suggest that India’s gig economy will grow, and maybe even give the Western countries a huge competition. Not because of the number of individuals making the shift but because of the low asking price and willingness to hustle.