Gig Economy And The Impact Of Technology On Vendor Management Systems
By Apoorv Gehlot
The way the nature of business has changed in recent years, it was only inevitable that the workforce, that is the backbone of every sector, will evolve with it as well. Due to the abrupt spike in the competition and the increased moodiness of the customers, businesses need to be highly flexible and scalable nowadays. They can no longer stick to their old, rigid criteria. The way the work culture has shifted along with the massive advancements in technology, there has been a rise in the number of freelancers in the workforce- those who jump from project to project, employer to employer. Talent globalization has been made possible because of this increase in the number of freelancers in the workforce and the technologies that enable them.
A survey unveiled that India is the leader in the freelancer market, with talents available in software development, creative media, sales and marketing and other such sectors, followed closely by Bangladesh and then the United States. And projections show that by 2020, 43% of the U.S. workforce will be made up of freelancers.
Due to this rapid increase in the number of freelancers available for work, companies big and small are using them to better adjust to the current market. So all of this comes together to make it abundantly clear that the Gig economy is here to stay.
The Great Workforce shift
To really understand the Gig economy, we first need to take a look at why it is on such a boom. What makes it so enticing to the current workforce?
The biggest reason behind the rise of the Gig economy is the Millennial population. A substantial chunk of the workforce at the moment is made up of GenZ workers. And if we know anything about them, it is that more than anything, they crave flexibility. The traditional 9-5 work module just doesn’t work for them. So more and more millennials are turning to freelance because it gives them the agility that they desire.
Millennials also hate to be tied down or boxed-in. They want to explore and they want things to be interesting. And the gig system gives them just that. They work on a project for one company, then they pick up another one from another company. This way, they are never bored or bound and it gives them the opportunity to explore and work with a wide array of companies.
Technology has been the biggest promoter of this job culture. Nowadays, there are so many tools out there in the market to facilitate remote working that being a freelancer and just hire an experienced app development company for your business.
Another reason why people are going for freelancing is that it helps them financially. Not all freelancers are full-time freelancers. There are those out there who have a traditional job but still freelance for extra money. The ever increasing cost of living of a common man has forced people to look for other ways to earn money to keep up with the economy. A survey shows that 4 out of 10 people in the U.S. have side jobs.
The Rise of the Gig economy
According to the research conducted by two Harvard economists, the contingent workforce increased by 66% between 2005-2015, which makes 6% of U.S. employment growth in this time window. In a survey conducted by EY, a majority of US employers admitted that 17% of their organizations are made up of freelancers while this figure was around 30% for 20% of those employers.
In the U.K., the number of people in the alternative workforce has reached 4.8 million, growing 28% between 2006-2016. A similar type of growth in the freelance market has been seen across the globe, making it more than just a passing trend.
But who is responsible for this? Why is there such a sudden surge in the number of people who don’t want full-time employment? Well, at least for the US, it can be traced back to 2008, when there were no full-time jobs. The recession of 2008-09 hit the world pretty hard. But it almost crippled the US. People lost jobs, money, and their homes. And in such circumstances, neither companies could afford to hire employees, nor employees could trust these companies that they won’t go bankrupt the next day. So the solution was simple for both the factions- hire people but on a short term basis.
But what started as interim work, actually turned out to be a permanent structure for many. While things were bad, people couldn’t help but notice all the benefits freelancing had to offer. And companies couldn’t overlook that what started off as a measure to control cost in a harsh economy, had the potential to be a permanent solution for their budget issues.
So to put it plainly, the 2008-09 recession became an important divide for the world- the pre-recension era when people focused on full-time employment versus the post-recession era when people grew sceptical of 9-5 work culture and started to move towards the Gig community.
Everyone is using them
Companies like Uber, Lyft, Deliveroo are shining examples of how Giggers can be used efficiently in a way that is beneficial for all. And following on their footsteps, the blue-chip community and the Fortune 500 club have decided to validate the Gig culture and have started to hire freelancers themselves.
Due to the rise and fall in demand, businesses have evolved and have learned how to expand and compress their workforce accordingly. This has in return helped their efficiency and their cost-control efforts. Hiring full-time employees means you have to pay them every month, even if the sales haven’t been good and your company is now showing a loss. This puts an additional burden of carrying the weight that you don’t need or can’t afford. While it may sound cynical to some, but companies need to shed off some employees so that it can keep its doors open for business.
It’s better to not hire than fire, right? Now companies can hire Giggers when there is a rise in demand and they can just stop hiring them in the off-season.
This type of flexibility and scalability was never seen in the corporate world until recently and all of it has been possible because of the recent advancements in technology. Working remotely and collaborating on a single project has been made incredibly easy by virtual portals and platforms where people can go looking for freelancers and then work with them with the help of latest IT tools.
Pros and Cons of the Gig Economy
There can be no exhaustive list of pros and cons that can be put together for the gig economy. For some, freelancing was a choice and for some, it was their only option. So largely, the pros and cons of being a part of the gig economy vary from person to person.
However, we can talk about some of the benefits and challenges of this alternative work environment when we talk bilaterally.
Pros and Cons of the Gig Economy for Employers
For employers, the gig economy has been a way to slash down the operational cost of their companies. The financial benefits are many. Not having to pay a traditional workforce its salary every month even when the business is slow, has to be one of the biggest ones. But apart from that, hiring freelancers mean you don’t have to give them infrastructure, you don’t have to give them other benefits that a traditional employee gets. The cost goes down on every front.
So it’s hard to see a problem with that when you are saving this much money. But the problems are there. And the most prominent of them is vendor management. Because companies hire multiple vendors and they hire them at different times, the process becomes messy. From storing their data to tracking their work, everything needs to be thought of. Employers need a platform where they can collaborate with their vendors and work on their projects. Then you need a centralized repository of data on the Cloud so that it can be accessed by people across the world.
Another problem is the quality of work. Not every vendor offers quality services; keeping the quality of their product and services intact while hiring a Gig workforce is a big challenge for companies. Also, paying freelancers can be a hassle. Keeping a record of how much a freelancer is owed and the date of payment and then keeping that record with you for accounting purpose is a cumbersome task, too.
Pros and Cons of the Gig Economy for Freelancers
If you look at the gig economy from the perspective of the employees, you will see an interesting picture. While the general sentiment in many work circles is that the people who go for freelancing are those who cannot find a permanent job. In other words- people who are not qualified enough and are not happy with their current job situations. But this cannot be further from the truth.
Based on what we have discussed earlier, we can very easily deduce that the reason why workers, especially Millennials, opt for Gigging is that it offers them the flexibility of work, control over their work hours and work itself, and the facility to work from home. Gigging also keeps their options open and gives them wider exposure. Because they are not chained to a cubicle, freelancers often relish in many learning opportunities that might otherwise pass them by. They also find the ability to plan their holidays and not worry about work and finding time for other things that they like to do very enticing. To surmise, Freelancing keeps them perpetually enthralled and they love it.
But of course, there are issues on their part as well. Many Giggers believe that companies tend to treat their full-time employees better than they treat their freelancers. Many gig workers find the lack of benefits in contingent working a prominent problem. The lack of retirement provisions, paid vacations, financial security, job security, health benefits, and other such perks of a traditional job is a problem for some. But still, for the majority of Giggers, the pros of this type of work-life outweighs the cons.
Why you should invest in a vendor management system?
As an employer, you need to understand what is vendor management system and how it can help you. It is a software that allows you to keep a track of all your freelancers and their work progress. It is a single location where all the data related to a freelancer, what project he’s working on, when is his payment due, etc. is conveniently available for you. Using a VMS you can maximise the use of your freelancers by hiring appropriate talent while sticking to your budget and get services of true value that will churn up a fantastic ROI for you. Some of the most significant ways in which a VMS can help you are,
Hiring the right talent: a vendor management system can allow you to look for the freelancer with the right set of skills across the globe and under your budget. Because they have to work remotely, distance and location will not be a barrier for them or your recruitment efforts.
Managing your contracts: one of the biggest problems of a gig workforce is managing all the documents and contracts. Because you will work with multiple freelancers, there will be a need to store all of their information-personal, professional, contract-related, someplace where you can reach it at any time. A VMS will help you in centralizing your data storage and thus make it organized and available at any time and any place.
Tracking Vendor Performance: since they will be working remotely, you will need a way to track the performance and progress of your freelancers. A VMS will give you a platform where you can get a look at all of your freelancers’ performance and progress. This will help you better control them and get the most out of your investment in them. This will drastically decrease the risk involved with hiring freelancers. Because you are keeping a sharp eye on their work, there is no way they can waste your money.
Improved relationships with vendors: As you will have all of their data, even after their contract with you has ended, you will have the power to approach your freelancers for some other project. It will be like having a part-time employee whom you call upon when and only when there is some work. This will build better relations with these vendors and you will get the added advantage of working with a person you’ve worked before so there will be a level of comfort between the two parties.
The Road Ahead
We are still in the early years of the contingent workforce and gig economy era. While a lot of momentous shifts have already happened in the past decade, we are nowhere close to being done with it. The advantages Gig economy has to offer are palpable and nobody will shy away from them. Companies will continue wanting to cut down their costs and become more agile and efficient while employees will want the flexibility of work and all the other perks they get out of this type of work-life to last. And in between both these islands, the bridge is technology. Investing in a vendor management system can help you hire better talent while remaining in your budget and track their progress and help you maximise their efficiency and Matellio’s team of expert engineers and designers can help you with that.